The corporate social responsibility of Elon Musk

23 March 2017

The corporate social responsibility of Elon Musk

If you were to read a handbook on the accepted way to run and build a business it might say just one thing. Don’t do it the way Elon Musk does it. 

But if you were to read a handbook on the most powerful way to run a sustainable and socially responsible business, it might well say the opposite. 

Why the disparity? It is beyond reasonable doubt that Elon Musk brings a powerful sense of social purpose to his businesses. The vision for Tesla is that it will bring forward the age of renewable energy. That purpose is there because it is something we desperately need to do as a society, not because it’s the most natural approach to guaranteeing maximum profits.

In pursuit of that vision, Musk has been relentlessly driving to scale. Building a profitable niche company making sexy and powerful cars for the uber rich simply won’t achieve the mission. So the first high priced Tesla model was to provide funding for the next slightly lower priced version. And then that one was to provide funding for the affordable mass-market version that could go to bigger scale.

And because electricity for cars can just as easily come from fossil fuels as from anywhere else, Tesla bought Solar City because the vision was that when you buy a Tesla car you will also buy the solar powered charging unit that will power it. Investors cried foul, suggesting that all Musk was doing was bailing out his solar company with Tesla money. Such criticisms were shrugged off. The purpose of Tesla didn’t make sense without renewable energy generation. The critics just didn’t get it.

He has been prepared to take the risks that others are too scared to take on

In 2014, Musk announced that he would open-source Tesla’s intellectual property. He wanted to encourage the rest of the industry to follow Tesla in making effective and attractive vehicles to replace their fossil fuel equivalents. Again, it’s really not in the rulebook of how you’re supposed to do these things. But on the other hand, popularising electric vehicles is key to making them successful. Large-scale production is key to bringing costs down to make them competitive. A larger network of vehicles with spur the growth of the network of charging stations.

One of the things that makes Elon Musk attractive to outside observers is that the man takes audacious risks, but they seem likely to pay off. He took on significant personal debt at the point where both Tesla and his Space X business were teetering on the edge of failure – with the latter having seen very expensive ($120m) setbacks that literally blew up on the launch pad.

At that point, it was a very close run thing. Musk could have ended up as a highly charismatic personality who became a case study of overreaching yourself with grandiose ambitions. Instead, he attained a very different auro, that of the rock-star businessman. The “real-life Tony Stark”.

That cult of personality around Elon Musk has both an upside and a downside when it comes to sustainable business. 

On the upside, Musk is a high-voltage generator of stories – and nothing spreads a powerful idea quite like stories.

Like when he promised that Tesla could solve some of Australia’s infrastructure problems in the wake of a series of powerful storms, and the CEO of Atlassian asked him if he was serious. He tweeted: “Tesla will get the system installed and working 100 days from contract signature or it is free. That serious enough for you?”

Needless to say, the communication made headlines. Unsurprisingly, he quickly ended up in a conversation with the Prime Minister Malcolm Turnbull, and was approached by the Ukrainian Prime Minister looking for a similar deal.

Or when a Tesla driver damaged his own car while saving the life of another driver who’d passed out at the wheel. Musk immediately offered that Tesla would pay for repairs to honour the man’s heroism. 

Effortless, instant story-telling.

But Musk’s charisma and the attention it attracts has a downside as well. It means that he becomes viewed as unique. “A force of nature” was how a member of the Trump administration described him. He takes audacious risks that others would be pulled down for, but investors believe in his personal ability to make it happen. People make allowances.

On the one hand, that’s good because it enables Tesla to take the risks that need to be taken if it’s genuinely to revolutionise the motor industry and the production and storage of renewable energy.

On the other, it stands as an impediment to purpose-driven business becoming accepted as business-as-usual. Everyone else is still held to focus on the short-term numbers, but Elon gets a free pass because, well, he’s Elon.

Focusing the attention of the entrepreneurial generation

 That said, there is a good reason why Elon Musk remains an excellent role model of socially responsible business.

  1. He’s pragmatic and mission-driven. For instance, he has been willing to talk to any government, including the Trump administration, to advance the aims of bringing forward the age of renewable energy. While some campaigners are urging him to join those making short-lived political gestures, he is focused on practically building the sustainable future. That is exactly the strength that socially responsible business brings to the table.
  2. He has been prepared to take the risks that others are too scared to take on. That may increase his risk of failure, but it makes the likelihood of real breakthroughs greater. Fortune favours the brave and all that.
  3. Corporate social responsibility has been largely developed over recent decades by the large, establishment businesses building a response to the unintended consequences their businesses create in the world because of their scale. There have been visionary leaders who have taken risks in this, but these are models of restraint in many ways because they always have to take a sceptical investor community with them and persuade them that they’re not “taking their eye off the ball”.

    Musk, as a representative of the energetic tech entrepreneur that has become the role model for so much of the millennial generation, serves as a different vision of business innovation to solve society’s problems. He puts the personal into corporate social responsibility, and therefore makes it an idea that can spread well beyond the old-school corporate mindset of yesterday’s businesses.

If we are serious about sustainability, we need Tesla to succeed in the short term. The company may ultimately fail if Musk takes one gamble too many, but with each year that passes before then the company has a demonstrable and powerful impact on the expectations of the marketplace and the responses of the other industry players to the challenges that Musk has set for them.

And if Musk provides a role model to others, let’s hope it may encourage other leaders to step forward to put sustainable purpose at the heart of their business strategy to, step by step, challenge the complacency of a business community that still thinks it’s all a short-term game focusing only on the numbers.