Tesla Needs to Build a Culture of Safety: Gautam Mukunda

Bloomberg

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00:00Can you bring us the examples, Gautam, where you think Elon Musk has been playing fast and loose

00:05with safety? Caroline, my critique is about the culture that he's establishing at Tesla, right?

00:11So what we know about safety cultures in every company that has ever decided to make safety its

00:17number one priority is they de-emphasize hierarchy and they make it safe to dissent. But safety,

00:23physical safety for your customers and for your employees comes from psychological safety,

00:27from your employees being willing to say, hey, we're making a mistake. We need to stop this.

00:32And if there's anything that you can see about the way Musk runs everything, not just Tesla,

00:37it's he's incredibly intolerant of dissent, of people beneath him saying, hey, I don't think

00:42this is right. We've seen a multitude of lawsuits against Tesla from employees saying that they've

00:47been retaliated against for raising safety concerns. When you have that kind of a culture,

00:52being a safe company becomes almost impossible. And you sort of take echoes from the past with

00:59Boeing, for example, and the issues that company has faced in a similar time of going for growth over

01:05potentially safety calls and a clearer chain of command. That's right. Boeing used to be the safest

01:11of all airline companies because they had this culture, one that was dominated by engineers,

01:16where when people thought there was a safety concern, everything else would go by the wayside until it was

01:21fixed and where you had complete freedom as an employee at Boeing to go to anyone at Boeing and

01:26say, no, like we have a problem. And this is this is a really, really important. When Boeing abandoned

01:32that culture in order to pursue short term shareholder returns, we found out that they got the shirt.

01:37There were short term returns for a little while, although not recently, of course, but much worse

01:41than that. The safety reputation of Boeing that had been cultivated for almost a century was thrown away

01:47because their their airplanes started crashing, which they had never done in the same way.

01:52And there's not mutually exclusive outcomes here. Just because you're putting safety first doesn't

01:57mean you need to hold back innovation. And you highlight, well, a couple of key executives in

02:00the past, particularly in the mining field, that really went for security and actually benefited them.

02:05So, yes. So the most famous example of this in the United States is Paul O'Neill at Alcoa,

02:10who said we are going to make this the safest company in the world.

02:13And when he first announced this, when he became CEO, one of his investors went and sort of said

02:19they've they've appointed a hippie to run the company and he's going to destroy it.

02:23And in fact, the while he was CEO, the value of the company went up by a factor of nine,

02:27because what O'Neill realized is there is no such thing as a well run, unsafe factory.

02:33Similarly, Cynthia Carroll at Anglo American, when she transformed safety in Anglo American,

02:36said there is no such thing as a well run, unsafe mine.

02:40So, no, these are absolutely not intentions. Psychological safety helps you on safety issues

02:46at the company as a whole. They also help you on innovation. It is the single determined factor

02:51more important than any other in determining the success of a team is how psychologically safe

02:56the people on it feel. When you take it away, you take away everything.

02:59It's interesting, Gautam, though, you reference a lot about the push into the robo taxi space in

03:03particular, that this is the moment that Elon Musk needs to be focused on safety above all else.

03:07But actually, he's been outrun by local competition, Waymo already on the streets performing.

03:14You've got China in particular showing growth when it comes to robo taxis and autonomous vehicles.

03:19So he's not really sort of running ahead of himself in terms of pushing for innovation ahead

03:25of safety. Or do you feel that there has been moments where that's occurred?

03:29So, I mean, there certainly have been moments. So before robo taxis, Teslas are incredibly safe

03:36cars if you are in a crash. But the ideally safe car is one that never gets in a crash in the first

03:42place. And Teslas do not do nearly as well. In fact, autopilot, for example, does not seem to make

03:48you safer when you're driving the car. It may actually make you a little less safe because it

03:52decreases driver attention. So we were already starting to see concerns about that with Tesla.

03:56But going forward, I mean, Tesla is not the leader in automated driving. Waymo is. We all know this.

04:03They are vastly ahead technologically. But Tesla's promises of what they're saying they will offer,

04:09if they want to offer anything like that successfully, they have to be at least as safe as Waymo and they

04:14probably need to be better. And that will be very, very difficult to do if they don't have a culture

04:19where people, every single person at Tesla feels safe to say, Elon Musk, we are not a safe company.

04:24Do you have the confidence that the culture will allow for that? Because thus far, the corporate

04:31governance is saying we are sticking by Elon and Elon only. We're not even assessing whether anyone

04:36could ever indeed replace him if needed. I don't at all. I would never underestimate Elon Musk to work,

04:43you know, miracles or what seem like miracles. But there is a track record of CEOs who have transformed

04:50the culture of their companies in ways like this. O'Neill is one example. Alan Mulally would be

04:54another. And the thing you'd say about them is they really don't operate anything like Elon Musk.

05:00They emphasize that the team is more important than themselves. They emphasize that hierarchy is the

05:04death of success in an organization. This is not the way Musk has operated anywhere he has been,

05:10certainly in the last 10 years. You could have, you know, you could make a real question about

05:14whether early Elon operated like that. But the one we see today just does not.

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