Valuation entrepreneurship through product-design and blame-avoidance strategies: How Tesla managed to change the public perception of sustainable innovations
Maximilian Palmié, Lucas Miehé, Johanna Mair, Joakim Wincent
kHUB post date: July 15, 2024
Originally published: April 10, 2024 (PDMA JPIM • Vol. 41, Issue 3 • May 2024)
Read time: 60 minutes
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Developing innovative, eco-friendlier products that gain traction in the mass market remains a persistent challenge for many firms. To bring consumers to choose “greener” alternatives over conventional products, firms need to overcome prevailing product evaluations that favor traditional solutions. Research on valuation entrepreneurship examines the strategies that actors apply to induce changes in established evaluations. Adding to the emerging literature on valuation entrepreneurship, our study analyzes how the car maker Tesla, Inc. used product design—material artifacts' properties of form and function—to advance the public perception of battery electric vehicles (BEVs). When Tesla entered the market, several firms had tried to promote BEVs as a way of making private mobility more environmentally friendly, but with limited success. In contrast, Tesla produced well-received BEVs that generated enormous consumer interest and led to a more favorable assessment of BEVs as a whole. Drawing on 54 interviews and nearly 2000 pages of archival data, our abductive study identifies three product design strategies that increased the appeal of Tesla's initial models: (1) incorporating discontinuous technological solutions; (2) optimizing the products on traditional evaluation criteria (e.g., driving performance, comfort, space, status); and (3) creating an ecosystem of complementary products. Since some design choices came at the expense of a minimal environmental footprint, they risked attracting blame for compromising on the environmental performance of potentially eco-friendly cars and for committing “greenwashing.” To minimize this risk, Tesla complemented its design strategies by employing three strategies of reputational politics to avoid such blame. After Tesla's initial, lavish models had improved the public perception of electric cars, Tesla and other car makers were able to sell less excessive and more sustainable BEVs in much greater quantities than ever before. Our findings contribute to three literature streams and generate valuable insights for management practice.
Practitioner Points
- Many sustainable innovations struggle to achieve widespread adoption.
- Tesla, Inc. managed to create a hype around electric vehicles that had, for decades, failed to scale.
- Our study identifies product-design strategies that allowed Tesla to improve the attractiveness of electric cars to the public. Tesla had to engage in reputational politics to avoid criticism and blame for some of its product-design decisions.
- Using abductive reasoning, our study develops a model of how companies can induce more favorable consumer perceptions of sustainable innovation so that consumers are more likely to switch to “green” new products.