Innovators Challenge Orthodoxies: Elon Musk

Innovators Challenge Orthodoxies: Elon MuskGreat innovators tend to be contrarians. They have an almost innate tendency to challenge industry orthodoxies, upend conventional wisdom, and turn the seemingly “impossible” into the possible. For me, one of the greatest modern examples of this is Elon Musk – of Paypal, SpaceX, and Tesla fame.

If you didn’t catch Elon’s interview at the recent All Things Digital® conference, it’s a must-see video for anyone who claims to take innovation seriously.

You can view the full video here.

Let’s go back in time to the Wild Wild Web of the mid- to late-nineties, when it simply wasn’t safe or easy to move money around online. Musk refused to accept that it had to be so, or that only giant financial services companies could come up with a solution. So in March 1999 he decided to start his own Internet financial services company, called X.com, which quickly became one of the Web’s leading financial institutions. One year later, in March 2000, X.com bought another Internet startup called Confinity and formed PayPal. In 2002, eBay bought PayPal for $1.5 billion. Today, Paypal is the leading global online payment transfer provider.

Innovators Challenge Orthodoxies: Elon Musk

So what did Elon Musk do next? Sit back and enjoy his millions? Nope. He set out to take on some even bigger, and arguably much more important innovation challenges. Indeed, as Chris Anderson put it last year in a Wired magazine interview, “he decided to disrupt the most difficult-to-master industries in the world”.

The first of these challenges was reinventing space rocket technology – a field that was assumed to be the exclusive territory of large government-funded organizations like NASA – with the audacious goal of reducing the cost of rocket launches by a factor of 10. Another challenge was reinvigorating space exploration itself (NASA’s efforts were being choked by continuous budget cuts), with the even more audacious goal of launching a privately-funded manned mission to Mars within 10 to 20 years. In June 2002, Musk founded SpaceX with $100 million of his early fortune, and set out to redesign space rockets and space exploration from scratch, challenging a plethora of orthodoxies and assumptions that had been around since the 1960s.

His initial and most fundamental question was “Why do space rockets have to be so expensive?” Musk took a look at the actual material cost of a space rocket – the aluminum alloys, titanium, copper, and carbon fiber – and found that it represented only about 2 percent of the typical price of the rocket itself. So, having decided that this was a crazy and unacceptable ratio, he set out to design and build his own space rockets (!) at a fraction of the normal cost.

In the process, Musk identified all kinds of absurdities in the aerospace market.

He found that it was largely bogged down by bureaucracy, and locked into legacy technologies from the past, which was keeping prices unnecessarily high. By challenging these absurdities, Musk was able to figure out ways of doing things that he calculates could save US taxpayers at least a billion dollars a year.

Over the last decade, Musk’s SpaceX team has designed, built and launched a whole series of next-generation rockets that have literally changed industry economics. In 2008, NASA awarded SpaceX a $1.6 billion contract for 12 cargo flights to and from the International Space Station, effectively replacing the Space Shuttle. And on May 25th, 2012, SpaceX made history when its Dragon spacecraft became the first commercial vehicle in history to successfully dock with the International Space Station.

Another important question Musk asked was, “Why can’t space rockets be reusable?”. Most people think the space shuttle was reusable, but in fact the main tank was thrown away after every flight, and the refurbishment of other parts before each new mission was so expensive that the shuttle actually cost four times more than an expendable rocket with its sequentially ejected stages.

Musk’s argument is that full and rapid reusability is “the fundamental thing that’s necessary for humanity to become a space-faring civilization. America would never have been colonized if ships weren’t reusable.” So SpaceX has made this another primary goal. In 2010, it became the first private company to successfully launch a spacecraft into Earth’s orbit and then bring it back. And now Musk is testing his incredibly ambitious “Grasshopper Project”, which is a huge Falcon 9 rocket that can take off, go into orbit, then turn around and return to the launch site, landing vertically, like something from a 1950s Sci-fi movie.

All of this has been just a precursor to Musk’s ultimate goal of colonizing space.

SpaceX’s first manned flights – under a NASA award – are expected in 2015. And, after radically reducing the cost of space flight and making rockets reusable, Musk’s original question “Why can’t we send people to Mars?” (the question that drove him to found SpaceX in the first place), doesn’t seem so ridiculous after all.

Oh and, by the way, in his spare time Elon Musk is also reinventing the way we drive. In 2003, he co-founded Tesla Motors to create affordable mass market all-electric vehicles for mainstream consumers. Ten years later, his Tesla Model S is the third best-selling luxury car in California (the biggest economy in America and the 12th largest in the world), after Mercedes and BMW, with a 12.7% share of the market.

Innovators Challenge Orthodoxies: Elon Musk

The Model S has received the highest Consumer Reports score of any car since 2007, and has picked up numerous awards. Tesla has understandably become a favorite on the NYSE, with the stock up 185% this year (2013), and 72% over the last month alone. Shares are up 447% since the company went public in late June 2010. In fact, Tesla’s market capitalization has risen by more than $4 billion since May 8, hitting a recent high of $10.7 billion, putting SpaceX on a par (in terms of market cap) with Staples, Tiffany and Whirlpool. The company has recently raised a billion dollars of new cash, and has paid off its half-a-billion dollar federal loan (part of Obama’s clean energy program) almost a decade early. Not bad for a venture that everyone in the automobile industry predicted would be a disaster.

Again, Musk’s whole success story is based on his propensity for challenging industry orthodoxies. In the “All Things Digital” interview mentioned earlier, he talks about two false assumptions that have dominated the thinking of Detroit’s senior executives for decades. First, “that you couldn’t make a compelling electric car – one that was aesthetically appealing, long-range, and high performance.” And, second, “that even if you did all those things, people would still not buy it because it was electric.” There also were other deeply-held and widely-shared beliefs that had put the brakes on the electric car opportunity for years (following GM’S failed foray into this space in the 1990s with the EV-1). Musk had been told, “You’ll never be able to bring it to market, you’ll never be able to produce it in volumes, and you’ll never be able to make a profit.” But, although it’s early days and the jury’s still out, it would seem that these industry “experts” may all have been completely wrong.

In addition to transforming space travel and automobiles, Elon Musk is transforming energy with SolarCity, a startup that leases solar-power systems to homeowners as well as educational, commercial and governmental users. And he has also hinted at another breakthrough project he has been working on in secret, called Hyperloop. He admits that he was irritated when he found out about the Californian government’s proposal to invest $60 billion in a bullet train project from LA to San Francisco, because, as he argues, it would be “the slowest bullet train in the world at the highest cost per mile”. As an alternative, Musk is proposing a hypothetical mode of high-speed transportation that he describes as a “cross between a Concorde and a railgun and an air hockey table”. He estimates that the cost of his SF-LA Hyperloop would be about $6 billion, one tenth as costly as the proposed high speed rail serving those cities.

“We have planes, trains, automobiles and boats,” Musk says. “What if there was a fifth mode?”. And here is his own tantalizing description of this “fifth mode of transportation”:

“How would you like something that can never crash, is immune to weather, it goes 3 or 4 times faster than the bullet train… it goes an average speed of twice what an aircraft would do. You would go from downtown LA to downtown San Francisco in under 30 minutes. It would cost you much less than an air ticket or than any other mode of transport. I think we could actually make it self-powering if you put solar panels on it, you could generate more power than you would consume in the system. There’s a way to store the power so it would run 24/7 without using batteries.”

Nobody knows exactly what Musk has in mind. But his track record as an innovator affords him enough credibility to be taken seriously, even if he’s talking about “a ground-based Concorde” or a kind of “railgun” without rails, that can travel at speeds of more than 685 mph (1,102 km/h). Let’s face it, with ideas like these, anyone but Elon Musk would be discounted as a nutcase. But it’s exactly by delivering on his big, radical ideas (remind anyone of Steve Jobs?)  that he has become such an innovation icon. This week, Rolfe Winkler of The Wall Street Journal wrote, “Each time Mr. Musk delivers a better, less-expensive electric car or launches another rocket successfully, he proves his doubters wrong”.

Jon Favreau, director of the first two Iron Man movies, famously modeled the on-screen character of Tony Stark, the eccentric billionaire inventor, on Musk. And in an article for Time magazine’s “100 Most Influential People in the World”, Favreau described Musk as “a Renaissance man in an era that needs them.” That’s as good a description as any for this remarkable innovator.

INVITATION FROM THE AUTHOR:

“Challenging Orthodoxies” is one of The Four Lenses of Innovation I describe in my bestselling book Innovation to the Core (Harvard Business Press) – the other three lenses are “Harnessing Trends”, “Leveraging Resources”, and “Understanding Needs”.

I’m currently collecting other compelling examples of “Challenging Orthodoxies” from all kinds of companies, industries and individual innovators. If you have a brief case, example or story you want to share, either from your own experience, reading or research, or from your own company, I’d love to hear from you either by email at rg@rowangibson.com or as a comment on this article. And of course I’ll give you a big, personal acknowledgment in my upcoming book, which is published next year. So, what are the one or two best innovation examples of “Challenging Orthodoxies” you can think of?

Email me or simply comment on this article today.

image credits: allthingsd.com; teslamotors.com

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Innovators Challenge Orthodoxies: Elon MuskRowan Gibson, co-founder of Innovationexcellence.com, is one of today’s foremost thought leaders on business innovation. He is co-author of the bestseller Innovation to the Core and a much in-demand public speaker in 60 countries around the world. You can follow him on Twitter @RowanGibson

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6 Responses to Innovators Challenge Orthodoxies: Elon Musk

  1. Pingback: Elon Musk: Innovators Challenge Orthodoxies | I...

  2. Ameriman says:

    In an era where again our Government incompetence and greed is failing and bankrupting us, Elon Musk reminds us that America was built by innovators and private enterprise.

  3. moladi says:

    So, what are the one or two best innovation examples of “Challenging Orthodoxies” you can think of?
    The antiquated tradition bound construction industry – Not addressing affordability by implementing technology – Housing, a basic need http://www.empowering-people-award.siemens-stiftung.org/blog/projects/moladi-innovations-in-affordable-housing/

  4. newdaysamestory says:

    . . . save US taxpayers at least a billion dollars a year.

    $7500 tax credit on every Tesla, and a US government loan to this business for a car no average buyer can afford.

    That certainly sounds like innovation and challenging conventional wisdom to me. If Elon has such a great vision, he can take his hands out of my pockets and pay for it.

  5. John Smithson says:

    To me, Elon Musk’s ideas are not that great. His skill, I think, lies in the execution, not the ideas.

  6. Pingback: Innovation Excellence | Innovators Challenge Or...

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