Tesla's board of directors is doubling over Elon Musk. The directors denied a report that electric vehicle companies are exploring possibilities for other CEOs and that the board is sending a clear message: We are in the Elon business.
Given one of the directors’ core responsibilities: assessing risks, this is a questionable move. Tesla is currently facing many of them, including tag sales, sales from Musk's government efficiency hangover, and, crucially, his plan to bet the company's future on robots. However, the biggest risk is caused by Musk himself. After all, the worst case scenario for a fleet of autonomous taxis is the safety issues found after the vehicle is on the road. Apart from the potential loss of life, any major problem could keep people away from the Tesla brand. Musk's leadership style makes this situation scary.
Security companies share common characteristics throughout the industry. They encourage open disagreements, minimize hierarchies, and make the welfare of employees and customers a North Star. They make sure everyone working there is psychological safety – they can express their ideas at will, ask questions, admit mistakes, or even disagree with their superiors without fear. This is a prerequisite for companies that want to keep their bodies safe because it enables employees to point out the risks their boss misses. Companies that deviate from this approach (as Boeing has done in recent years) are punished by accidents and markets.
Cynthia Carroll of Anglo American Plc and Paul O'Neill of Alcoa Corp. use culture to change the security approach of their companies. Carroll took over a mining industry, with an average of 44 deaths a year, and in six years that number has dropped to 12. She began to say that she discovered an environment of “bullying and fear” shaped by South Africa’s apartheid South Africa. Everything from temporarily closing the company’s largest mine after an accident to changing the compensation standards to requiring the supervisor to personally apologize to anyone killed in the mine, Carroll transformed it into a company whose key value is “caring and respecting.”
At aluminum maker Alcoa, O'Neill is so focused on safety that after his first speech as CEO, the audience said, “The board puts a crazy hippie in charge and he will kill the company.” O'Neill sent a staff memorandum urging employees to ask any safety issues with supervisors and contact him directly if they are ignored. He even shared his home phone number. The result is: Even though the company's share price jumped from $7 per share in April 1987, when O'Neill started as CEO, his share price lost more than 80% from April 1987, i.e.
Boeing is heading in the opposite direction. Once the safety was provided so much that the pilot “I wouldn’t have gone if it weren’t for Boeing,” the aircraft manufacturer’s engineering-led and safety-obsessed approach faded after buying McDonnell Douglas, replacing shareholder returns with the best efforts. At the expense of its culture to cut costs, the whistleblower was punished, undermining the psychological safety and reputation that generations have built. The company began to fix the two biggest crashes that lost and 346 deaths.
When it comes to safety, Musk often says the right thing. In 2013, he emailed the company, “Anyone at Tesla can and should send emails/talks to others based on what they think is the quickest solution to the problem that benefits the entire company… You can talk to me… You should consider that you are obliged to do this until the right thing happens.” In October 2021, he sent a memo to all Tesla managers, giving him a “clear instructions” of three options. The first is “Send me an email to explain why what I said is incorrect. Sometimes I am just wrong!” This is exactly the requirement of psychological safety. For leaders, there are few ideas than “sometimes I’m just wrong”.
Unfortunately, Musk's actions are not always consistent with his words. Tesla engineer Cristina Balan said in 2014 that she was concerned about the floating parts of the Model S and the quality of its suppliers. According to Balan, she was told that if she did not resign, members of her team were waiting for a green card. Over the years, multiple employees accused the company of firing safety issues or criticizing Musk.
Therefore, Tesla's safety culture may be insufficient. If something goes wrong, Musk himself has made sure that the company cannot rely on regulators as the backend. ARS Technica reports that the National Highway Traffic Safety Administration’s Doge layoffs focus on “employees who assess the risks of autonomous driving.” This is reminiscent of what happened to Boeing, which reportedly used its influence in the federal government to weaken the FAA's oversight of the company.
There are few CEOs in history who are as forgiving the risks of the company as Musk, who in his own assessment guided Tesla through “many crises.” However, the phone here comes from the inside of the house. Musk's leadership style is sowing seeds for Tesla's next crisis, which could impact the industry as a whole. If he doesn't want to follow Boeing's example and become the latest American manufacturer to be removed by its own mistakes, he needs to realize that boldness doesn't necessarily mean quick play in terms of safety.
This column reflects the author's personal views and does not necessarily reflect the opinions of the editorial board or Bloomberg and its owners.
Gautam Mukunda has written about company management and innovation. He leads at Yale School of Management and is the author of “Essential: Leaders Really Important”.
This article was generated from the Automation News Agency feed without the text being modified.
