Is Tesla Highly Vulnerable to a Hidden Risk or Ambiguous Threat?

source: flickr

This week, I read Charles Duhigg's incredible article about Elon Musk at Tesla (ok, I'm biased... Charles is my former student). The lengthy piece, written for Wired, is titled Dr. Elon & Mr. Musk: Life Inside Tesla's Production Hell.  Duhigg's article is based on an in-depth investigation of the company and its mercurial leader.  He explains:

Over the past six months I’ve communicated with dozens of current and former Tesla employees, from nearly every division. They describe a thrilling and tumultuous workplace, where talented engineers and designers have done some of their proudest work but where, as one former executive put it, “everyone in Tesla is in an abusive relationship with Elon.” Almost all these employees spoke on the condition of anonymity because of nondisclosure agreements or fears of being sued or fired by Musk. (Even those with positive things to say asked for anonymity.)

The story describes Musk firing employees on the spot without much warning.  It describes his brilliance, as well as the incredible insights that he has had about revolutionizing the car industry.  Duhigg also describes a turbulent workplace and somewhat shocking tirades and rather unpredictable behavior by the boss.  He writes,

At Tesla, Musk’s oddness was accepted. He was, after all, the leader, the biggest stockholder, the visionary. But sometimes his impatience would turn into tirades. “We called it ‘the idiot bit,’ ” a senior engineering executive told me. “If you said something wrong or made one mistake or rubbed him the wrong way, he would decide you’re an idiot and there was nothing that could change his mind.” Musk would openly deride employees in meetings, according to numerous sources, insulting their competence, bullying those who had failed to perform, demoting people on the spot.

Duhigg describes the dismismall or departure of many of his senior managers over the past few years.  Some left due to burnout, disagreements about the direction of the firm, or other opportunities.  Others were fired by Musk.  As I read the article, I wondered about more than whether whether talented managers will continue to flock to Tesla because of the exciting work and ambitious goals.  I wondererd whether Tesla could be highly vulnerable right now, despite the fact that it has ramped up product and begun to turn a profit.  Clearly, they build a beautiful car that has wowed consumers.  They have cultivated high willingness-to-pay for a premium product.  On the other hand, what if there's a problem with product quality or safety?  What if an ambiguous risk or threat emerges?  Will people be willing to share the bad news with Musk, or will such risks remain hidden?  Could such a hidden risk become the firm's Achilles heel?  Duhigg writes about pushing back if you disagreed with Musk:

And a troubling trend emerged, according to former executives: If someone raised concerns or objections, Musk would sometimes pull the person’s manager aside and order that the offender be reassigned, or potentially terminated, or no longer invited to meetings. Some executives began excluding skeptics out of self-preservation. “If you were the kind of person who was likely to push back, you got disinvited, because VPs didn’t want anyone pissing off Elon,” one former executive who reported to Musk told me. “People were scared that someone would question something.”

Those statements worry me a great deal.  Bad news does not rise to the top in most organizations. It often remains hidden.  Ambiguous risks certainly get downplayed or suppressed if leaders create the wrong kind of climate or environment within the firm.  As the organization grows, it will become harder for Musk to know everything.   Will people filter the information that he receives in ways that could become very problematic?  Stay tuned.