A few months back, I commented on a post in support of the idea that Tesla Motors are not the electric vehicles (EVs) that will radically change the automotive industry, in that they are not "disruptive technology". I caught some grief for that when someone assumed I meant that Tesla was not making an impact. +Hollis Blanchard
noted that I probably meant "disruptive" in the way defined by Christensen in "The Innovator's Dilemma". I realized then that while that was what I meant, I had not yet actually read the book. Now I have... and I take it back.
Christensen defines disruptive technology as more of a marketing problem, and less of a technology problem. Disruptive technology often involves no new technology, but uses established, proven technology to reach underserved or even nonexistent markets. By that definition, the disruptive EV would have a range of 100 miles, seat two people, and do 0-60 in 20 seconds. It would be a street legal golf cart. It would not address the needs of the mainstream market, but it would be cheap and quite useful for small parcel delivery in highly congested areas, great for remote areas with electricity but poor gasoline supply, or perhaps areas where exhaust was problematic. But also: cheap. Over time, the battery technology would improve, and the EV would eventually meet the performance requirements of the mainstream market, and the cycle completes.
Tesla is definitely not that. None of that. Least of all: cheap. However, after completing the book, including the surprise speculative chapter on EVs (crudely summarized above), while Christensen did not describe what Tesla Motors would do in 15 years from the time he authored his book, I believe he could have. He omitted in his case study the infrastructure necessary to support EVs as gas stations support internal combustion engine (ICE) vehicles today. That is a major expense unlikely to be met with the small volume and low margin typical of new undefined markets associated with disruptive technology.
However, if instead of saying "cheap", we were to say "non-mainstream market", and instead of reaching below the mainstream, we were to reach way above - to the affluent first adopters - well, much of the rest still applies. This move afforded Tesla a new value network, where range and miles per gallon were not the performance metrics of interest. Affluent first adopters love technology for technology's sake. It's fun, it's clean, it's FAST, it's beautiful. And a P85D launch makes you giggle. It just does.
Much of the rest of the ideas in the Innovator's Dilemma are exemplified by Tesla Motors. They formed a new organization outside of the traditional automakers. Indeed, they even changed how vehicles are purchased, eliminating the dealer network. By building in small volume, they allowed themselves a trial period with the Roadster, followed by an improved Model S, which itself has undergone regular incremental improvements, catering to the gradually materializing values of the new market they created.
Rather than filling the vacuum at the bottom of the market created by a performance surplus, Tesla Motors started at the top, outside the mainstream market, where they can experiment with expensive technology, and build out the necessary infrastructure (such as the supercharger network and the battery gigafactory) to support growing down into the mainstream market.
So while Tesla Motors may not have followed Christensen's hypothetical EV example in Chapter 10 of the Innovator's Dilemma to the letter, I think it is fair to say they have done so in spirit. I take it back, Tesla Motors is most definitely disruptive technology. #teslamotors #innovatorsdilemma #ev