Industry observers have recently noted that Elon Musk should follow in Apple’s iPhone footsteps and find another company to manufacture its cars. While focusing on a core competency of product design is admirable, the observers are wrong.
“Design Here, Manufacture There” may work for computers and devices like cellphones, but the paradigm breaks down with mass production of multi-faceted products. Computers and smartphones are largely digital devices with simple physical components; their complexity lies within the software.
Cars are not “computers on wheels,” but computer systems and subsystems, integrated to perform in highly varied conditions where failure can result in death. Cellphones, conversely, are designed to work in protected environments and have no moving parts. Designing, engineering and manufacturing vehicles requires strategic workflows, not a simple “toss the design over the wall” approach that can work for computers and phones.
There is already substantial outsourcing in the automotive industry, accomplished through a sophisticated supply chain. The continued digitization of physical products and subsystems makes it even more critical that car makers understand how to leverage these supplier relationships. The integration of product and process are the two strands of the DNA that will synthesize the design and manufacture of next generation consumer goods.
Elon Musk's mistake wasn't that he tried to get into manufacturing. It was in not establishing the design and manufacture of the Tesla lineup in an ecosystem like Michigan's – as upstart Mahindra has done. This is a blind-spot often seen in tech executives that don't understand the complexity of manufacturing.
Companies that produce physical products have much to learn from digital companies regarding rapid, iterative, and agile development. However, tech companies need to learn process leaning, optimization, and scaling from manufacturing companies. Businesses that succeed in the future will embrace this duality and excel in both.