Elon Musk must feel like the world is watching him and his team at Tesla--not that he doesn't invite it. The tech titan just delivered on another bold bet (albeit a little late), when his production team passed the critical milestone of producing 5,000 Tesla Model 3's in one week. Musk had pegged this as the number the company needed to hit to move into profitability.

Cheers of joy were heard at 5 a.m. on July 1st when the 5,000th Model 3 sedan of the week rolled off one of Tesla's three production lines. Following the milestone, Musk sent this email to Tesla employees:

"We did it!! What an incredible job by an amazing team. Couldn't be more proud to work with you. It is an honor. The level of dedication and creativity was mind-blowing. We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible.

Intense in tents. Transporting entire production lines across the world in massive cargo planes. Whatever. It worked. Not only did we factory gate over 5000 Model 3's, but we also achieved the S & X production target for a combined 7000 vehicle week!

What's more, with the widespread productivity gains throughout Tesla and the new production lines spooling up, we are on track to reach 6K/week for Model 3 next month.

I think we just became a real car company...

Thank you for your hard work and dedication,

Elon"

The Tesla team certainly has a lot to be proud of, having achieved the milestone with great ingenuity and stamina. Musk has been sleeping under his desk at the Tesla factory to help boost production. A critical third production line was quickly built under a makeshift tent. While most other car companies prove out their production process well in advance, then lock it in, Tesla engineers were adjusting in real time, on the fly. They've been bringing new manufacturing employees in at the rate of 400 per week to try and keep up.

Musk put things in perspective earlier by telling analysts, "If we can send a Roadster to the asteroid belt, we can probably solve Model 3 production."

At the same time, I can't help but wonder, can the company sustain the needed production level (and accelerate it well beyond, like other car manufacturers have)? Will the quality of those Model 3's built in the past few months hold up? How do people that paid a lot of money, and waited for two years, feel about their Tesla being built hastily under a tent?

Maybe all that doesn't matter because we're rooting for Tesla. If Tesla succeeds, the innovative spirit succeeds--that kind of thing. 

Time will tell.

In the meantime, it got me thinking about the importance of setting stretch goals that are inspiring, that have a reasonable chance of being reached, but that can then be sustained over the long haul.

My experience in running multibillion dollar businesses teaches me when you set a stretching goal, people rise to the occasion. But if rising to the occasion means burning everyone out, having to make dumb choices to hit that goal (what we called "burning the furniture"), or having to face an inevitable dip right after finally achieving the goal, the goal is probably too aggressive.

For example, in one business I ran we set an aggressive goal of gaining four market share points from a key competitor. We achieved that goal. Then we learned the hard lesson that that competitor couldn't afford to let us win that much share, that their expensive manufacturing machines would be running far too idle, and that they would spiral the category into a price war to win some of that share back, which they did.

So don't be afraid to set big goals like Musk has done, goals that make teams uncomfortable and force everyone to work together and do things differently to achieve those goals. Along with that, however, have a well-thought-through, data-based reason to believe you can sustain those stretching results.

So, I ask again, will the Tesla team reach sustainability? And again I say, time will tell.

What do you think? Has Tesla "burned the furniture" to achieve its production goal, or do you believe they'll adapt and overcome, on a sustainable basis?

Published on: Jul 5, 2018