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How Tesla’s audacious purpose led to a breakthrough decision
In June 2014, Tesla CEO Elon Musk made a startling announcement. In one fell swoop, Musk tore up Tesla’s patents and embraced open sourcing – making the electric car firm’s intellectual property freely available from the company website. As a symbolic gesture, Tesla literally pulled down the framed patents from the walls of its Palo Alto headquarters.
This audacious decision was rooted in Tesla’s clear sense of purpose beyond profit: its mission to "accelerate the world's transition to sustainable energy".
As Musk explained at the time, “We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.”
In other words, Musk understands that the future of the automobile industry extends beyond the four walls of Tesla’s headquarters. Tesla’s decision will supercharge the “world’s most talented engineers”, whether or not they’re working for Tesla.
Since the company began in July 2003, Tesla’s purpose has been to present the electric car as a viable option to traditional, environmentally unfriendly automobiles. Eco-friendly innovation has been at the forefront of everything the company does, which in turn has led to commercial success. By having a different, more forward-thinking goal compared to other automotive companies, Tesla rules a market of its own creation.
Aaron Hurst, author of The Purpose Economy, argues that “the great business challenge now is not just how to build a successful organization, but how to build more human-centred markets”. Tesla is clearly relying on people, inside and outside of the organisation, to join them and buy into a common purpose.
This is not just a charitable gesture, though – it makes complete commercial sense. By lowering the barriers of entry, Tesla hopes to grow the electric car segment within the automotive industry: a segment in which it is already a leader. Over time, this will make Tesla’s cars more affordable to the public, as was always the plan.