Shaping strategies are proactive measures that companies execute by using technological changes to establish new business ecosystems with capabilities to earn a competitive advantage and achieve other goals. Shaping strategies refer to efforts that broadly redefine the terms of competition through positive acts, which provide benefit to everybody who adopts the new terms. An example of this strategy is Googles AdSence strategy, Salesforce.com, Novell, Virgin Galactic.
The formulation of shaping strategies involves three key elements including the view, acts and assets, and platform (Hagel, Brown, & Davison, 2008). It starts with communicating a shaping view, which entails having a broad view of the future, highlights the changes and needs in an entire industry and the opportunities, which can benefit a wide spectrum of stakeholders. The second step is developing a shaping platform that involves having a set of standards and capabilities to organize and support the activities of the participants. Lastly, the process requires demonstrating the shaping acts by convincing that the shaper has the capability to succeed and give a competitive advantage. Therefore, shapers should strive to show their belief in the shaping strategy through their actions (Ireland, Hoskisson, & Hitt, 2009). It is a catalyst to achieving the organizational goals.
Many managers magnify risk and discount potential rewards, thereby acting timidly. Therefore, rethinking the essence of the strategy would enable strategy shaper to diminish the perceived risks while maximizing the perceived rewards (Ireland et al., 2009). Moreover, such strategies motivate a large number of stakeholders to make huge investments and take aggressive actions in order to accelerate their movement towards a given strategic goal (Ireland et al., 2009). Strategic goals must always be specific, achievable, time-bound, and measurable.
The following paper applies the concepts of shaping strategy to Tesla Motors. Tesla Motors is a company that designs, develops, and manufactures high-performance electric vehicles, powertrain components, and energy storage systems. The company has a variety of vehicles, including Model X, Model S, Model 3, and Tesla Roadster. The company also has other products such as stationary energy storage applications (Securities and Exchange Commission (SEC), 2015). The company is among the first movers to adopt the manufacture of high performing electric vehicles.
Tesla Motors and Five Tests of Shaping a View
The first step has five tests and involves developing a shaping view with capabilities to change the way people perceive the industry or the market opportunities. First, shaping view must demonstrate perspectives by considering long-term directions and highlight how it will change. Tesla concepts of the electric vehicle and use of autopilot technology are the innovation, which was long-term and aimed at changing the entire motor vehicle industry, thereby showing a proactive reaction to electric vehicle technology.
Second, shaping view clearly identifies the most attractive business opportunities for all the participants (Hagel et al., 2008). Tesla Motors investments in electric vehicles are an attractive business opportunity for most stakeholders because of its reducing environmental impact. The technology used to manufacture the vehicles does not cause air pollution, which is of great concern to a wide range of stakeholders, such as the government, consumers, environmentalists, and even consumers. Therefore, Tesla Motors vehicles are attractive because the company addresses this problem.
Third, a shaped view should tie opportunities to wider economic, technological, and cultural forces on the business landscape. Tesla Motors vehicles offer opportunities to a wide range of cultural, economic, and technological forces. Also, the companys products are less harmful to the environment as compared to the vehicles that emit billions of tons of carbon dioxide. Fourth, a shaped view must be at sufficiently high levels to allow contingency development and focus the thinking of managers facing difficulties. Tesla Motors enables future contingency developments because the company spares room for innovation and experimentation. For example, the autopilot model, which is still being tested, can improve its effectiveness. Lastly, a shaped strategy must have a shaping view that is aggressive and communicated continually to all stakeholders. The consumers, government, environmentalists, and Tesla Motors employees are aware of the companys technologies and innovations due to appropriate communication and aggressiveness of the products.
Tesla Motors and Five Tests of Shaping Platform
The shaping platform is the second step in shaping strategy, and it involves a set of practices and standards that organize the activities of the participants. First, the platform must have financial benefits to the participants through reduction of costs of entry, and ability to gain accelerated revenues (Hagel et al., 2008). It is less costly to adopt the manufacture of electrical vehicles, and many vehicles manufacturing companies, such as BMW, did that. The vehicles are charged premium prices, and it may lead to increased revenues to the participants in this field (Ireland et al., 2009). Premium prices are placed on high technology products generate extra revenue. Second, the platform must support a diverse set of stakeholders while offering opportunities and value in several distinct niches. Tesla Motors use of autopilot technologies can support various companies and create value for vehicle manufacturing companies.
Third, the platform must be able to scale up through the accommodation of larger numbers of companies without adding acceptable costs to the company (Ireland et al., 2009). Manufacturing companies can produce vehicles with electrical capabilities without having additional costs on Tesla. Fourth, the platform must provide increasing returns even if the number of participants increases. The use of autopilot vehicles may ensure revenues augmentation as the number of stakeholders grows. Fifth, the platform must continually evolve and provide the participants with an incentive to participate with the platform owner. Elon Musk, who is the owner of Tesla Motors, has established a platform for communicating with all the stakeholders, considering their views, and providing areas for improvement (Ireland et al., 2009). Communication with the stakeholders wins their support and persuades them to work towards the strategic goal.
Tesla Motors and Six Tests of Shaping Acts and Assets
The third strategy in formulating shaping strategies involves shaping acts and assets. First, the strategy shapers acts and assets must indicate that it has the capabilities to involve a large number of incumbents to convince the participants that it can succeed. Tesla Motors possesses such a capability and informs the stakeholders about that. Secondly, the acts and assets must include smaller entrants (Hagel et al., 2008). Unfortunately, Tesla Motors strategies cannot be adopted by participants with insufficient resources (Ireland et al., 2009). Third, the strategy must be able to attract and mobilize sufficient participants who will take full advantage of the shaping platform. Fourth, the strategy must convince the participants that its strategy of electrical vehicles and the autopilot will not compete with any potential entrants (Ireland et al., 2009). Fifth, senior level management must also have tolerance for the risks involved in the strategy (Ireland et al., 2009). Elon Musk has a high level of risk tolerance for the new strategies adopted by his company. Lastly, Ireland et al. (2009) argue that a shaper strategy must have leadership with a forceful personality on top to establish a shaping narrative that is vivid, plausible, and alluring to all the participants. Forceful personalities, like Elon Musk, can help to convince others that the strategy is achievable.
The current business world is changing and requires shaped strategies that can overcome the dynamism. Shaping strategies mobilize the global ecosystem and transform markets by redefining competition and providing benefits for the participants. Formulation of shaping strategies involves three main elements: shaping view, shaping platform, and shaping acts and assets. Managers should rethink the strategy development process to maximize the benefits associated with shaped strategies and minimize the perceived risks. Tesla Motors is one of the companies whose strategies of developing electric vehicles and auto-piloted vehicles continue to promise many benefits to all the participants in the industry.