What We Can Learn From Tesla’s Decision to Not Enforce Its Patents

Since Tesla Motors is a company that has been capturing top awards in the automobile industry, one might think that it would be guarding its industry secrets closely. So when the company’s CEO Elon Musk announced that Tesla would be open-sourcing all of its patents to help promote the “advancement of electric vehicle technology” (it would not sue anyone who used their technology), it garnered a lot of attention. Here are two lessons we can learn from its decision:

1. Real Change comes from Making Waves  

We talk about acts of leadership as “wave-making,” because the human wave is a powerful metaphor of inspiring people towards collective action. The wave is so powerful that fans who came to root against each other find themselves standing up next to each other in collaboration.

Similarly, Musk has realized that Tesla alone couldn’t change the automobile industry and consumer habits. Owning a sexy electric car is virtually useless if there aren’t many charger stations located in convenient places as well as automobile repair shops that have the capacity to fix up electric cars. As Autoweek writes, electric vehicle companies “contend with a crippling lack of infrastructure that limits their real-world practicality for a large portion of potential buyers.”

Musk explains that after seeing current electric car initiatives at even the most well-known automobile manufacturers are nearly non-existent, he believes “that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform” – hence the open-sourcing of their technology.  Tesla had to make a wave so that other companies – in energy, in automobile, in car repair – would be inspired to go electric, and it chose to do so by being transparent and generous with its intellectual property.

Doesn’t this open Tesla up to more competition?

The word ‘competition,’ comes from the Latin word, ‘competere,’ which means to ‘strive together.’ The idea is that by striving against one another, companies sharpen each other and get better at what they do (think of how Mo Farah and Galen Rupp trained together under the same coach and won gold and silver in the Olympics 10k). The company’s decision to open up their technology to others reveals a belief that collaboration and cooperation, rather than a zero-sum mindset in which one company’s gain requires others’ losses, is the key to sustainable innovation and success.

2. Tesla Got Clearer On its Purpose

The company’s decision was the result of deep reflection about who they are and what they stand for. Musk explained that Tesla would allow others to use their technology and would not “initiate patent lawsuits against anyone who, in good faith, wants to use our technology” because they realized it ran counter to what the company stood for.  He writes, “Tesla Motors was created to accelerate the advent of sustainable transport.  If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal.”

Our own research has found that organizations who are purpose-driven and values-oriented – we call them “self-governing organizations” – experience significant competitive advantages over their peers, which means that Tesla’s recent move to share their technology will likely reap financial benefits. Unsurprisingly, one of the key indicators in our research about self-governing companies is that they are transparent in information-sharing. The verdict is still out, of course, as to whether Tesla’s decision will pay off, but by staying true to their purpose and the true meaning of competition, Tesla Motors stands to gain as it enables the sustainable transportation industry to make significant strides.


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