The Tesla’s Organic Profitability And Power of Business Model

The Tesla’s Organic Profitability And Power of Business Model

How do you create a new basis of competition? How do you discover an orthogonal path, totally different from all the trajectories of your competitors? How do you move from building on speed to building on velocity, where that elemental direction associated with velocity is the pulse of market perception? The empires of the future must NOT just serve the needs and  the expectations of customers, but most importantly, serve their perceptions of the future. It goes beyond volume. It goes beyond balance sheets. It goes beyond assets quality. It is about building Organic Profitability.

Organic Profitability is a profitability system where products and services earn income throughout their lifespans. Generally, software solutions on subscriptions have an element of that. But most hardware solutions struggle. Once you pay for that radio, no extra money goes to the maker.

But one guy and his pals invented a new way of making hardware earn organically. Yes, Tesla is the world’s largest automobile company, not because it makes the most cars; it makes about 500k when Toyota ships close to 11 million yearly. But each of those 500k cars Tesla has made will likely earn income until they are decommissioned from roads. Yes, you buy Tesla, you have to pay some subscriptions for software, and when you sell that car, the new owner has to re-license the software.

Also, besides the software,  those cars keep earning as Tesla resells the emission credits it has gotten on them. The biggest innovation in Tesla is not the cars and batteries but a business model that delivers compounding leverageable factors, creating a virtuous circle of accelerating returns. Because of that, Tesla is bigger than the world of cars!

The most profitable unit in Tesla is selling emission credits, not cars. But for the emission credits business to thrive, Tesla has to make cars to earn those credits. Because it makes electric vehicles, it earns credits for not polluting the world. Then, it resells those credits to other car companies which make fossil-fueled cars to stay in compliance.

Think differently in your sector.


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One thought on “The Tesla’s Organic Profitability And Power of Business Model

  1. What Tesla did with its car business model was what Microsoft did with Windows, something the automotive industry failed to do over the years, so the latter ended up selling boxes, while with Tesla model, you don’t fully own the car. Apple does same with its products, because the users will keep coming back for one upgrade or another, else you go out of fashion.

    Sometimes what makes the greatest impact in an enterprise looks simple on the surface, but the reality is that no one else did it before you, so for opening everyone’s eyes, you deserve to collect royalties and tithes on top their heads; and that’s what Tesla is doing at the moment.

    Like Apple advised, think different. And when you do, you become the new sheriff in town.

    Come up with what hasn’t been done by anyone before, and the world will congregate.


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