NEWS FROM SILICON VALLEY

Tesla and SolarCity seek to create a complementary group of products and services

Elon Musk chairs the boards of Tesla Motors and SolarCity, and is the largest shareholder in each company. Photo: Ringo H.W. Chiu, Associated Press

The two businesses share a common goal – to gradually stop the world depending on fossil fuels / oil. The intention of the deal is to create a combined business whose products would generate and store renewable power and use it for transportation.

Tesla Motors is an automaker and energy storage company  whose mission is to accelerate the world’s transition to sustainable energy. SolarCity is a solar leasing and installation company. Both boards and chaired by Tesla Motors CEO Elon Musk.

This intended deal was presented in the media October 12, and this blog post build of an article in the San Francisco Chronicle that you can read by clicking here.

Both companies have scheduled shareholder votes on the intended deal on Nov. 17.

What I personally find very interesting about this the combination of products and services that make each of the two brands and their business models stronger. This is a way to apply service innovation research: apply the term of ‘complementary assets’, as suggested by Berkeley Professor David Teece.

What is complementary here is illustrated in this quote: “By leveraging SolarCity’s installation network and Tesla’s global footprint, we can do this is a way that is seamless for our customers and that we expect will create significant value for our shareholders,” Tesla argued in a post on the company’s official blog.

Complementary assets include any activity that gravitates around the core innovation such as distribution channels, reputation, marketing capabilities, strategic alliances, customer relationships, licensing agreements, among others.

You can read more about complementary assets here.

i conclude by challenging companies to think of how they can create of combine complementary assets. Just to make it clear; there is NO need to have challenges in the grand scale as illustrated in the Tesla-SolarCity example. The concept of complementary assets is important for any kind of products and service you want to bring to market. For example, if you are introducing a new cheeze to  a market you also need to have marketing and distribution – complementary assets – in place.

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