Let me take this from the other direction, asking how Toyota would have pursued Musk’s “first principles.” (Hence the "Tesla Way versus the Toyota Way" of the title.) They were also a start-up (from the late 1930s but not in volume production until the late 1940s due to the war), facing choices in pursuing its first principle of providing the best transportation possible for consumers of modest means in a war-ravaged country where hardly anyone had a car.
Toyota could have done this by copying foreign practices in product development, production, etc. and (like Nissan) even making foreign designs on license. That would have been the way to go fast, and Nissan jumped out to a big lead in market share in Japan by using this strategy. Instead Toyota decided to go slow and to innovate as a business enterprise before it innovated with products. (This really began in 1950 when they believed their sales forecast, built ahead of the market, ran out of cash, and fell into the hands of Japanese bankers who broke the company in two to create Toyota Motor Sales and Toyota Motors.)
By 1965 Toyota had fully elaborated its new production, product development, supplier partnership, sales and customer support, and general management systems, the latter focused on developing capability in every employee. They had also created an enterprise that was stable and that could tackle new challenges from solid base.(Taiichi Ohno’s production system is widely known in this regard but Kenya Nakamura (product development), Shotaro Kamiya (the sales system), and, above all, Eiji Toyoda (the management system) contributed much more.
In addition, by 1965 Toyota had learned how to compress lead times in product development and production so it could grow almost entirely with internally generated cash. This meant never having to rely on banks again and retaining more than 50 percent of the shares within the Toyota Group so that Wall Street raiders weren’t a concern either.)
By 1966, Toyota was ready to go as a volume player, one competing on much more than low wages. And the Corolla was launched then as Toyota’s first international product. What followed was rapid growth (facilitated by brilliant production-system design methods) across the world and in an ever-growing range of products.
By the mid-1990s (after Lexus was successfully launched) Toyota was finally ready to innovate with products. (After only 40 years!) The first was the Prius (when no one else believed this technology had promise), whose most interesting characteristic was that it was launched on time and actually worked exactly as promised with no quality or reliability problems. Only later did it turn out that Toyota could grow its market share and make money with Prius technology. (These objectives were not part of the original plan, which was to make a mass market vehicle that could dramatically reduce the consumption of carbon fuels and burnish Toyota’s image as a technology company without losing much money in the process.)
The next innovation was hardly what the world would call innovative: offer Prius-proven hybrid technology all the way across the Toyota product range while reducing the cost of the technology by 30 percent, so Toyota could also make a good margin. But the results are pretty impressive: eight million Toyota hybrids on the world’s roads to date as Toyota has made record profits.
Toyota’s next product innovation was the Mirai fuel cell vehicle, just launched after decades of development. Does this make any sense? Not according to Elon Musk, who coined the term “fool cells.” But, no one thought the hybrid technology had potential either (any more than they thought a high-performance, long-range electric vehicle made sense) and we are just at the start of the race to see who is right. (I have no odds to offer. Innovation is inherently risky and winners are hard to forecast.)
So, what’s my take on the Tesla Way, as an advocate of the Toyota Way? Like Mark, I love Musk’s first principles. But I worry about the business system supporting them. Tesla is in its 14th year as a car company, which is a long time in Musk years. Yet it’s hard to see how its product development system (always years late, with rework to do post-launch), the production system (with spotty quality and unknown amounts of rework and warranty claims), the supplier management system (with an inability to forecast demand to suppliers), the customer support system (which is still to be created for a mass market), and the general management system (which seems to wear people out at a remarkable rate, rather than build capability in every employee) have matured to a point where they equal to the challenge of marketing 500,000 vehicles in 2018 and one million in 2020. Wouldn’t it seem reasonable to expect some stability by this point?
The Tesla Way is to go fast (“Let’s try ludicrous mode!”) and hope that genius and adrenaline can compensate for the lack of planning and stability. But I would advise going slower and getting the job done right the first time in accord with the Toyota Way. We will see.

This is the global technical specification and quality management standard for the automotive industry. It brings together standards from across Europe and the US. ISO/TS 16949 outlines everything you need to know about achieving best practice when designing, developing, manufacturing, installing or servicing automotive products.
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