How Tesla shines with ‘Premium Experience’ based disruptive business model!

 In Digital Transformation

The world is increasingly getting dominated by born-digital companies. As Mark Andreessen quotesSoftware is eating the world”. Every industry is disrupted already or about to get disrupted.  Anand Deshpande, Founder and CEO of Persistent Systems writes in his blog,

“Born-digital companies are not encumbered by either physical legacy constraints or a mindset that limit how they see the world.”

These born-digital companies do things differently. In their pursuit of doing things “differently”, these bellwethers command the industry with disruptive business models. Jo Caudron and Dado Van Peteghem in their book Digital Transformation , describe various hyper disruptive business models that are instrumental behind tidal forces of Digital transformation.

(Note: I have added “Crowdsourcing” as a model here which is not originally listed by Jo Caudron and Dado Van Peteghem. I firmly believe that Wikipendia’s crowdsourcing model is worth mentioning – since it disrupted the mighty Britannica Encyclopedia!)

If one closely looks at these models, one theme emerges very strongly. Many models follow the principle of volume, adoption by large customer base, tremendous data generated by this adoption and being able to channelize this data i.e. getting a market leader position by volume or adoption first and revenue follows later. Apple first started with the concept of excellent user experience. However, its ecosystem for developers to develop and distribute apps and the reach out of this platform to millions of users via billions of app downloads is what made Apple extremely successful.

One example that clearly stands out in these business models is Tesla.

Tesla thrives on the model of Premium Customer Experience. Its website proudly states that “Think of the Model S as an app on four wheels!” With the premium experience, it disrupted a segment of luxury sedans which is extremely difficult to penetrate.

Tesla is obsessively focused on “customer centricity“. While disrupting the powerful and gigantic automotive industry, it disrupted the entire value chain right from car ordering, delivery to after-sale service. Some of the things that Tesla does are simply too-good-to-be-true-and-yet-true!

  •  Tesla pioneered a B2C model for car ordering by completely bypassing car dealership. Customers visit a high-tech company owned showrooms and order the car online. And it provides flexible customizations in color schemes, interiors etc.
  •  In a panel discussion last week at IBM Interconnect with IBM IoT GM Chris O’Connor, Anand talked about how in the age of IoT every device will be software-driven. Tesla is proof of that and is one of the leading examples of IoT, since all cars are connected to company remotely via wifi. All updates to the car are delivered automatically. How cool is that! It really is an app that customer happens to drive!!
  •  Tesla nurtures passionate customer community via online forums. It leverages the popular principle of social media brand advocacy where rich content is contributed by loyal and passionate customers.

Moreover, the most mind-boggling thing that Tesla has done is to open-source all its patents to be used by auto industry to innovate and build upon! In the world of highly secretive formulas and related lawsuits, this is almost an anti-pattern! Where a successful car maker opens its success recipe to the world to leverage and build upon.  But that’s exactly the principle of disruption – doing things so differently that no one has ever thought of it! This radically differentiated thought-process has what made Tesla what it is today! As this Business Insider article quotes –Rashmi 4(During the research of this article, I came across an interesting LinkedIn post by Vivek Wadhwa, What the legendary Clayton Christensen gets wrong about Uber, Tesla and disruptive innovation. Vivek dissects the theory proposed by Clayton Christensen who is the author of a famous book, The Innovator’s Dilemma which served as guiding principle for many successful entrepreneurs to survive industry disruption.  Vivek explains how even the legendary Clayton’s theory of disruption is outdated now! Every rule book, school of thought and cult following would be forced to realign by born-digital companies and their disruptive innovations!)

Image Credits: pixabay.com

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