What should the new CEOs rescue from Elon Musk’s management?

Madrid, April 20, 2023.- A CEO who has managed to lead the auto industry towards electrification. A CEO who started the race of private space flights and services and even making us dream of colonizing Mars. A CEO who has acquired a social network for 44 B. USD and turned it upside down in no time… Elon Musk, yes, Elon Musk leadership style, despite the criticism and the defamatory, should be studied in Business Schools and his best management strategies should be rescue while learning as well from his shadows (Twitter). I begin this review with the positive. The BBC, the prestigious British television broadcaster, has revealed some of Elon Musk’s keys to success:

1. It isn’t about the money

This is absolutely central to Elon Musk’s attitude to business. His electric car company, Tesla, has performed particularly well. Shares have surged over the past year to take their value to more than $700bn. For that, you could buy Ford, General Motors, BMW, Volkswagen, and Fiat Chrysler, and still have enough left over to buy Ferrari.

2. Pursue your passions

That Mars base is a clue to what Elon Musk believes is the key to success. It was while he was trying to get that off the ground he realised the problem wasn’t “a lack of will, but rather a lack of way” – space technology was far more expensive than it needed to be. Et voila! The world’s cheapest rocket-launching business was born.

3. Don’t be afraid to think big

One of the really striking things about Elon Musk’s businesses is how audacious they are. He wants to revolutionise the car industry, colonise Mars, build super-fast trains in vacuum tunnels, integrate AI into human brains and upend the solar power and battery industries. There’s a common thread here. All of his projects are the kind of futuristic fantasies you’d find in a kid’s magazine in the early 1980s. He believes low ambition is baked into most companies’ incentive structures.Too many companies are “incrementalist”, he said. “If you’re the CEO of a big company and you aim for something that’s a modest improvement, and it takes longer than expected, and doesn’t work out quite as well, then nobody’s gonna blame you,” he told me. You can say it wasn’t my fault, it was the suppliers. 

4. Be ready to take risks

This one is obvious.You’ve got to have skin in the game to do well, but Elon Musk has taken more risks than most. By 2002 he had sold off his holdings in his first two ventures, an internet city guide called Zip2 and the online payment company PayPal. He had just entered his 30s and had almost $200m in the bank. 

He says his plan was to put half his fortune into the businesses and keep the other half. Musk said he faced a stark choice. “I could either keep the money, then the companies are definitely going to die, or invest what I have left and maybe there is a chance.”

5. Ignore the critics 

What really shocked him – and it was clear in 2014 he was still very upset by it – was the delight many pundits and commentators took in his travails. “The liberal schadenfreude was really quite astonishing,” said Musk. “There were multiple blog sites maintaining a Tesla death watch.”I suggested people may have wanted him to fail because there’s a kind of arrogance about his ambition.He rejected that. “I think it would be arrogant if we said we were definitely going to do it, as opposed to we’re aspiring to do it, and we’re going to give it our best shot.”

6. Enjoy yourself

Follow this guide and, with a bit of luck, you’ll become impossibly rich and famous too. Then you can start to come out of your shell.Elon Musk is famously a workaholic – he boasts of working 120-hour weeks to keep production of the Tesla Model 3 on track – but since we met he seems to have been enjoying himself.And his year ended with a real bang in December, when SpaceX tested its Starship launch vehicle, which it hopes will take the first humans to Mars. The giant rocket exploded when it crash landed six minutes after lift-off. Elon Musk hailed the test as an “awesome” success.

The arguments of those who criticize Musk

An analysis by The Converstion has explained the main management mistakes that Elon Musk has made in his business strategies:

Change management never quite goes to plan. It’s hard to figure out whether Musk even has a plan at all. Since taking over Twitter on October 27, Musk has stopped employees working from home, cancelled employee lunches, and laid off about 3,700 employees – roughly half of Twitter’s workforce. Many realised they had been sacked when they could no longer access their laptops.

Just days later it emerged that Musk had a team of snoopers comb through employees’ private messages on Slack, firing those who had criticised him. 

Then, on Wednesday last week, Musk sent an ultimatum to staff to pledge commitment to a new “extremely hardcore” Twitter that “will mean working long hours at a high intensity”. Employees had until 5pm the next day to accept, or take a severance package.  Musk appears not to have anticipated this reaction. As the “hardcore” deadline approached, he started bringing key staff into meetings, trying to convince them to stay.

He also walked back his working-from-home ban, emailing staff that “all that is required for approval is that your manager takes responsibility for ensuring that you are making an excellent contribution”.

It was unsuccessful. So many employees decided to leave that on Friday Twitter locked all staff out of its office until Monday amid confusion as to who still worked there and should have access. Layoffs and restructuring are common in organisational change. But the way they are managed has significant effects on those who are leaving, as well as those who remain. If you want employees to be committed and to respond to a crisis, telling them they are lazy and threatening them won’t help.

But what about SpaceX and Tesla – the companies on which Musk has built his fame and fortune? Doesn’t their success prove he is a good leader? 

Not so fast. There is a big difference between a mission-driven company like SpaceX and a platform like Twitter. 

When there is a common mission to achieve something extraordinary which hasn’t been done before, employees will often willingly work extremely long hours in difficult situations.

Both Tesla and SpaceX have many unhappy employees, with lawsuits filed over working conditions and Musk’s management style.

He has been commended for his thinking on iterative design and solving engineering problems. Challenging old models that may no longer be useful is important. But the fundamentals of leadership and organizational change are still essential – and on these, Musk falls woefully short. 

Organizations are complex, interdependent systems, underpinned by a web of behavioral processes. Creating successful change requires aligning individual, work group, and organizational goals. Even if the little blue bird is still flying, for now, the people-led systems that keep it aloft are under significant threat.