Production, not Product, as Competitive Strength

Talk about burying the lead:

“The competitive strength of Tesla is not going to be the car; it’s going to be the factory,” Musk said.

https://arstechnica.com/cars/2018/02/tesla-loses-another-675-million-in-q4-its-biggest-quarterly-loss-yet/

Car manufacturers have known that for years (though some seemed to have forgotten about it) If you ever toured the factory floor of BMW in Munich, you know how much focus is on perfection of the production and factory. A lot of industries are talking about automation, but few take the cues from industries that have long pioneered automation without compromising innovation and agility. Successful car manufacturers master the art of how to automate more and faster, how to build highly tuned and adapted processes and machinery, but at the same time stay flexible enough to change and add new innovations next year[1].  Because next year’s models will have different technology, different suppliers, different software and hardware, and different assembly steps, you cannot optimize production without constantly asking yourself about the “technology debt” and loss of agility you’re introducing.

Having great products are table stakes. But delivering a product in the physical world, at consistent high quality, without production drift or decay, and at the same time staying agile and open to new innovations and processes will ensure competitiveness in the long term.

 

[1] Successful car manufacturers also master debt management and financing and channel and partnerships and marketing and …. but that’s table stakes.

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