Elon Musk Has Changed Investors’ Views on the Electric Car

Elon Musk Has Changed Investors’ Views on the Electric Car

“Tesla, to a large extent, has become the purest proxy for betting on electric vehicles. Early on it ditched plans for a hybrid electric car—the kind of part-gas, part-electric half-measure favored by traditional auto makers for improving fuel efficiency. More than just selling an electric car, Mr. Musk has crafted an aura around Tesla with a stated mission of accelerating the world’s transition to sustainable energy.”

That is very much a man who has the Mandate of Heaven.

In his case, he has the Mandate of Heaven to lead the Army and lead it successfully to the completion of the campaign:

Tesla Motors Inc. TSLA under CEO Elon Musk

07 – THE ARMY

MANAGERIAL ISSUE:

The CEO – managing his army of employees/customers.

Hexagram 7 describes the Army. From a managerial point of view, it is easy to compare corporations to armies. They have a chain of command, are always ready to follow the leader, and are always ready to battle its competitors.

MANAGERIAL LESSON:

The Superior CEO knows:

1. Corporations are dictatorships rather than democracies. They do not look for consensus but rather for leadership. And in a dictatorship, it is the army, which in effect rules. This Hexagram, just like an army under a dictatorship, represents the management of a corporation at all levels. Even if at times one gets the impression that at all levels the army shows obedience to its superiors, we should keep it in mind that there will always be conspiracies led by leaders bent on eliminating each other and therefore it always represents a dangerous element. A corporate army’s aim is to gather financial strength and political muscle through the abilities of its employees and allies. Such strength is a dangerous thing as it can go in the wrong direction. When Sandy Weill of Citigroup used his power and influence to change the Glass-Steagall Act, he created the conditions which almost brought about the destruction of his own corporation as well as that of the entire financial system. The same applies to Goldman Sachs, what they change through their political muscle always has unintended consequences and collateral damage.
2. The success of a corporation is closely linked to how well organized and disciplined it is. Such organization in turn is also closely linked to how able the CEO is in earning the loyalty and the admiration of the employees. Loyalty must be earned not forced upon the employees. To earn such loyalty, the CEO must be enthusiastic and recognize the merits and accomplishments of his executives promptly and publicly. Only then will he win their hearts and minds. And only then will he make the employees more willing to make the necessary sacrifices to earn the proper recognition. That is the key to be more productive as well as profitable. Think of Napoleon.

3. The CEO must be courageous and well balanced to avoid harming others both inside and outside the firm.

4. The CEO must always have the confidence and full backing of the Board of Directors. Carly Fiorina of Hewlett Packard did not have such support when she launched a takeover on Compaq. She was successful in the takeover, but she got fired.

5. If the CEO intends to attack another corporation or to force a takeover, he must do it only if his corporation is financially strong or bullet proof and only if there are no other alternatives. Should he pursue an aggressive policy from a weak position, his efforts will surely end in a defeat.

6. When victorious, the CEO must be magnanimous with the other corporation’s personnel. Only then will his fame spread far and wide.

7. All corporations have spiritual reserves for the employees to access when the corporation is in danger; nevertheless, those spiritual reserves should be accessed only when really needed. Meanwhile they must be kept calm. Only a CEO who has earned the admiration and respect of his troops has the right to access those spiritual reserves and put to the test the bonding between him as a leader and his army of employees as followers. Only such a CEO can make his army follow him under the worst circumstances and succeed. He must be able to explain the reasons for such a war, and such reasons must be clear and much focused in order to get the necessary commitment and unity to achieve victory. And if Heaven grants him victory, then justice for the vanquished must always prevail. This is a must lesson for CEOs such as Larry Ellison of Oracle who is always expanding via mergers and acquisitions.

The I CHING advises the CEO the way to launch a takeover effort is the same to wage war. To lead a War the leader must have:

1. A clear cause to justify it.
   
2. A clear set of objectives.
   
3. Massive communication to explain the causes and the objectives.
   
4. Unity and commitment from the employees.
   
5. Cool heads to avoid getting into the frenzy of war.
   
6. Good “citizens” who are willing to defend their “land”.
   
7. A benign, fair and generous “government” loved by the “people” for which they are willing to fight.
   
8. A strong “economy” promoted by a humane “government”.
   
9. A strong bond between the “government” and its “people”.
   

INVESTMENT ADVICE:

For the investor, The Army is, in general terms, not a favorable Time-Space to invest. Where there is an army there is violence and where there is violence there is danger. It is not wise to invest under dangerous conditions.

By itself, (no lines), points to good fortune if the CEO perseveres.

THE ARMY.

The army needs perseverance

And a strong man.

Good fortune without blame.

An army is a mass that needs organization in order to become a fighting force. Without strict discipline nothing can be accomplished, but this discipline must not be achieved by force. It requires a strong man who captures the hearts of the people and awakens their enthusiasm. In order that he may develop his abilities he needs the complete confidence of his ruler, who must entrust him with full responsibility as long as the war lasts. But war is always a dangerous thing and brings with it destruction and devastation. Therefore it should not be resorted to rashly but, like a poisonous drug, should be used as a last recourse.

The justifying cause of a war, and clear and intelligible war aims, ought to be explained to the people by an experienced leader. Unless there is a quite definite war aim to which the people can consciously pledge themselves, the unity and strength of conviction that lead to victory will not be forth coming. But the leader must also look to it that the passion of war and the delirium of victory do not give rise to unjust acts that will not meet with general approval. If justice and perseverance are the basis of action, all goes well.

Only the line in the second place and the sixth are favorable. The other four tend to be negative.

THE LINES

SIX IN THE SIXTH PLACE

Managerial Issue: The CEO – managing the army of employees – after a corporate victory.

Managerial Lesson: Be just.

Managerial Warning: At the sixth stage of the Army Time-Space, the CEO and his troops win the campaign and either conquer market share or successfully complete the takeover. Now it is up to the CEO to reward merit.

Managerial Advice: The Superior CEO is careful when rewarding merit. That is, he is wise enough to reward merit but is also wise enough to differentiate between those who should receive monetary rewards only and those who should receive leadership positions within the recently conquered corporation. If he fails to exercise this rule, he will surely eventually destroy the same corporation he has just conquered. There are great executives-warriors who should never be given any managerial position within the conquered corporation because they will destroy it.

When a capable general conquered a territory, the Emperor had to decide if the general had the ability to administer the newly acquired province. Wisely, the Emperor would look for a civilian with experience to run the province and reward the general with properties and money.

In the case of Larry Ellison’s takeover of PeopleSoft, the two corporations were easily merged because both were in the software business. There was no need to look for an executive to run the newly conquered corporation. But in the case of Citigroup, Travelers Smith Barney, and Citibank had different lines of business. One man could not run it all. Sandy Weill’s betrayal of John Reed and of Jamie Dimon was as catastrophic for the bank (Citibank) as well as for the entire corporation (Citigroup).

Investment Advice: Invest.

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