Forbes Names Tesla As The World’s Most Innovative Company

In the first year it was eligible for consideration, Tesla Motors “shot to the top” of Forbes’ list of the World’s Most Innovative Companies.

The carmaker that seemingly avoids most traditional carmaker behaviors wasn’t selected because the Model S is so technologically advanced – though that certainly helped. Forbes’ explanation for what distinguishes Tesla from other automotive companies extends beyond the company’s battery electric vehicle. Market disruption, CEO Elon Musk’s unique approaches to running a business and the company’s ability to quickly adapt are among the editors’ reasons.

It’s important to note that the 100 companies selected for the list weren’t picked because of their investment potential. Instead, the “innovation premium” of each candidate was analyzed.

“Most innovation rankings are popularity contests based on past performance or editorial whims,” said Jeff Dyer and Hal Gregersen with Forbes. “We set out to create something very different with the World’s Most Innovative Companies list, using the wisdom of the crowd. Our method relies on investors’ ability to identify firms they expect to be innovative now and in the future.”

“To be included, firms need seven years of public financial data and $10 billion in market cap,” added Dyer and Gregersen.

Here are a few of Tesla’s unique traits that led to its latest award.

“World’s Best Car”

Tesla’s previous awards didn’t sway Forbes, but editors were still impressed with the Model S in its own right. This battery electric sedan is worthy of being called the “world’s best car,” said editors.

“It offers a week’s worth of driving on a single charge from any one of a nationwide network of free solar-powered charging stations … and is also the safest car in its class. When it collides with the crash-test machine, the crash-test machine breaks. You can order it online and have it delivered to your door, get software updates beamed wirelessly and receive maintenance alerts before bad stuff happens,” noted Forbes.

Fast Communication

“We have a seamlessly integrated information system that gives us speed and agility like no other automaker,” said Jay Vijayan, the chief information officer for Tesla.

Vijayan led the team that built Tesla’s proprietary software from scratch in only four months. Included in this is a wireless connection to all Model S sedans currently on the road. This allows the company to quickly transmit software updates to the cars without customers bringing them to a service center.

Tesla’s communication strengths extend beyond the vehicles as well. When creating the Model S, Forbes noted, designer Franz von Holzhausen worked side-by-side with only three other designers. This is a quarter of the size of standard automotive design teams.

“Our communication allows us to move incredibly fast. That is an element that isn’t happening in the rest of the automotive world. They are siloed organizations that take a long time to communicate,” von Holzhausen said.

Continuous Innovation

Tesla is not afraid to admit its blunders, according to Forbes, and makes a constant effort to become stronger.

“We definitely don’t get it perfect on the first try, not even close,” said cofounder and chief technical officer J.B. Straubel. “But that’s how we learn.”

SEE ALSO: Tesla Opens New Showroom To Service And Sell Used Model S Sedans

Though the Model S has not received a major redesign since its 2012 launch, that doesn’t mean its underlying components are in a state of stagnation. Changes to setup and performance are issued throughout the year via the car’s wireless connection. Even interior modifications are made as needed.

“In 2013, after receiving feedback that the back seats in the Tesla S were uncomfortable, Tesla service workers changed every owner’s seats in a matter of weeks, midyear,” Forbes noted.

Effective Market Disruption

These elements (and plenty more) have led Tesla to become what Forbes refers to as a “high-end disruptor.”

“Unlike classic disruptive innovations such as steel mini-mills, personal computers and, in the car business, cheap Japanese imports, Tesla never pursued the classic route of going after low-end, price-sensitive customers first with cheaper, inferior technology,” said Forbes.

“Tesla has instead proved to be a different kind of disruptor, a high-end version that can be just as troublesome for the incumbents.

“High-end disruptors produce innovations that are leapfrog in nature, making them difficult to imitate rapidly. They outperform existing products on critical attributes on their debut; they sell for a premium price rather than a discount; and they target incumbents’ most profitable customers, going after the most discriminating and least price-sensitive buyers before spreading to the mainstream.”