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Elon Musk: Will he be the Death of his own Businesses?

Elon Musk: Will he be the Death of his own Businesses?
January 25, 2018 Carly

Elon Musk, the man behind Tesla and SpaceX, co-founder of Paypal, father of five, and a self-made billionaire. Sounds like a successful man that knows how to run businesses, but is that really the case?

While it is undeniable that he is an entrepreneurial force to be reckoned with, and you will see his inspirational quotes glorified all over Instagram, he is a fantastic example of how to strangle your own business’ growth.

What do we mean by that?

One word – perfectionism. Musk has publicly admitted on numerous occasions that his perfectionism is detrimental to his happiness. He told The Wall Street Journal that he can “see only what’s wrong….It’s not a recipe for happiness.”
While perfectionism is not a recipe for happiness, it is, however, most definitely, a recipe for stunting business growth.

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But how?

Tesla’s Model 3, the first mass-market vehicle, had over 500,000 pre-orders but just 260 vehicles were completed in the first quarter of production, falling 1,240 short of Musk’s prediction. Why? Perfectionism.

For those of you that are not familiar, the Tesla Model 3 was set to be the most affordable Tesla vehicle at a starting price of US$35,000 and was set to be the start of sustainable, energy efficient travel for the everyday person. There was no denying that the Model 3 was prepared for mass production and ready to hit the streets, but Musk’s need for perfectionism caused the production line to shut down.

In the words of Musk himself, “it is really hard. Making one of something is easy. Making lots of something at a consistently high standard is hard.” Elon Musk and Tesla are so set on producing state-of-the-art cars that are 100% incredible, that they refuse to release cars that are 98% incredible to the market.
But do you know what? 98% is still an INCREDIBLE vehicle. If Elon Musk would just stop standing in his own way, Tesla cars could be cruising down the highway tomorrow and making the world a greener place (while allowing Tesla’s net worth to grow exponentially).

“In business, perfection is the enemy of profitability.” – Mark Cuban

Take a moment to think how much Tesla could have contributed to sustainability and the advancement of energy-efficient transportation if Elon Musk would let go of his unrealistic goal of perfection?

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Let’s talk about the cost-benefit tipping point for a second…

Don’t get me wrong, at Ronin we are all for creating incredible services and results for our clients, so long as it is a business-savvy decision for our clients. What is the point of pushing and pushing for perfection to the detriment of your business? This is where it is important for your business to do a cost-benefit analysis.

A cost-benefit analysis, as its name suggests, requires you to add up the benefits of a project and/or decision and then compare it with the associated costs.

When it comes to running a healthy business you always want your benefits to outweigh your costs. Every business needs to be acutely aware of where their cost/benefit tipping point is (i.e. where the costs begin to outweigh the benefits). Elon Musk cares so much about the benefits and the over-delivery of an already highly exemplary product that it has cost his businesses their financial performance.

There is no denying that the art with the vast majority of businesses, including us at Ronin, is to overdeliver on the value proposition, sure – but how much of an over-delivery actually hurts you and your customers?