How different is your business?
OK, so I bought a Tesla. Your reaction will likely be either “Cool! An amazing car…which one have you got?” or “Yeah, well, I just don’t like Elon Musk, ok?” At least, those are the two reactions I’ve had so far. The vast majority of reactions have been former, thankfully, and for one person, the experience of just being a passenger of mine has changed his mind from owning a BMW iX3 to buying a Tesla Y!
Yep, I’m now an evangelist, and I make no apology. You see, I’ve been an Apple user for the last 25 years and it is the closest thing to an Apple product you could possibly have in a car. It feels like when I got my first iPhone and I thought, “why isn’t every phone made like this?” How Apple will produce a car that is better will be intriguing to find out (if they do finally get around to it).
So, what is it about this car that is different and better than anything I have ever driven. Not just a bit different, but by a country mile. Where do I start?
Like Apple, Tesla has created an ecosystem that works
Every other car company is so far behind. Let me make a comparison. When Apple launched the iPod with the famous Steve Jobs quote “1000 songs in your pocket” it had one massive advantage over other MP3 players, and that was iTunes. Without iTunes, it was just another MP3 player…well, not quite…it was actually an amazing piece of kit that looked beautiful and worked, like every Apple product, intuitively. However, the combination of both of these, working in harmony, stole the show.
Tesla have done exactly the same with their charging infrastructure. It’s everywhere, there are lots of them and they are super-fast. There are now over 35,000 super chargers in the world for Tesla, and in 40 mins you can have an 80% charge, which on a Tesla will be over 250 miles.
Here’s a real example:
My wife and I drove from Guildford to Falmouth to see one of my daughters at Uni recently. It’s 210 miles and on a good day about 5 hours plus stops. Tesla routed us to a Supercharger stop in a hotel on the way down with about 10 chargers and on the way back to an outlet park with about 12 chargers. We found a charger in 5 mins and had enough time for a sandwich and coffee before my Tesla app showed me that my car was charged to 90%.
Their focused differentiation is a thing of beauty
What do I mean? There are three possible differentiation strategies that a business can take: Product Focus, Operational Excellence and Customer Intimacy. Tesla are all over Product Focus. Let’s look at what that means. To be truly product focused you have to produce a product that disrupts the market and has continuous investment in Research and Development (R & D). Tesla spends the most on R & D and the least on Advertising of any car company in the world. It spends almost $3,000 on R & D for every car produced – that’s three times the industry average! Let me give you some other examples of Tesla’s Product Focus:
- You order online. Tesla have no sales staff. When you test drive a Tesla you ask for it online, you show up and drive the Tesla on your own (no Tesla staff in the car), you return to the Tesla Centre, and they will explain anything you wish to know about the car. They won’t try to sell you a car. If you want to buy one they will help you on the computer in the centre or you can simply order one online for a £100 deposit.
- You don’t negotiate on a Tesla – it just has a price.
- You receive constant improvements overnight to the software in your car.
- When I picked up my Tesla I was told (through the app) that it was available to be picked up at the Telsa Delivery Hub in Staines, London at 4.30pm on 30th June. I arrived to find a large car park with an office in the middle of it. I parked where I was told to and went into the office. At the desk a lady in a Tesla T shirt looked my car up on the system and told me it was about to arrive on a huge car transporter, having driven up the M3 from Southampton. The car duly arrived and was taken off and cleaned to within an inch of its life. I was then taken to the car. “Did I know how it worked?” I was asked. Yes, I had reviewed all the videos that had been sent through on my app. I got in and drove off. Now that is ‘Just in Time’ in action, with low touch customer service.
- The app controls everything through the customer journey and it works seamlessly. You order one and it shows you when it will be available, this moves from a month to a date, to a time and a place local to you. If you need a service, you book it online. If it can be fixed easily, a Tesla technician comes to you, more complicated you take it to a local service centre. The app tells you how the service is coming along, it tells you how much it will cost and provides an invoice, and of course you pay on the app. When you charge at home or at a Supercharger station, the app controls everything and tells you how it’s doing. At a Supercharger station you just plug in. The charger knows it is your car and charges you – you guessed it – to your app (which already has your credit card details).
Be a Jack of All Trades AND be a Master of One!
To run a successful business, you must have minimum standards on all three areas: Product Focus, Operational Excellence and Customer Intimacy, but make a conscious decision to ‘major’ in one of them. Because Tesla’s technology works so well, they can be a ‘low touch’ customer business. Other great examples of Product Focus companies are Dyson and Apple; both set very high standards of Customer Intimacy and Operational Efficiency, but their killer strategy is Product Focus. I am not saying Tesla staff aren’t friendly; they are, but that’s not their point of difference.
Take a strong position
The Godfather of Strategy, Michael Porter, famously outlined in his 1985 book, Competitive Advantage, that the worst place to be for a business is ‘stuck in the middle’. So, if you are trying to be high on all three strategy positions, you’re unlikely to create sustainable competitive advantage in any of them.