Blog #4
This past week we examined how one defines themselves in
comparison to their competitors. How you do this will determine much about your
success. This is because a part of how you define yourself against your
competitors is how you define your customer. How you define both the needs and
wants of your customer will determine how you attempt to differentiate yourself
from the competition. I think a pertinent example of this would be the
electronic car companies Fisker and Tesla.
Overview
Comparison
|
|
Tesla
|
Fisker
Automotive
|
|
Founded
|
2003
|
August 7, 2007
|
|
Founders
|
Elon Musk
Martin Eberhard
Marc Tarpenning
JB Straubel
Ian Wright
|
Henrik Fisker,
Bernhard Koehler
|
|
Management Team
|
Elon Musk
(Chairman and CEO)
JB Straubel (CTO)
|
Tony Posawatz, (CEO)
Bernhard Koehler, (COO)
|
|
Car Models
|
Roadster, Model S, Model X
|
Fisker Karma
|
On a first pass evaluation, one might draw the conclusion
that both are two similar electronic vehicles manufacturers seeking to take the
common user electronics strategy of breaching the upstream market first, and
then attempting to go broader as they achieve economies of scale hoping to
reduce cost of production, and therefore reduce overall cost, allowing them to
market to a larger market segment.
While the above is true they both went about it incredibly
different ways that have ultimately determined their fate. In the car industry
there are many substitutes. While these number dwindle when one is looking only
at electronic cars, that simply is not the sole product someone looking at an
electronic vehicle would be interested in. They could go for a hybrid, ULEV
gasoline, or possibly clean diesel engines to meet their demand for a
environmentally conscious vehicle.
So with all these viable substitutes, how does one differentiate themselves
in the car industry?
One was is to focus on your core technology. Tesla is
essentially a battery company masquerading as a car manufacturing. They have chosen to focus on a key
resource for an electronic vehicle; the battery and engine. This is the soul of
every car model they produce. Control and optimization of this key resource
have also allowed them to expand into areas such as energy storage for the
grid.[ii]
This additional area of expansion endows them with a supplemental revenue
stream to survive off of when automobile sales don’t match expectations. So
while Tesla is a car manufacturing company, I would argue that they see
themselves more as a battery company. Their focus on batteries for their cars
has allowed them to succeed against the odds because they understand that
pushing the boundaries of battery usage is the next big step for all of
technology. With this comes an understanding that their customers are not just
drivers but rather anyone seeking a better battery.
On the other hand you have Fisker. Fisker is the brainchild
of renowned car designer Henrik Fisker. Their first model, the Karma, is a
strikingly beautiful car, which simply isn’t very good. The car focused to much
on exterior beauty, something that many other car brands can match, and didn’t pay
enough attention to the soul of the car; battery and engine. Fisker chose to
define themselves as car manufacturer, this was going to be their core focus. They
would rely on outside suppliers for many of the parts needed for their cars,
including the batteries and engine. This lack of control of this key resource
doomed them. The battery supplier they worked with eventually went bankrupt,
the cars they were able to put together ended up being prone to malfunctions,
and their core focus of design was not enough to keep the company afloat.
With Tesla doing splendidly and Fisker failing I think these
two companies side-by-side paint an interesting picture of how you can compete
in the same market but define yourself in incredibly different ways. This is
something all entrepreneurs should consider.
http://gigaom.com/2013/04/02/tesla-fisker-and-what-could-have-been-a-tale-of-two-electric-car-startups/
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