Running Head: Week 4 Assignment: Leadership Matters!

Case Study

Leadership Matters!

Louken Salvan Pluviose II

Keiser University

Introduction to Managerial/Organizational Behavior

Instructor: Dr. Tom Burgett

2 April 2025

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Running Head: Week 4 Assignment: Leadership Matters!

Introduction

Elon Musk is perhaps one of the most controversial and equally transformative business leaders,

known for his bold vision and unrelenting drive, as exemplified by his work at Tesla and

SpaceX, as well as his influence on other companies. He single-handedly changed the landscape

of electric vehicles, space travel, and renewable energy, which earned him the status of a

visionary. However, Musk’s leadership also accounts for controversies like Tesla’s self-

destructive micromanagement, emotional outbursts, and social media gaffes. Musk has yet to be

proven wrong regarding his unconventional approaches to business and growth, but, to the

contrary, they have led to high-profile executive exits and reputation damage. Amidst this chaos,

questions arose regarding the long-term effectiveness of his leadership. This assessment analyzes

his influence through the lens of organizational behavior. Specifically, the disconnect between

Tesla’s potential and operational hardships as seen through the 3-Step Problem Solving Approach

(Kinicki & Fugate, 2020). On the individual level, Musk's brilliance is overshadowed by

impulsive tweets that invite SEC fines, a refusal to delegate work, exasperated teams, and public

brawls with stakeholders. On a more macro level, Tesla suffers from insufficient governance and

an organizational structure where Musk’s rule suppresses opposing views and alternative

frameworks, as evidenced by the reckless attempt to fully automate Model 3 production.

In parallel, Musk must pair his boundless audacity with accountability while maintaining the

Tesla metric of incorporating innovation into all projects, balancing coherence with innovation

without stifling his boundless drive to push boundaries, all while being held accountable. Thus,

striking a balance between leading operational excellence and stakeholder esteem, alongside

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emotional resilience, demonstrates how true innovation can shine brightly in tandem with

stability.

Step 1: Defining the Problem

Tesla’s greatest concern is the significant gap between its self-set aspirational goals and the

current state of its operations. Tesla aspires to become a world-class leader in the electric vehicle

and green energy industries, characterized by exceptional efficiency and innovation.

Unfortunately, the current state is marked with leadership instability, chronic underperformance,

production bottlenecks, and public perception issues. The principal reason lies within Elon

Musk’s far-from-traditional management style, which has propelled Tesla to unprecedented

heights while exposing the company to considerable systemic risk.

A. Multilevel Problem Analysis

1. Single-Point Problem: Individual Level (Musk’s Leadership Style)

a) Micromanagement of Subordinates: Musk tends to micromanage,

exercising undue control over operational details at the expense of middle managers, leading to

decision-making bottlenecks. Musk’s policy of having the final say on vehicle part design

changes has considerably lengthened production timelines (Kinicki & Fugate, 2020).

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b) Emotional Volatility: Musk’s outwardly visible anger (e.g., social media

antics, unkind comments during earnings discussions) has promulgated a volatile environment

that increases workplace stress and attrition levels. Former executives note that his volatile

outbursts led to the sudden termination of engineers who challenged his decisions (Enderwick,

2018).

c) Decreased Ceding of Control. Even with the company's growth, Musk

still retains control of key decisions, thereby neutralizing the erosion of authority at the senior

staff level.

This has led to a very high turnover of C-suite positions, including several CFOs and engineering

VPs who reported feeling ignored (Sonnenfeld, 2019).

2. Group/Team-Level Dysfunctions

a) Autocratic Decision-Making: Musk’s top-down management** allows

little to no room for team member contributions, as employees are likely to be punished for

speaking out. Tesla’s engineers have reportedly refrained from presenting differing answers to

Musk’s vision due to fears that he would not entertain them (Davenport, 2018).

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b) Fear-Based Culture: The paucity of psychological safety has resulted in

teams becoming risk-averse, whereby employees focus on not getting things done instead of

pushing boundaries. In the Model 3’s “production hell,” engineers became reluctant to challenge

Musk’s automaton plan due to the undue delays until it was too late (Kinicki & Fugate, 2020).

c) Cross-Functional Silos: Disruption of departmental coherence as a

result of Musk’s direct involvement in numerous sectors like design, manufacturing and software

has caused a rift between the R&D, marketing and production teams.

3. Organizational-Level Consequences

a) Reputational Damage: Musk’s doubtful public comments, including the

unfounded “pedo guy” claim, coupled with smoking weed on Joe Rogan’s talk show, have, along

with other steps, led to a loss of trust, especially among consumers and investors.

b) Regulatory and Legal Risks: The SEC’s fraud charges levied against

Musk’s “funding secured” tweet, which culminated in a $40 million fine and his removal from

the board chair position, underscore governance lapses and erratic decision-making (SEC, 2018).

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c) Operational Inefficiencies: Musk’s production delays (Cybertruck and

Semi) as well as quality control issues (panel gaps in early Model 3s) highlight some of the

systemic challenges and failures of oversight in supply chain and manufacturing processes.

Those in the strategic management field would cite Musk’s unwavering, visionary commitment

alongside his *disjointed tactical execution as his most paramount concern posing the most

significant trouble for the company.

Musk’s transformative vision, coupled with his *lack of systematic approach to execution, came

at a cost for Tesla:

1. Sustained turnover in C-suite roles, as Musk’s reckless, high-octane approach to

management led to chronic understaffing at the VP level, with 36+ executives leaving since

2018.

2. Exceeding deadlines and going over budget due to nonsensical paradigms (e.g., FSD-

orbital delay).

3. Diminishing confidence among stakeholders, leading to significant fluctuations in

stock prices and volatile consumer sentiment.

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Step 2: Identifying the Problem

Following the Organizing Framework (Kinicki & Fugate, 2020), we evaluate the inputs,

processes, and outcomes that describe Tesla’s leadership difficulties.

A. Person Factors (Inputs)

1. Personality: Musk exhibits a high acceptance of new ideas, indicating visionary

thinking, but possesses low emotional stability due to impulsive reactions and public outbursts

(Davenport, 2018).

2. Transformational Leadership: He employs a transformational leadership

approach, inspiring his employees with bold visions (Buss, 2017). The absence of contingent

reward leadership (e.g., feedback, delegation) results in many unproductive activities.

3. Overconfidence Bias: Musk dismisses expert opinions due to an unwarranted

high estimation of his capabilities, as evident in the ill-fated Model 3’s automation strategy

(Kinicki & Fugate, 2020).

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B. Situation Factors (Inputs)

1. Industry Constraints: Competition within the EV market intensifies as

innovation accelerates, further amplifying Tesla’s propensity to take risks.

2. Weak Corporate Governance: The absence of a sound board to oversee Tesla

gave Musk free rein to indulge in his reckless behavior, including SEC infractions (Sonnenfeld,

2019).

3. Public Attention: Given the controversies surrounding Musk, his celebrity

status amplifies the consequences of his actions, as seen in instances such as the podcast where

he smoked marijuana and the defamation lawsuits.

C. Processes (Individual, Group, Organizational)

Decision Making: The Implementation of a Kanban system proposed by Toyota would have

likely garnered employee engagement; however, the lack of employee inclusivity results in a

relative disregard for ideas and a top-down decision-making approach.

1. Emotional Intelligence: His behavior, particularly his comments about a rescuer

being a “pedophile,” is damaging to Tesla’s reputation (Kinicki & Fugate, 2020).

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2. Crisis Management: Tesla lacks clear PR procedures, which allows Musk’s

tweets to create stock market fluctuations.

Step 3: Recommendations

To address Tesla's leadership challenges, the following solutions are proposed.

1. Improve Tesla’s Governance (Tesla & Musk)

a) Appoint an Independent Chairman: This blocks Musk’s absolute power by

ensuring he is overseen (Sonnenfeld, 2019).

b) Social Media Policies: A PR team should oversee Musk’s tweets to minimize

legal risks, such as SEC fines.

2. Address Musk’s Low Emotional Intelligence (EQ)

a) Executive Coaching: Assists Musk in self-regulation and understanding others’

emotions (Goleman, 1995).

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b) Restrict Operational Decision Making: Allow the COO to make production

decisions so that Musk can devote his attention to new ideas.

3. Improve Tesla’s Collaborations

a) Encourage Employee Feedback: Through anonymous surveys, employees can

report issues without fear of retribution or retaliation.

b) Cross-Functional Teams: Eliminate silos by inviting engineers, marketers, and

production personnel to participate in decision-making.

4. Advanced Crisis Management

a) PR Training For Executives: Provides uniform messaging during controversial

proceedings.

b) Withheld Information regarding Production Delays: Tell the public before they

have to postpone delivery to customers (ex. Model 3).

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Legal/Ethical Challenge: Employee Autonomy vs. Corporate Policy

The Claire’s incident highlights a serious ethical conflict that necessitates balancing an

employee’s autonomy with corporate policy and the well-being of a child. The case studies

examine how policy constraints at the corporate level can conflict with the moral agency of

frontline workers, particularly in terms of safeguarding a person’s autonomy. From the

perspective of organizational behavior, this situation illustrates policy and system misalignment

resulting from a lack of ethical training. Employees like Raylene Marks experienced the conflict

of following orders within a stratified bureaucracy that ignored consent frameworks. What ought

to have been included in Claire's policy manual about child assent was relevant governance

oversight. Store managers, buoyed by the absence of policies delineating the rights of lower-level

employees, would force employees to perform trivial tasks, such as ear piercing on agitated

children. Such procedures not only promise psychological injury to these minors but also carry

the risk of reputational and legal injury to the corporation, as witnessed in the public outcry after

Marks’s whistleblowing.

To resolve these problems, Claire needs to make organizational changes based on the ethical

principles of organizational behavior. First, aligning corporate policy to require explicit consent

from the child, independent of any parental influence, would enable the company to

contemporarily comply with child welfare norms and allow employees to serve as ethical

subadapters. Second, managers would potentially avoid coercive situations as a result of

balancing mandated business processes and duty of care by teaching supervisors about trauma-

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informed decision-making during basic manager training. Coercive power is often justified as a

legitimized performance carrot. Ultimately, the establishment of procedures to protect

whistleblowers on ethical grounds will empower employees to report ethical misconduct without

fear of retribution, thereby fostering a sense of psychological safety and promoting the

possibility of receiving constructive feedback that encourages accountability. All these changes

would reduce legal exposure and increase Claire's reputation as a socially considerate employer,

which, in the retail business where trust determines profitability, is crucial. Adopting these

policies, Claire's will be able to transform the piercing controversy into a discussion about

exemplary leadership in corporate policy reform.

Conclusion

Musk’s leadership is a perfect example of the benefits and problems associated with visionary

entrepreneurship. Musk's bold vision has disrupted multiple industries, but his personal

micromanagement, volatility, and anti-Tesla governance have consistently eroded the firm’s

stability. Heightened Tesla Control Measures and improving the emotional governance of Musk,

alongside fostering team frameworks, would help achieve balance and attain more sustained

innovation.

Additionally, organizations like Claire’s face dilemmas in enforcing their policies alongside

ethics and must ensure that employees have the flexibility to act in the best interest of relevant

stakeholders. Successful leadership, however, requires far more than having a vision. It demands

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empathetic emotional responsiveness, adaptability, and accountability, qualities that represent

long-term success.

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References:

Buss, D. (2017). Elon Musk: The driving force behind Tesla. Entrepreneur Press.

Davenport, C. (2018). The Space Barons: Elon Musk and the Quest to Colonize the Cosmos.

PublicAffairs.

Enderwick, B. (2018). Leadership Gone Rogue: The Dangers of Unchecked CEOs. Harvard

Business Review, 96(4), 54-61.

Goleman, D. (1995). Emotional Intelligence: Why It Matters More Than IQ. Bantam.

Kinicki, A., & Fugate, M. (2020). Organizational behavior: A practical, problem-solving

Approach (3rd ed.). McGraw-Hill.

Sonnenfeld, J. (2019, February 12). Why Tesla's Board Must Rein in Elon Musk. Yale Insights.

Retrieved April 2, 2025, from

https://insights.som.yale.edu/insights/why-teslas-board-must-rein-in-elon-musk

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Worktech Academy. (2025). The future of leadership in tech-driven industries Retrieved April 2,

2025, from https://www.worktechacademy.com

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