The built to scale playbook for platform ecosystems

Why E-Trucks by #Tesla vs. traditional OEMs are a great place to learn for your own disruption challenges and opportunities –

From this week´s #IAA

Un Espresso per favore!

It is Friday and I am glad you take a sip of Ecosystem inspiration. After a good unannounced summer break the #EcosystemEspresso is back...

This is #EcosystemEspresso #57

1| Thank you for 1055 Subscribers! THANK YOU!!!!!

I value you all are coming back and that you engage after the silent period. I will repeat this at X-mas...

It is so nice to hear from people that they read, are surprised and still I do not see their thoughts and interaction.

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2| Platform Disco Episode #16

Great guest: stefan wolk - you will learn a lot on how to be customer focused through incentivising and enabling team members around customer experience and satisfaction as Omnichannel group that is expanding from glasses to hearing aids and from Central Europe to international.

Thank you for being our guest!

3| The built to scale playbook for platform ecosystems

#Tesla has successfully taken major auto segments by segment with a playbook , while competitors are not learning although they are suffering increasingly and can follow this playbook unfolding sitting in the front row.

Here a sip of #EcosystemEspresso what the key building blocks are and why certain features of the new Tesla Semi ecosystem are unique to B2B.

Why learning and applying this playbook is essential: "anywhere there can be a platform, there will be one". And given that disruption follows a predictable X-model! Do not try to compete with traditional management frameworks or metrics.

Quote of the week:

In B2B trucking time is money. It is that simple!

The core message:

Disruptions happen with or without your business. Disruptions follow a predictable X-pattern. History is repeating itself. So, learn from the best and start doing strategy and stop only doing financial annual planning!

Disruptions these days are happening faster given product-life cycles are shorter and tech-evolution occurring at lightening speed. Different tech developments overlap and amplify each other.

Businesses, even mid-sized are well advised to learn from new success models on how to leverage and lead these developments.

Masters of these disruptive strategies, like #Tesla are consequently applying a new cocktail to leading the disruption while participating and benefiting from multiple business models layered on in parallel.

The built to scale playbook for platform ecosystems

This week´s #IAA24 outlines beautifully how traditional OEMs will most likely find it hard to compete with #Tesla without this

I do see some key factors most players are missing: Tesla overall is built on some of these pillars:

1. Consequent future backwards thinking and actions
2. Vertical Integration for Interoperability, Speed and Scale
3. Ruthless Product Simplification for Mass Production
4. Platform Ecosystem and Data Feedback Loops
5. Customer-Centric Ecosystem Integration

PLAYBOOK 1: Consequent future backwards thinking and actions

I highly recommend to apply the #Amazon methodology. Below you can find a real life example on the Tesla Semi. While this headline was produced by a creator, it could have also been designed by Tesla at the very beginning of the Semi project back then...

Read the headline below - pure future backwards!

Source of business: Replace Diesel Truck with lower TCO.

• Aiming at price parity with comparable top trucks right out of the gate - not one day down the road.
• Aiming at the big incumbent market in a bullish fashion in line with Tesla´s purpose and not just carefully with few vehicles sold with innovators or early adopters at premium prices.

Rationale: lower operating cost and high performance 24h =1 day 1.700 km is possible

• Not letting negative PR kick eTrucks out of evoked sets of buyers like in personal BEVs.
• Providing true value innovation with equal performance at significant lower cost to attract switching from day one replacing complete Diesel fleets and not just complementing them with "PR-eTrucks".

Reason to believe: 7,5M miles driven in real-life tests AND operations

• Not small test lab situations in tough industrial environments with Tesla and Pepsi operations as learning fields.
• Covering the whole ecosystem E2E lens, not just the vehicle stand alone.

--> The above is a real headline a content provider created. A built to scale playbook might start there straight away.

Stop presence to future - go future backwards

Amazon´s future backwards methodology

Amazon is not only the inventor of business models, see the scaled ecosystem platform with layered business models in retail and beyond.

They are also a powerhouse in innovating operating models (process, skills, data). I highly recommend to get familiar with the #Amazon methodology in line with this.

As brand-led strategists we have always been using the principles behind this methodology. What it adds is (1) the ability to make something abstract more relatable and tangible (2) allows to address concerns and unsolved issues with the help of FAQs.

There are software supported and template solutions available, see below:

PLAYBOOK 2: Vertical Integration for Interoperability, Speed and Scale

A recent newsletter was titled "The verticalization of everything".

This was focusing on platform ecosystems and aaS products. But it also could apply to tech platform ecosystems.

B2B Truck users need a seamlessly working solution. Hence, interoperability is key. Traditional OEMs have the challenge to work through their traditional multi-tiered supplier ecosystems.

Even with the best intentions from all involved this means that very practical items from compatibility, operating systems, firmware, interoperability will cause issues. Performance in a verticalized system can be optimised and cost are not loaded by too many players.

Consequently, I do see more verticalization strategies be winning while multi-partner ecosystems withjointly set standards will remain in play in parallel. The impact on current top-tier suppliers will be that they will also play in more fields and verticalize selectively as many will verticalize.

Tesla Verticalization Scope (extract):

1. Solar Power Generation

2. Battery Production

3. Electric Motor Manufacturing

4. Power Electronics

5. Vehicle Assembly

6. Software and Firmware

7. Supercharger Network

8. Sales and Distribution through Tesla stores

9. Humanoid robots

Verticalization is the key ingredient to time to scalability

Working with the ecosystem without committing big enough numbers leads to high cost items which increase for the customer the price and decrease the margin. So, both the customer and the company´s finance team are unhappy.

After typically 1,5 years the internal doubters come out and challenge this new project and sell funding the old tech instead which delivers the returns "guaranteed".

This vicious cycle can be repeated for a long time, until it it too late. See the profit warnings by #VW and #Mercedes these weeks.

Speed is adoption and scalability

Wright´s Law is the underpinning factor here. Without speed there will not be the favourable cost impacts. Consequently it is a race. Somebody out there will go down that path.

PLAYBOOK 3: Ruthless Product Simplification for Mass Production

The Tesla Semi truck cockpit is famously built around the driver with two screens, a standing area behind the seats etc.

The Pepsi operations tests and Tesla´s own use of the Semi confirmed "This is better than my Diesel" - user centric design and performance led to loving it.

Tesla’s ability to design vehicles with fewer parts and simpler production processes enables large-scale manufacturing efficiency. This focus on minimizing complexity allows Tesla to produce more vehicles with fewer errors, critical for scaling in both the automotive and energy sectors.

Part and process delete

Tesla is following the principle: "part and process delete" - this means a part and process that is not there, cannot be broken. Complexity in design is creating cost and time to market impact. More parts and process steps also make price points and time to market worse.

The collaborative approach with design, production and users hand in hand ensure that what the customer needs is in. Not more, not less.

Standardization and Modularity

Tesla’s standardized design approach, where parts are shared across vehicle models (e.g., batteries and drive units), provides economies of scale while maintaining flexibility. Modularity in parts allows Tesla to experiment with new features or components without disrupting the overall platform.

Requirements inflation

Incumbent organizations sometimes have separate brand-led business units. While this was great to create and support tiered brand images in the past, it is no longer favourable in a data-led and platform world.

The time it takes to align on requirements - premium brands inside a big conglomerate demanding more, while entry level brands requiring less, leads to long lead times, overloaded requirements, complexity in coding and therefore weak performance, delays and cost explosions. We have seen this in #VW. Even separate business units like #Cariad were victims of this trap.

Built for capacity early on

In Tesla´s approach the investments in manufacturing can be better calculated and are more predictable. It is no surprise that Tesla is aiming at 50.000 Semi units and not just small numbers like #Scania or #Mercedes.

Some of those incumbents have been burnt before with high BEV estimates. While adoption is slowing down in the current economic environment and bad charging experience many private customers had, the internal planning is super careful.

It is not a surprise that cost per unit are too high for mass-adoption subsequently of all of this. Thus pricing is not competitive, neither vs. the likes of Tesla nor Diesel.

Built for mass adoption

Tesla is aiming at price parity right out of the gate. This might be € 200-250K with lower operating cost.

PLAYBOOK 3: Platform Ecosystem and Data Feedback Loops

Fleet management and operations are data driven. Forward logistics are optimised to the last digit almost. It will be a simple calculation based on real life data and customer endorsement like the one from Pepsi.

At current prices a Diesel truck in the US is USD 75K. The cost of operation of a Semi is significantly lower.

Especially, with incentive programs there will be an even better calculation accelerating the adoption.

With strategic charging the reach is 1.000 miles =1.609,344 kilometres 1.600 km per day. This is enough for an operator. Especially given that charging can happen while trucks are loaded and unloaded.

Environmental Lever - EV trucks

Companies have made ESG commitments and mostly struggle to deliver against it vs. deadlines that come closer and closer.

While trucks only make 1% of the fleet, they almost create 1/5th of the impact. The pressure to lower cost, exhausts, noise of operations and increase CO2 performance and safety is high.

#Scania goes EV as well

While some OEMs go mixed choice, Scania will go EVs only. Rationale high cost and lower efficiency of H2. They tested busses and other H2 vehicles in real life before.

I am in that camp as well for this application, given operators need a well run ecosystem machine. Seamless charging networks will not be built on EVs and H2 in parallel. Most test stations of big oil are closed again.

FSD on Semi Trucks as encore

The original presentation was showing videos of "road trains" multiple Semis being "connected" and pulled by a driver mounted version. With the progress made so far on FAS 12.5 and the progress to be anticipated in the next 2-3 years will mean that labor cost as share of driving and handling trucks will go down as well.

Savings per year and truck could be some USD 10K on top.

Systematic serviceability tracking

Tesla dismantles and puts together Semis virtually and in real life to learn and improve the time to service. Time is money! Part distribution network leveraging the person car business. Driving down cost. From shift to shift.

Having traveled 3,8 M km in the Semi fleet so far, there is a lot of data available.

More utilisation ideas is on the roadmap.

Training and development in Service

Different fleets have different needs. For some fleets the service will be moved over to Pepsico. Tesla has developed a full program to now start handing over to in house servicing.

PLAYBOOK 4: Customer-Centric Ecosystem Integration

Customers buy the ecosystem not the vehicle!

Ecosystem Innovation beats Innovation alone!

Innovating in the lab situation, alone will not do it.

While Tesla is a B2B was well, they do not know the world of operators first hand. So, they decided to replace their own Diesel fleet already now shipping batteries from factory to factory - we are not talking around the corner.

Pepsi Ecosystem Innovation partner: Let the customer do the sell for you

Pepsi was committed to co-develop this opportunity in order to lower cost of operations, create environmental impact and at the same time provide employee satisfaction.

This is true pioneering work and requires top down endorsement and willingness to chip in own resources. The benefit is free PR and the perception of an innovation pioneer.

This testing program wich challenged both Pepsi and Tesla alike and also the relationship is the best way to sell to critics and doubters while making the ecosystem-launch proof.

3 depots were launched deploying 50 trucks with a lot of positive reactions so far with different profiles from long-haul to regional and local.

• Light: Frito Lay chips - 0,8k Wh/1km
• Heavy: Beverages - 1,0 kWh/1km

Driver feedback. Drivers with 30-40 years on Diesel. "I do not want to go back to Diesel!"

MW-Charging was key to success

Although it might be harder to set up- it is like a new warehouse operation. But it has been a success. Continuing the full operation was enabled, full duty cycles were done.

Working with the utilities is essential. Simplifying the process: easing the planning, approval, building, deployment will have to be a focus moving forward.

Peak shaving and megapacks are further key ingredients to manage cost down and secure MW supply.

We are doing a project in the space mapping demand of EV fleets with utility action required in the US at the moment. Another space to provide new platform solutions.

"Europe is different, we understand this - we are looking forward to developing the solutions and configurations in line with customer´s needs". Dan Priestly, Tesla

Passing on cost advantages for scale

After testing and expanding now with Pepsi, more customers including Europe will be invited following the ramp in US.

More partners will create more profit which Tesla intends to pass on to clients immediately. Other companies will try to recuperate investments and report high margins. Scale is more important than short-term profits!

Scaling vehicles, service and infrastructure

It is not enough to scale the vehicles. Tesla will provide multiple service solutions:

• on customer site
• on mobile
• third-party

In addition to that there will be multiple charging solutions provided in compatibility with other third-party networks:

• Depot charging (like Pepsi)
• Public supercharging

Provide the evidence for early adopters and beyond

a. Customer concern/rumor weight and range:

• "Too heavy"
• "Too short range"

Purpose built EV platform with multiple options at competitive weight and reach.

b. Customer concern/rumor charging is too slow and does not work comparably

• "Too slow"
• "Too often"

Safe and reliable MW charging is enabling 1:1 replacement of Diesel, if there is no "dedicated charging slots" in the daily operation. The solution is charging decentrally at depot levels, while loading and unloading or breaks/off duty slots while driving.

1.700 km in a single period getting vehicles back on the road fast is competitive.

c. Customer concern/rumor eTrucks are not reliable workhorses

• "Too risky"
• "Too vulnerable"
• "Too temperature - sensitive"

Accelerated life performance testing: Tesla has 1 Semi that was in operation for less than 1,5 years having driving 400.000 km in real world 15 Min ton km of work.

Tesla put the Semi to work in their own shipping from Nevada to California which is challenging. And they proofed that they can replace the Diesel fliegt completely even in context of a tight JIT operation.

Tests with respective high and low temperatures from +45°C to -20°C worked

The vertical integration, with data, interoperability and integration positively contributes to achieving amazing up time. This is important in the early days of a program. While "innovators" as customers are willing to compromise progress for reliability to a certain degree, a scalable solution for later cohorts of "early adopters" and "early majority" will not accept many compromises.

The 95% include unscheduled and scheduled maintenance. 24h in 70% of cases in current state of fleet getting trucks back to work!

Essence of the test program:

1. No compromise in payload
2. No compromise in schedule

d. Customer concern/rumor bad energy efficiency in comparison to Diesel

• "Too expensive to operate"

• Electrification is improving a step change actively approaching 100 kWH/100 km.
• Improvements are on the roadmap with high volume versions
• Lower battery mass with lower battery cost will further impact this

Net net leading with built to scale playbook driven by purpose

As usual super clear and well delivered. The best part - the big picture in mind. Helping the industry progress to frontier futures - inviting all to progress down the path!

Other players are in the competitive mindset, while Tesla has the ecosystem mindset. For the own solution but also the purpose-led impact:

Accelerate the transition to sustainable energy (PURPOSE)

"I applaud all the efforts to go and scale whether it is charging or vehicles to make your transportation zero emissions". "We want to help accelerate the transition to sustainable energy". "I call on other charging providers and OEMs to develop compelling solutions..." Dan Priestley, Tesla

I applaud Tesla for leading the way. I hear more negative than positive about this because of the person and personality of Elon Musk. I invite all to judge this neurally and learn for the impact of own businesses and not hide behind a simple "Elon-bad" play.