Forbes crowns Tesla the World's Most Innovative Company

Forbes* September issue features Tesla Motors CEO Elon Musk on its cover. Why? Well... it turns out that Tesla Motors has just been crowned #1 out of 100 companies as the "World's Most Innovative Company" by Forbes.

*Forbes September 2015 Cover

Forbes corresponding cover story Decoding Tesla's Formula provides insight into why Tesla Motors (TSLA) deserves this #1 position. The story makes a compelling argument exploring why Tesla is so innovative. They view Tesla Motors as a classic high-end disruptor, "they target incumbents’ most profitable customers, going after the most discriminating and least price-sensitive buyers before spreading to the mainstream. If you look within some large companies, you can flesh out previous examples: Apple iPod outplayed the Sony Walkman; Starbucks’ high-end coffee drinks and atmosphere drowned out local coffee shops; Dyson’s vacuum cleaners now have solid market share... the incumbents didn’t react fast enough, and the high-end disruptors took over their market."

*Forbes Top 10 Most Innovative Companies

However, much of the article (and their #1 ranking) comes down to the hard-charging corporate culture that CEO Elon Musk demands of his team at Tesla Motors. Says Tesla Chief Information Officer Jay Vijayan, “Elon [Musk] doesn’t settle for good or very good. He wants the best.” Vijayan’s first major task? Build all the software to run the business, from scratch, in three months, for one-fifth the cost. Typically big companies spend millions of dollars on enterprise resource planning software–which handles product planning, finance, manufacturing, supply chain and sales–from large vendors like SAP and Oracle.

*Forbes provides a look inside the Tesla Motors factory in Fremont, CA

When Vijayan told him such a task wasn’t possible, Musk simply stated, with a Steve Jobs-like confidence: “Let me know what you need from my side to make this happen.” Says Vijayan, “He doesn’t accept constraints as ‘givens’ the way most people do.” Vijayan and his team implemented a basic but functioning homegrown system in four months, and with steady improvements it now gives Tesla a lightning-fast feedback loop. “We have a seamlessly integrated information system that gives us speed and agility like no other automaker,” says Vijayan. 

“Our communication allows us to move incredibly fast,” says chief designer Franz von Holzhausen. “That is an element that isn’t happening in the rest of the automotive world. They are siloed organizations that take a long time to communicate.” Von Holzhausen was able to design the award-winning Tesla S with a team of just three designers sitting next to their engineering counterparts. Bigger automakers typically have 10 to 12 designers working on each new model.

*Forbes talks Tesla with its chief designer Franz Von Holzhausen

Tesla Founder and CTO, J.B. Straubel explains further: “Elon challenges everyone to work incredibly hard. I know that sounds stereotypical, but I think he does it to a degree that is pretty unusual, and it is highly uncomfortable for most people, but the results are fairly undeniable. If you challenge people to work hard, they achieve more than they think they can. Most leaders don’t want to do that.” Adds Doug Field, Vice President of Engineering: “We take leaps of faith that are like jumping out of an airplane and designing and building the parachute on the way down.”

Indeed... in its description of Tesla's big win on Forbes' fifth annual list of The World's Most Innovative Companies they explain that, "Tesla Motors, which debuts at No. 1 on this year’s list of the World’s Most Innovative Companies, has rewritten many of the rules hardened within the century-old auto business. Operating at high speed and under continuous uncertainty has become something of a thing for Tesla and its billionaire CEO, Elon Musk."

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*Source: Forbes; The World's Most Innovative Companies List