Session 02 1.5 hours Analysis

Framework for Strategic Analysis

Purpose, the Value Gap & the Analysis Before the Choice

Strategy does not start with analysis. The firms Kaplan and Norton studied start with what they are for and how far they mean to go, and only then ask what stands in the way. This session builds that front end — purpose and values, a goal precise enough to measure, the gap it opens — and argues it on Tesla.

Session 1 asked what strategy is and tested Tesla against Porter, Mintzberg and Collis & Rukstad. It left a question those tools cannot answer alone: why would anyone choose the hardest entry in the car industry and keep going through losses in all but two quarters from its 2010 listing to mid-2018? The answer sits upstream of the strategy, in a purpose and in a goal big enough to force the strategy.

Start with question 1 Readings & preparation

The three questions

  1. 01What is the firm for?
  2. 02How large is the value gap, and how will it be closed?
  3. 03What does a disciplined analysis add before the choice?

Each question belongs to one reading. Collins & Porras answer the first. Kaplan & Norton answer the second with the value gap and the third with their analysis step. The Tesla case is where all three get argued out loud.

Session 2 · Learning outcomes

By the end of this session, you should be able to…

  1. Distinguish core values, core purpose, a vision-level BHAG and vivid description, explaining what should endure and what can change. Use the vision diagram.
  2. Classify organisational statements using the two readings' definitions, rather than treating every aspiration as a strategy. Practise the distinctions.
  3. Translate a quantified vision into a same-date value gap, identifying the baseline, metric and assumptions needed to close it. Work through the value gap.
  4. Connect external and internal analysis to a strategic choice, stating what evidence would challenge that choice. Build the analysis.
  5. Defend a recommendation for Tesla using dated case evidence, separating an enduring purpose from new goals and the leader's preferences. Argue the case.
Begin the sessionUse the supplied resources

Recall → connect → carry forward · Session 1

The strategy story so far: Session 1

In our last session, we used Michael Porter’s concepts to distinguish doing similar activities better from choosing a coherent way to compete. Operational effectiveness is necessary, but better speed, quality or cost alone does not establish a sustainable strategic position. We also practised objective, scope and advantage, and examined how intended plans meet emerging patterns of action. The three business stories below help us retrieve those ideas before asking what gives a firm direction.

Three lessons from famous strategic reversals

Use Nokia to examine strategic positioning, Kodak to examine trade-offs, and Yahoo to examine fit. These are evidence-led teaching lenses: the events do not establish a single cause of decline. Pause at each question, then open it to compare your reasoning.

2011–2014; continuing network business

Nokia: handset efficiency and the software ecosystem

Documented context: In January 2011, Nokia's CEO publicly described competition shifting from devices to ecosystems. Its 2011 report records competing-platform pressure and a Windows Phone transition. Nokia sold substantially all Devices & Services to Microsoft on 25 April 2014. Nokia continued with its network and other retained businesses.

Strategy lesson: reducing handset cost and defects improves operational effectiveness. Choosing software platforms, developer relationships and connected services changes the activity system. Manufacturing strengths alone cannot settle ecosystem competition.

Which decisions improve the existing handset operation, and which require a different system of activities?

Separate production improvements from platform and partner choices, then explain their fit. This does not imply Nokia lacked software or that manufacturing alone caused its smartphone decline.

Nokia annual report · 2011, pp. 3–4, 13, 17 · Nokia's sale announcement · 25 April 2014

1975–2013

Kodak: an invention still needs a viable activity system

Documented context: Kodak developed a digital-camera prototype in 1975, sold EasyShare digital cameras and announced a digitally oriented strategy in 2003. Kodak and its U.S. subsidiaries filed for Chapter 11 on 19 January 2012 and emerged on 3 September 2013. Kodak did not ignore digital technology.

Strategy lesson: compare the film system's recurring consumable sales with a digital offer's activities and revenue logic. Reallocating resources can conflict with the established system even when the technology is understood.

What would Kodak have had to stop, change or fund differently to make a chosen digital position coherent?

Name a specific offer and the capabilities, channels and revenue mechanism it needs. The film–digital tension is a teaching lens, not a complete explanation of the bankruptcy.

Kodak corporate milestones · 1975, 2003, 2013 · Kodak Chapter 11 release · 19 January 2012

2006–2017

Yahoo: a broad portfolio needs reinforcing activities

Documented context: Yahoo's 2006 report describes search, marketplaces, media, communications and connected-life offerings, plus a customer-focused reorganisation. In February 2016 it announced portfolio simplification. Yahoo sold its operating business to Verizon on 13 June 2017; services continued, while the remaining listed entity became Altaba.

Strategy lesson: breadth is useful only if activities reinforce a chosen proposition. Ask whether products share customers, technology and advertising advantages, or compete for resources without a clear fit.

Which Yahoo activities could reinforce one another, and which would you stop funding without a demonstrated link?

Draw the proposed links and test them. The filings document scope and attempted refocusing; they do not prove that every activity was fragmented or that poor fit alone caused the sale.

Yahoo annual report · 2006, business and reorganisation · Yahoo annual report · 2015, February 2016 plan · Verizon completion release · 13 June 2017

Return to the framework: Operational effectiveness and strategy · Fit across activities · Deliberate and emergent strategy cases from Session 1

One continuing classroom story. Nila Foods is a fictional Indian meal-service for working adults. Follow its choices from Session 1; later expansion ideas are proposals to test.

  1. Session 1 · What is strategy?

    Operational effectiveness improves similar activities; strategy requires positioning, trade-offs and fit. State objective, scope and advantage, then compare intended plans with emergent action using evidence.

    Nila Foods: Nila proposes preordered weekday meals on clustered routes, declines instant citywide delivery and studies actual customer behaviour.

Why this leads to Session 2

Nila’s preorders, focused menu and clustered routes suggest a position, trade-offs and fit. Session 2 asks the next questions: what enduring purpose and values should guide those choices, what future is worth pursuing, and what measurable gap separates the ambition from the projected baseline? A purpose or BHAG gives direction; analysis and strategic choices still have to explain how the gap can be closed.

Retrieve it before moving on

Nila cuts cooking time, offers every possible dish, and announces “become India’s largest meal company”. Which Session 1 tests are still missing, and what must Session 2 add?

Compare your reasoning with a model answer

Faster cooking is an operational improvement. Offering every dish does not identify a customer, a defensible scope, a trade-off or reinforcing activities; “largest” does not explain an advantage. State objective, scope and advantage and test actual customer behaviour. Then distinguish enduring purpose and values from the envisioned future, and define a metric, same-date target, baseline and gap before proposing how to close it.

Question 01 · Collins & Porras (1996)

What is the firm for?

Articulating a vision: two complementary parts

Use the diagram to separate what endures from what the organisation aims to achieve. A vision combines both; a slogan or a numerical target alone does not fill all four components.

Core ideology and envisioned future form a vision Two complementary curved regions. Core ideology contains core values and core purpose. Envisioned future contains a 10-to-30-year vision-level BHAG and a vivid description. The regions are not budget shares or sequential stages. Core ideology Core values Core purpose Envisioned future 10–30-year BHAG Vivid description
Original diagram of the Collins & Porras (1996) framework. The curved halves express complementarity, not a 50/50 allocation. BHAG means Big, Hairy, Audacious Goal.

Core ideology · discover and preserve

Values: enduring principles. Purpose: the reason for being, beyond today's product or profit target.

Envisioned future · create and pursue

Vision-level BHAG: an audacious goal with a finish line, typically 10–30 years in Collins and Porras. Vivid description: a concrete picture of achieving it.

Keep the two readings distinct: Kaplan and Norton's quantified vision uses a 3–10-year horizon and a value gap at the same target date. Do not treat every target as the same kind of BHAG.

Explore the four components in the Collins & Porras tab
An enduring star and a mountain with a finish flag

Purpose is a star; a BHAG has a summit

The star keeps guiding as products change. A summit can be reached, after which a new mountain is needed.

Test the distinction

“Improve everyday mobility” suggests an enduring purpose. “Reach a specified scale by 2040” is a time-bound goal. What changes after the target is reached—and what should still guide the firm?

A technology product linked to a global ambition

Global illustration · Sony in the reading

In Collins and Porras's historical 1950s illustration, being a pioneer supplies an enduring value; worldwide recognition for quality gives the future a concrete direction.

Connect the four components

Separate the innovation principle from the aspiration to change perceptions of Japanese products. Use the existing Sony comparison under Vision in practice to identify purpose, BHAG and vivid description. These are historical reading examples, not Sony's current official statements.

A family and an affordable-car ambition

Indian illustration · Tata Nano

The affordable-family-car ambition helps distinguish a product goal from an enduring purpose. A ₹1 lakh launch-price commitment alone does not establish a complete vision-level BHAG.

Look for the missing evidence

What would establish Tata's core values, enduring purpose, long-horizon goal and vivid description? Do not invent those statements from one price. Compare the verified launch and market history in Session 1's Tata Nano timeline.

A fictional commuter route passes a safety checkpoint toward 20402040

Hypothetical illustration · Nila Mobility

Keep honest safety disclosure as a proposed value; pursue the candidate 2040 scale goal; describe reliable, affordable journeys.

Make the value costly

Would Nila delay launch rather than hide a failed safety test? How do its purpose and goal guide that decision? Try the complete fictional scenario in the written study companion. A numeric target is not automatically audacious.

Collins and Porras studied companies that stayed great across generations and found one pattern underneath: core values and a core purpose that stay fixed while business strategies and practices keep adapting (Collins & Porras, 1996, p. 65). Their name for the discipline is preserving the core while stimulating progress, and a vision is the tool that says which is which.

A well-conceived vision has two parts (p. 66). Core ideology says what the organisation stands for and why it exists; it is discovered by looking inside, and it should outlast products, markets and leaders. The envisioned future says what the organisation aims to become; it is created, it is meant to be reached, and then it is replaced (pp. 71, 75).

“Core ideology provides the glue that holds an organization together as it grows, decentralizes, diversifies, expands globally, and develops workplace diversity.”
Collins & Porras (1996, p. 66)

Session 1’s Collis and Rukstad put mission, values and vision above strategy and said none of them is a strategy. This session gives those upper levels their own tools.

Core ideology · preserve it

What we stand for and why we exist. The yin of the scheme.

  • • Core values: a few enduring tenets, usually three to five, that need no external justification (p. 67)
  • • Core purpose: the reason for being; never fulfilled, like a guiding star on the horizon (p. 69)
  • • Discovered by looking inside, never set by looking at the market (p. 71)
  • • Its job is to guide and inspire, not to differentiate (p. 71)
Envisioned future · stimulate progress

What we aspire to become, achieve or create. The yang.

  • • A vision-level BHAG: a Big, Hairy, Audacious Goal of 10 to 30 years with a clear finish line (p. 73)
  • • A vivid description: the goal translated from words into pictures (p. 74)
  • • Created, not discovered; there is no right answer to analyse your way to (p. 75)
  • • Once reached it must be replaced, or the We’ve Arrived Syndrome sets in (p. 76)

Tesla’s version · the plan Musk published in 2006

One sentence of purpose, four lines of future

The case opens with Musk’s 2006 purpose for the company: to help speed the move “from a mine-and-burn hydrocarbon economy towards a solar electric economy” (Serafeim & Migdal, 2024, p. 1). The same blog post set out the sequence below (p. 5).

Read with Collins and Porras, the sentence is a core purpose: it can never be finished, and it has already led Tesla beyond cars. The four steps are an envisioned future with a finish line, an affordable car, much as Ford’s “democratize the automobile” was a qualitative target BHAG (Collins & Porras, 1996, p. 72). The case never lists Tesla’s values; the evidence points to reasoning from first principles (“two false premises”, p. 4) and to intensity (the “Ultra Hardcore” email, p. 7).

The wording has moved. Rothaermel (2023, p. 50) records Tesla’s vision changing from accelerating the transition to sustainable transport to sustainable energy after SolarCity, and the 2017 change of name from Tesla Motors to Tesla, Inc. Hold that for the vision-drift workshop.

STEP 1

Build a sports car

Roadster, released 2008 at $109,000; 500 sold that year (p. 6).

STEP 2

Use that money to build an affordable car

Model S, launched 2012; Consumer Reports’ best car tested in 2013 (p. 8).

STEP 3

Use that money to build an even more affordable car

Model 3 at $35,000, unveiled 2016 with more than 232,000 pre-orders in its first week (p. 9).

STEP 4

Also provide zero-emission power generation

Solar and storage: SolarCity bought for $2.6 billion in 2016 (p. 10).

Why publishing it was itself strategic

Collins and Porras’s mechanism: a clearly stated ideology attracts people whose values fit it and repels those whose values do not (1996, p. 71) — engineers, early buyers, investors willing to wait. Having said what came next, Tesla also could not quietly drop it. Mintzberg would add that the plan fixed a direction without fixing the route.

The question to hold open

Step 4 arrived in November 2016 as the SolarCity purchase, with Musk the largest shareholder of both firms and his cousins running SolarCity (p. 10), while Tesla prepared Model 3 production. Was that the purpose being honoured, or capital and attention leaving the one thing that had to work? The cash figures are in the exhibit workshop.

Discovering purpose · the five whys

Climb from the product to the purpose

Collins and Porras: start from “We make X” and ask “Why is that important?” until the answer stops describing a product and starts describing a reason for being (1996, p. 70). Type your own answer to the first why; the rest of the chain then appears.

  1. What we do We build electric cars.

Three confusions Collins and Porras warn against

1. Purpose versus BHAG

“Think of the core purpose as the star on the horizon to be chased forever; the BHAG is the mountain to be climbed.”

Collins & Porras (1996, p. 74)

2. Values you wish you had

Aspirations belong in the envisioned future or the strategy. Listing a value the organisation does not actually hold breeds cynicism among the people who know better (p. 71).

3. Ideology versus competence

Sony’s miniaturisation is a core competence that might leave its strategy; its purpose would not (p. 73). Competences change over the decades, ideology does not. The rule that follows: if it is not core, it is up for change (p. 73).

Sort it: which part of the vision?

Nine statements from the reading, the case and one fictional venture. Place each one before you read the reason. Two of them are not part of a vision at all.

0 / 9 correct

The two readings

One question each

Both readings are required. Kaplan and Norton give the process: purpose first, then a goal precise enough to open a value gap, then the analysis that names what stands in the way. Collins and Porras take the first step apart: what a vision is made of and how to tell its parts from each other. Each tab rebuilds that author’s central diagram so you can work it rather than read it.

The strategy development process, step by step

Kaplan and Norton’s Figure 1 (Kaplan et al., 2008, p. 2) is a four-step sequence that, in their experience, most successful companies with a planning process follow. Each step answers one question. Select a step to see its objective, the work it involves, where this course takes it, and what it looked like at Tesla.

Redrawn for this session from Kaplan et al. (2008), Figure 1, p. 2. Wording paraphrased. The byline adds Edward A. Barrows Jr.; the page calls the authors Kaplan and Norton for short.

Why the order matters

You cannot judge whether an industry is hostile until you know what you are trying to achieve in it. Steps 1 to 3 set the stage; only the fourth formulates the strategy (Figure 1, p. 2).

Between steps 1 and 2: the enhanced vision

Nemours’s vision, “Freedom from Disabling Conditions”, gave little guidance for strategy. Its enhanced vision named four goals that became four strategic themes: Impact & Community, Service & Quality, Efficiency & Environment, People & Learning (p. 3).

What the steps produce

Step 2 produces a number with a date: the value gap. Step 3 produces a short list of key issues the strategy must address (pp. 4–5). Questions 2 and 3 below work each one.

Read with a pencil. Circle the target, underline the date, and write beside it what the existing strategy would deliver by that date. The value gap is measured against that same-date baseline, not against today’s results (p. 4): if the current strategy already brings growth, count it before crediting a new initiative. Which assumption in your baseline deserves the most scrutiny?

From the reading · Collins & Porras (1996)

What the framework looks like in real companies

The examples Collins and Porras use, grouped by box. Read them for the pattern rather than the slogan: values that would survive a penalty, purposes that outlive the product, goals with a summit.

One correction. The earlier deck filed General Electric’s “number one or number two in every market we serve” under target or common-enemy BHAGs. Collins and Porras list it as an internal-transformation BHAG (1996, p. 72).

Walt Disney

  • • Imagination and wholesomeness
  • • No cynicism
  • • Fanatical attention to consistency and detail

Nordstrom

  • • Service to the customer above all else
  • • Hard work and individual productivity
  • • Never being satisfied

Merck

  • • Corporate social responsibility
  • • Science-based innovation
  • • Unequivocal excellence in all aspects of the company

Sony

  • • Being a pioneer, not following others
  • • Encouraging individual ability and creativity
  • • Elevation of the Japanese culture and national status

What is missing is the point

Sony does not hold customer service as a core value, Disney not respect for the individual, Wal-Mart not quality, Hewlett-Packard not market focus, Nordstrom not teamwork (p. 67). They may practise all of these; none is their essence. There is no universally right set of values.

Why so few

None of the visionary companies in Collins and Porras’s research had more than five core values; most had three or four. Listing more than five or six usually means practices and strategies have crept onto the list (p. 67).

Selected from Collins & Porras (1996), insert “Core Values Are a Company’s Essential Tenets” (p. 68).

Working vocabulary

Five words, one job each

Purpose, values, vision, mission and BHAG are used loosely in boardrooms and inconsistently in the literature. The useful test is not what a sentence is called but which job it does. The glossary below is the earlier deck’s, kept and sourced; the table under it shows where the readings disagree.

The one-line test. Ask what the sentence lets someone decide: who we are (values), why we exist (purpose), where we are going (vision and BHAG), how we will get there (mission, in the textbook’s sense, and strategy).

The foundation · yin

Core values · who we are
The few beliefs that guide behaviour and decisions at every level, held even when they cost something (Collins & Porras, 1996, p. 67).
Core purpose · why we exist
The reason for existing beyond making money; pursued forever, never completed (pp. 68–69).

The future · yang

Vision · where we are going
What the organisation wants to become. Kaplan and Norton add the discipline: to guide strategy it must name a measure, a niche and a date (Kaplan et al., 2008, p. 3).
Mission · how we will get there
In the textbook’s sense, what the organisation does, for which markets, and how it will achieve the vision, often written with “by” (Rothaermel, 2023, p. 51).

The goal · how much, by when

BHAG · what we will achieve
A clear, compelling 10-to-30-year goal with a finish line; it can be quantitative or qualitative (Collins & Porras, 1996, pp. 72–73). The bridge between today’s work and the vision.
Value gap · how far it is
The distance between the stretch target and what the existing strategy would deliver; it becomes the goal for the new strategy (Kaplan et al., 2008, p. 4).
WordCollins & Porras (1996)Kaplan, Norton & Barrows (2008)Rothaermel (2023), the course text
VisionThe whole scheme: core ideology plus envisioned future (p. 66)Three-to-ten-year goals, external and market-facing; measurable if it is to guide strategy (pp. 2–3)What the organisation wants to accomplish ultimately; it begins with “to” (pp. 43, 51)
MissionUsed for bold goals: visionary companies use “bold missions”, which the authors call BHAGs (p. 73)The organisation’s fundamental purpose: “What business are we in and why?” (pp. 1–2)What the organisation actually does and how it will reach its vision (p. 51)
ValuesA few enduring tenets held for their own sake (p. 67)They prescribe desired behaviour, character and culture (p. 2)Ethical standards and norms that govern behaviour in the firm (p. 51)
PurposeA separate box: the reason for being, never fulfilled (p. 69)Carried by the mission (p. 2)Carried by a “purpose-driven vision” (p. 44)

Session 1 followed Collis and Rukstad, whose hierarchy uses mission for why we exist. On this page, mission means purpose unless the textbook’s sense is named.

How they connect

1 · Preserve

Values and purpose

2 · Aspire

Vision and BHAG

3 · Quantify

The value gap

4 · Decompose

Strategic themes

5 · Choose

Strategy: objective, scope, advantage

  • Purpose and values fuel the vision. They are the base the envisioned future is built on, and the test it must pass.
  • The BHAG makes the vision actionable. A goal with a summit is the anchor the strategy is built to reach.
  • The value gap makes it accountable. Quantify the BHAG and the gap becomes the goal the new strategy has to close (Kaplan et al., 2008, p. 4).

Apply the glossary · Disney + 15 companies

From the foundation to the future

Values, purpose, vision, mission and a BHAG should help people make connected decisions. Start with Disney, then open company profiles and challenge the alignment. These selected examples are a classroom comparison, not a market-capitalisation ranking.

Read the labels before you compare

The five-word map uses this course’s glossary. Organisations use these terms differently: an official mission may contain both a purpose and an aspiration. Published means supported by a company source; teaching interpretation means our analytical paraphrase; classroom proposal means an invented goal to critique, not a company commitment. A metric and date alone do not establish a vision-level BHAG.

For Collins and Porras, vision combines core ideology with an envisioned future, including a 10–30-year BHAG and a vivid description. Keep that framework distinct from a simple “where/how” shorthand. Revisit the two-part vision diagram.

One company, five connected questions

Disney: from a belief to a guest’s experience

Imagine a family entering a park. The attraction is a product; the experience depends on choices about stories, people, service and investment. Use the five lenses to explain those choices. The mappings below are a classroom interpretation, with historical and current evidence identified.

Disney: a foundation, a future and a finish lineAn original storybook building diagram. Values and purpose form the foundation. Vision and mission describe the future and work. A flag marks a goal to be tested for scope, ambition and horizon. The five glossary lenses are explained in the adjacent HTML; this is not a reproduction of Disney's official architecture.Goal / BHAG?VisionMissionCore valuesCore purposeWhere?What + how?Who are we?Why exist?
Original classroom illustration. The foundation/future metaphor follows this glossary. Collins and Porras use vision for the whole combination of core ideology and envisioned future; their framework remains in the diagram above.
🧱 Core values · Who are we?
Imagination, family-friendly care and a consistent experience are useful historical teaching themes. Disney’s published Five Keys—Safety, Courtesy, Inclusion, Show and Efficiency—illustrate how operating guidelines can turn beliefs into behaviour. A guideline is evidence to examine, rather than proof that a value is always lived.
🧭 Core purpose · Why do we exist?
Jim Collins’s 1995 account describes Disney’s business as “to make people happy”. We read that passage as a historical purpose illustration; it is not presented here as a verified verbatim remark by Walt Disney.
🔭 Vision · Where do we want to go?
Teaching interpretation: be an admired creator of distinctive entertainment experiences. Disney’s current mission also expresses a leadership aspiration; this is a lens for reading it, rather than a separate official vision quotation.
🛠️ Mission · What do we do, and how?
Official mission, paraphrased: use storytelling, creative people, brands and technology to entertain, inform and inspire audiences worldwide. A mission identifies the work and beneficiaries; strategy still needs choices, trade-offs and activity fit.
🎯 Goal / BHAG candidate · What finish line?
Disneyland’s opening made an ambition tangible: invited guests attended on 17 July 1955; the public opening followed on 18 July. This is an achieved project milestone. Its opening date alone does not establish the original 10–30-year horizon and company-wide ambition required to classify a vision-level BHAG.

Connect the five: care and imagination shape behaviour; happiness explains the purpose; an entertainment aspiration points forward; storytelling names the work; and a completed park supplies a finish line. Evaluate the fit between them rather than collecting five slogans.

Does Disneyland’s opening automatically prove a vision-level BHAG?

No. An ambitious project can illustrate a goal without establishing the full Collins–Porras classification. Identify when the commitment began, its scope and transformational ambition, the original horizon and the finish line. A vivid description would explain what achieving the future feels like. Use the earlier vision diagram to keep those requirements together.

Jim Collins · historical Disney purpose (1995) · Disney · current official mission · Disney · Inclusion added to the Five Keys (2021 CSR report, p. 19) · D23 · 17 July preview · D23 · 18 July public opening

Open a company. Compare the jobs of its statements.

Expand two profiles at a time. The four statement fields identify their source status; the fifth is a published target or a clearly labelled proposal. Judge company-wide scope and ambition as well as metric, date and original horizon. Source review: .

Ten global company snapshots

NVIDIAClassroom proposal · debate BHAG fit
Core values · Who are we?
Innovate, seek truth, adapt quickly, pursue excellence, and act as one team.Published core values, paraphrased
Core purpose · Why do we exist?
Expand human capability by tackling difficult computing problems.Teaching interpretation
Vision · Where do we want to go?
Accelerated computing and AI advance discovery and industry.Teaching interpretation
Mission · What do we do, and how?
Co-design chips, systems, networking, software and libraries for demanding workloads.Teaching interpretation of published business strategy
Goal / BHAG candidate · What finish line, by when?
By 2036, cut electricity per completed task by 90% against a 2026 baseline on a fixed AI-and-science benchmark suite.Classroom BHAG proposal: fictional, not a company pledge · 2026–2036: ten-year classroom proposal

Test the claim: This proposed target needs fixed workloads, quality thresholds and independent measurement; efficiency is not total electricity consumption.

NVIDIA Sustainability Report, Fiscal Year 2026: company strategy and core values

ApplePublished target · debate BHAG fit
Core values · Who are we?
Accessibility, education, environment, inclusion, privacy, equity and responsible supply chains.Published values, paraphrased
Core purpose · Why do we exist?
Use technology and business to empower people and serve the public good.Teaching interpretation
Vision · Where do we want to go?
Powerful tools expand opportunity while respecting people and the planet.Teaching interpretation
Mission · What do we do, and how?
Build useful products and tools while applying Apple's values to how they are made.Teaching interpretation
Goal / BHAG candidate · What finish line, by when?
Reach carbon neutrality across Apple's entire footprint by 2030, reducing emissions 75% from 2015 before balancing the remainder.Published commitment: Apple 2030 · Announced July 2020 for 2030: originally ten years; about four calendar years remain in 2026

Test the claim: A company-wide climate commitment, not an officially labeled firmwide BHAG. Carbon neutrality includes carbon removals; it does not mean zero gross emissions.

Apple: Our Values · Apple announces its 2030 carbon-neutrality commitment · Apple Environment: current Apple 2030 scope and reduction target

Google (Alphabet subsidiary)Published target · debate BHAG fit
Core values · Who are we?
Protect users, expand access and opportunity, and innovate responsibly.Selected published commitments, paraphrased
Core purpose · Why do we exist?
Help people benefit from information and technology.Teaching interpretation
Vision · Where do we want to go?
Useful knowledge and digital opportunity are available to everyone.Teaching interpretation
Mission · What do we do, and how?
Arrange global information so people everywhere can find and use it.Officially labeled mission, paraphrased
Goal / BHAG candidate · What finish line, by when?
Match electricity demand with carbon-free energy in every hour on every operating grid by 2030.Published sustainability ambition; originally announced in 2020 · 2020–2030: originally ten years; about four calendar years remain in 2026

Test the claim: Google scope, not the whole Alphabet portfolio. This is not an official firmwide BHAG. Annual renewable matching does not establish hourly matching.

About Google: official mission and commitments · Google announces its 2030 carbon-free-energy ambition · Google Public Policy: Energy and Sustainability

MicrosoftPublished target · debate BHAG fit
Core values · Who are we?
Respect, integrity and accountability.Published corporate values
Core purpose · Why do we exist?
Expand people's and organizations' ability to accomplish meaningful work.Teaching interpretation
Vision · Where do we want to go?
Technology creates opportunity and a future that benefits everyone.Teaching interpretation
Mission · What do we do, and how?
Enable every individual and organization worldwide to accomplish more.Officially labeled mission, paraphrased
Goal / BHAG candidate · What finish line, by when?
Become carbon negative by 2030: reduce operations and value-chain emissions and remove more carbon than the company emits.Published climate commitment · 2020–2030: originally ten years; about four calendar years remain in 2026

Test the claim: A measured climate commitment, not an officially labeled firmwide BHAG. The separate historical-emissions-removal commitment has a 2050 deadline; Copilot marketing is not the climate target.

Microsoft: official mission and corporate values · Microsoft: current sustainability commitments · Microsoft announces carbon-negative 2030 and historical-removal 2050 commitments

AmazonPublished target · debate BHAG fit
Core values · Who are we?
Start with customers, take ownership, invent, learn, and act responsibly at scale.Selected published leadership principles, paraphrased
Core purpose · Why do we exist?
Improve everyday life through inventions that serve customers.Teaching interpretation
Vision · Where do we want to go?
Customers gain convenient, trustworthy experiences as the business grows responsibly.Teaching interpretation
Mission · What do we do, and how?
Lead in customer focus, employment quality and workplace safety.Officially labeled mission on Leadership Principles page, paraphrased
Goal / BHAG candidate · What finish line, by when?
Reach net-zero carbon across Amazon's global operations by 2040 under The Climate Pledge.Published commitment, co-founded in 2019 · 2019–2040: originally 21 years; about fourteen calendar years remain in 2026

Test the claim: A climate commitment, not an official firmwide BHAG label. Amazon eliminated the separate Shipment Zero target in 2023; do not present its 50%-by-2030 target as active.

Amazon Leadership Principles: principles and stated mission · Amazon Sustainability: 2019 Climate Pledge and 2040 target · Amazon: Update Regarding Shipment Zero

SpaceXClassroom proposal · debate BHAG fit
Core values · Who are we?
engineering ambition, continuous improvement, safety and reliability; these are inferred priorities, not a verified official core-values list.Teaching interpretation
Core purpose · Why do we exist?
extend humanity's future beyond Earth while improving access to space and connectivity on Earth.Teaching interpretation
Vision · Where do we want to go?
humanity explores and lives beyond Earth, supported by reusable space transport.Teaching interpretation
Mission · What do we do, and how?
build technology for multiplanetary life, understanding the universe and extending consciousness to the stars.Official mission, paraphrased from the 2026 factsheet
Goal / BHAG candidate · What finish line, by when?
Classroom BHAG proposal: establish a continuously inhabited Mars base with at least 100 residents by 2045.Classroom BHAG proposal — unofficial · 2045; 19 years from the 2026 review

Test the claim: The proposed population and deadline are teaching inventions, not SpaceX commitments. A million-person Mars city must not be presented as a verified company goal with a fixed completion date.

SpaceX official IPO factsheet — mission · SpaceX updates — reusability, safety and reliability

TSMCPublished target · debate BHAG fit
Core values · Who are we?
Integrity, Commitment, Innovation and Customer Trust.Official core values
Core purpose · Why do we exist?
enable customers' semiconductor ideas through trusted manufacturing, treating customers as partners rather than competing against them.Teaching interpretation
Vision · Where do we want to go?
lead in advanced foundry technology and scale, strengthening customers through partnership.Official vision, paraphrased
Mission · What do we do, and how?
provide dependable technology and manufacturing capacity to the global logic-chip industry over the long term.Official mission, paraphrased
Goal / BHAG candidate · What finish line, by when?
Published long-term goal: reach net-zero emissions by 2050.Published company goal; selected as a BHAG-style example, not a company-designated BHAG · 2050; announced 2021, reaffirmed 2025; 24 years from the 2026 review

Test the claim: This is an environmental commitment, not a claim of future foundry market dominance. TSMC's non-compete policy concerns its customers; 'never design any branded products' is an overbroad substitute.

TSMC Values and Business Philosophy · TSMC Vision and Mission · TSMC commits to carbon-reduction path aligned with SBTi

MetaClassroom proposal · debate BHAG fit
Core values · Who are we?
Move Fast; Focus on Long-Term Impact; Be Direct and Respect Your Colleagues.Selected published values (2021 Sustainability Report, published 2022)
Core purpose · Why do we exist?
help people connect with people, interests and experiences that matter to them.Teaching interpretation
Vision · Where do we want to go?
richer human connection across distance, using AI and immersive mixed-reality experiences.Teaching interpretation
Mission · What do we do, and how?
create the future of human connection and the technology that enables it.Official mission, paraphrased
Goal / BHAG candidate · What finish line, by when?
Classroom BHAG proposal: reach one billion monthly users of accessible mixed-reality social experiences by 2040.Classroom BHAG proposal — unofficial · 2040; 14 years from the 2026 review

Test the claim: The metric and deadline are a teaching proposal. Meta's AI and AR ambitions alone do not establish a measurable, dated company-wide BHAG. The selected values are documented in the report published in 2022.

Meta company information — current mission and technology direction · Meta 2021 Sustainability Report — values updated in 2022

BroadcomClassroom proposal · debate BHAG fit
Core values · Who are we?
integrity, sustained research investment and engineering execution; integrity is an explicit governance commitment.Teaching interpretation
Core purpose · Why do we exist?
make the digital infrastructure behind organizations and everyday services work effectively.Teaching interpretation
Vision · Where do we want to go?
customers can scale computing and connectivity through increasingly capable infrastructure.Teaching interpretation
Mission · What do we do, and how?
design and supply semiconductor and infrastructure-software technology for organizations' complex needs.Teaching interpretation of its company description
Goal / BHAG candidate · What finish line, by when?
Classroom BHAG proposal: reduce energy per bit by 90% across flagship AI-networking platforms by 2040, against a defined 2026 product baseline.Classroom BHAG proposal — unofficial · 2040; 14 years from the 2026 review

Test the claim: The baseline, metric and deadline are invented for classroom practice. Broadcom does not publish a verified 'dominate global infrastructure' BHAG in these sources; do not imply monopoly ambitions.

Broadcom company overview · Broadcom corporate governance — ethics and integrity

TeslaClassroom proposal · debate BHAG fit
Core values · Who are we?
sustainability, innovation, affordability and access; Master Plan IV publishes related guiding principles, not this exact core-values list.Teaching interpretation
Core purpose · Why do we exist?
improve daily life by making energy, mobility and useful technology more accessible.Teaching interpretation
Vision · Where do we want to go?
broad prosperity supported by clean energy, electric transport, autonomy and robotics.Teaching interpretation
Mission · What do we do, and how?
“Our mission is building a world of amazing abundance.”Current official mission, quoted from the 2025 Form 10-K
Goal / BHAG candidate · What finish line, by when?
Classroom BHAG proposal: deploy 10 TWh of cumulative stationary battery-storage capacity worldwide by 2040.Classroom BHAG proposal — unofficial · 2040; 14 years from the 2026 review

Test the claim: The storage target is a teaching invention. September 2025's Master Plan IV used 'sustainable abundance'; the 2025 Form 10-K, filed in 2026, uses 'amazing abundance'. The older sustainable-energy mission must be labeled historical.

Tesla 2025 Form 10-K, filed 2026 — current mission · Tesla Master Plan Part IV — direction and guiding principles

Five Indian company snapshots

Reliance IndustriesPublished target · debate BHAG fit
Core values · Who are we?
Customer Value, Integrity, One Team, Ownership Mindset, Respect and Excellence.Official values
Core purpose · Why do we exist?
Improve lives and expand India's opportunities through enterprise at scale.Teaching interpretation
Vision · Where do we want to go?
A diversified Indian enterprise creating enduring value through consumer services and an energy transition.Teaching interpretation
Mission · What do we do, and how?
Build and operate integrated businesses, combining investment, technology and execution to serve customers.Teaching interpretation
Goal / BHAG candidate · What finish line, by when?
Reach Net Carbon Zero in operations by 2035, supported by operational decarbonisation and the New Energy ecosystem.Published corporate target; its classification as a BHAG is a teaching interpretation. · 2020–2035: a 15-year horizon when announced.

Test the claim: The target remains active; 2020 is its historical announcement date. Keep operational emissions scope explicit. Giga-factories are implementation programmes, not automatically separate company-wide BHAGs.

Reliance: About us and six values · Reliance Integrated Annual Report 2022–23: Net Carbon Zero timeline, pp.152–153 · Reliance Annual Report 2025–26: Net Carbon Zero strategy

Bharti AirtelClassroom proposal · debate BHAG fit
Core values · Who are we?
Alive, Inclusive and Respectful; customer attention, openness and dignity guide behaviour.Official values
Core purpose · Why do we exist?
Help people and enterprises participate in a connected digital economy.Teaching interpretation
Vision · Where do we want to go?
Enrich customers' lives and earn lasting relationships through exceptional experiences.Official vision, paraphrased
Mission · What do we do, and how?
Deliver reliable connectivity and digital services through network investment, platforms and attentive customer service.Teaching interpretation
Goal / BHAG candidate · What finish line, by when?
Classroom proposal: By 2040, give every inhabited Indian village access to affordable high-speed connectivity meeting a published, independently verified service standard.Classroom BHAG proposal; not an announced Airtel commitment. · 2026–2040: 14 years.

Test the claim: Define affordability and performance before measurement. No all-India 6G deadline is asserted.

Bharti Airtel Integrated Report 2024–25: Ethical Compass, p.5, and strategic pillars · Airtel: Our core values

HDFC BankClassroom proposal · debate BHAG fit
Core values · Who are we?
Operational Excellence, Customer Focus, Product Leadership, People and Sustainability.Official values
Core purpose · Why do we exist?
Help households and businesses manage money and pursue economic opportunities responsibly.Teaching interpretation
Vision · Where do we want to go?
A trusted Indian banking institution offering service comparable with global standards.Teaching interpretation
Mission · What do we do, and how?
Become a world-class Indian bank, preferred by target customers, with profitable growth within its risk appetite.Official mission, paraphrased
Goal / BHAG candidate · What finish line, by when?
Classroom proposal: By 2040, make 95% of routine retail-banking journeys completable within five minutes, with accessible assisted service for customers who need it.Classroom BHAG proposal; not an announced HDFC Bank commitment. · 2026–2040: 14 years.

Test the claim: Specify eligible journeys and a baseline; the proposed metric does not imply bypassing verification or risk controls.

HDFC Bank: Who we are, mission and values · HDFC Bank: About us and explanations of the five values

ICICI BankClassroom proposal · debate BHAG fit
Core values · Who are we?
Fair customer outcomes, teamwork, conscience in compliance, disciplined risk-taking and capital preservation.Official principles, paraphrased
Core purpose · Why do we exist?
Enable customers' financial progress while sustaining trust in an essential service.Teaching interpretation
Vision · Where do we want to go?
Become customers' trusted first choice and generate lasting stakeholder value.Official vision, paraphrased
Mission · What do we do, and how?
Increase core operating profit through useful services, coordinated capabilities and carefully bounded risk.Official mission, paraphrased
Goal / BHAG candidate · What finish line, by when?
Classroom proposal: By 2040, complete 95% of eligible retail and small-business service requests in one interaction, while meeting published risk and accessibility standards.Classroom BHAG proposal; not an announced ICICI Bank commitment. · 2026–2040: 14 years.

Test the claim: Define eligible requests and baseline. Do not substitute another ICICI group company's five-value list for the bank's principles.

ICICI Bank Annual Report 2024–25: business model, strategy and Our Values, pp.12–17 and 34 · ICICI Bank Careers: culture, trust and One Bank, One Team

Tata Consultancy Services (TCS)Classroom proposal · debate BHAG fit
Core values · Who are we?
Integrity, Responsibility, Excellence, Pioneering and Unity.Tata values applied at TCS
Core purpose · Why do we exist?
Create better futures for customers and society through technology and collective expertise.Teaching interpretation
Vision · Where do we want to go?
A trusted global technology partner helping enterprises remain adaptable as technologies change.Teaching interpretation
Mission · What do we do, and how?
Combine skilled people, engineering, consulting and innovation to solve customers' business problems.Teaching interpretation
Goal / BHAG candidate · What finish line, by when?
Classroom proposal: By 2040, enable every employee whose role is materially changed by automation to enter a verified new role through reskilling and redeployment.Classroom BHAG proposal; not an announced TCS commitment. · 2026–2040: 14 years.

Test the claim: Measure successful role transitions, not course completions. Workforce development enables company strategy; it does not alone define the whole-company vision.

Tata Group: current values and purpose · TCS: Who we are, customer value and talent development · TCS named Global Top Employer 2024: Tata values and employee development

Two useful corrections: Amazon retired Shipment Zero as a separate goal in 2023; its profile uses the 2040 Climate Pledge. The Tesla profile uses current 2026 public wording, while the assigned historical Tesla case keeps its case-period mission. Functional efficiency, service and workforce targets remain BHAG candidates to debate, even when they have a long horizon.

Apple × TSMC: two scopes that can fit

TSMC’s stated policy is to avoid competing with its customers. Apple integrates product design and the user experience, while using manufacturing partners. Those are different choices about activities and boundaries.

Does an integrated experience require owning every factory?

No. Separate customer-facing integration from ownership of production. Ask which design, software, supply and service activities reinforce Apple’s offer, and which technology, capacity and trust activities reinforce TSMC’s. The non-compete promise concerns TSMC’s customers; it does not mean the firm can never design any branded item. Their placement in this gallery has no ranking implication.

Apple 2025 Form 10-K · external manufacturing, Item 1A and Note 12

Reliance × TCS: capital and capability

Compare Reliance’s published 2035 carbon target with the explicitly proposed TCS workforce goal in its profile. The second is a classroom candidate, so compare the strategic mechanisms and evidence rather than treating them as equivalent corporate promises.

What changes when the bottleneck is capital versus human capability?

For Reliance, examine long-lived assets, energy technology, financing, construction and emissions measurement. For TCS, examine skilled time, role redesign, client demand, deployment and demonstrated work quality. Both require capital and people; identify the binding constraint. Course completions alone do not establish capability or business transformation. Debate whether the proposed TCS goal has the scope and ambition of a firm-wide BHAG.

Your turn: make the hierarchy earn its place

Hypothetical Indian business: Nila Foods wants reliable weekday meals for working adults. Keep food-safety commitments and the meal-burden purpose distinct from a future ambition. Propose a mission describing its work, then draft a 2040 goal with a baseline, boundary and finish line.

What would a defensible first draft contain?

For example, make independently verified dependable weekday meal access possible across 100 named office clusters by 2040, against a stated 2026 baseline. This is a fictional classroom proposal. Explain why it would transform the business, how affordability, nutrition and reliability are measured, and what trade-offs it demands. A big count and a date alone are insufficient. Then use Kaplan and Norton’s same-date target and projected baseline to work out the value gap.

Four decisions: classify, then defend

Choose an answer and inspect the explanation. Formal assessment follows the course outline and instructor guidance.

    0 / 4 correct

    Return to the five-word glossaryContinue to the value gap

    Question 02 · Kaplan, Norton & Barrows (2008)

    How large is the value gap, and how will it be closed?

    Kaplan and Norton treat strategy as a quest for value with a measured destination. Step 1 reaffirms the mission, values and vision. Step 2 turns the vision into a stretch target and measures it against “what could be achieved by maintaining the status quo with the existing strategy” (Kaplan et al., 2008, p. 4). The difference is the value gap, and closing it is the new strategy’s job.

    This is where Question 1 turns into a number. Kaplan and Norton cite Collins and Porras on BHAGs (p. 4): a leader’s stretch target is what stops an organisation settling for incremental improvement. The BHAG supplies the ambition; the value gap says how far it is, and the strategic themes say who will carry which part of the distance.

    “The value gap represents the difference between aspiration and reality; it becomes the goal for the new strategy to fulfill.”
    Kaplan et al. (2008, p. 4)

    Mission · stable

    Why the organisation exists

    A brief, usually one-sentence statement of fundamental purpose: what the organisation provides and the goal its people have come together to pursue. Google’s: “To organize the world’s information and make it universally accessible and useful” (p. 2).

    Values · stable

    How it will behave

    Values prescribe the behaviour, character and culture the company wants. Whole Foods calls its core values “the soul of our company” and says they must hold however large it grows (p. 2).

    Vision · three to ten years

    Where it intends to be

    A concise, external, market-facing statement of mid- to long-term goals. To guide strategy it must be measurable as well as inspiring. “To be our customers’ preferred provider” is laudable and gives no guidance (p. 3).

    Activity · score the statement

    Does it pass the three-part test?

    A quantified vision has three components: a success indicator you can measure, a niche that says where the organisation will compete, and a time line. CIGNA Property & Casualty’s nine words, “To be a top-quartile specialist within five years,” contain all three (p. 3). Mark what each statement below contains, then check.

    Worked example · CIGNA Property & Casualty

    Closing a 37-point value gap

    An insurer’s combined ratio is what it pays out in claims and expenses for every 100 it collects in premiums, so lower is better. When CIGNA set its vision, a top-quartile insurer ran at 103. CIGNA ran at 140. The new strategy had to close 37 points within five years (p. 4).

    The executive team split the gap across four strategic themes and estimated how much each could close, and how fast, before any detailed strategy existed (p. 4). Switch the themes on and off to see which part of the gap each one carries.

    “At this point, these were informed estimates; they were not yet based on a detailed strategy.” Kaplan et al. (2008, p. 4)

    Show the decomposition as a table
    ThemeInitiative Y2Y3Y4Y5Total

    Points of combined ratio closed in each year; nothing was planned for year 1. Source: Kaplan et al. (2008), Figure 2, p. 4.

    Now Tesla · the earlier deck’s value-gap workshop, rebuilt

    A gap of about 400,000 cars a year

    The target. Tesla planned to sell 500,000 cars a year by 2020 (Sull & Reavis, 2019, p. 12). In 2016 Musk set the half-million mark for 2018 instead (Serafeim & Migdal, 2024, p. 12).

    The status quo. Model S and X deliveries in 2017, the last year before Model 3 volume, came to 101,200 (Sull & Reavis, 2019, exhibit workbook). The existing strategy delivers about 100,000 cars a year.

    The gap. About 400,000 cars a year. Split it as CIGNA did, across the earlier deck’s three themes. The shares are your estimates, not Tesla’s.

    The baseline should be what the existing strategy would deliver by the target date, not today’s result. Holding Model S and X at about 100,000 a year is an assumption, and the record bears it out: 99,347 in 2018 (Sull & Reavis workbook).

    Your decomposition of the gap

    Your turn · a fictional venture

    Build a value-gap bridge

    A fictional mobility venture, annual contribution in ₹ crore. Every figure is an illustrative classroom assumption, not a Tesla number. Set the year-3 ambition and the same-date baseline, then estimate what three initiatives contribute. Treat them as additive for a first pass; in discussion, look for overlap and cost.

    Enter the figures, then calculate.

    The board’s own value gap · 2018

    A pay plan cut into rungs

    In January 2018, with Tesla worth about $52 billion, the board endorsed a grant for Musk that vested in 12 tranches: the first at a market value of $100 billion, each of the rest at another $50 billion, up to $650 billion. Sixteen operational milestones ran alongside, taking revenue from $20 billion to $175 billion and adjusted EBITDA from $1.5 billion to $14 billion (Serafeim & Migdal, 2024, p. 10). One observer read the plan as “signaling a credible commitment to Tesla’s purpose” (p. 10). Read it with Kaplan and Norton: a value gap stated in market value, decomposed into rungs a board could check.

    Why the gap comes before the five forces

    A hostile industry is hostile relative to a goal. Only once the gap is sized can the analysis ask what stands in the way of closing it, and which theme it threatens. That is Question 3.

    Question 03 · Kaplan, Norton & Barrows (2008), step 3

    What does a disciplined analysis add before the choice?

    With the gap sized, step 3 asks what stands in the way of closing it. Kaplan and Norton’s analysis has two halves and a summary (Kaplan et al., 2008, p. 5). The external half scans the macro environment (PESTEL), the industry (Porter’s five forces), the firm’s financial ratios against its competitors, and the competitors themselves on a two-by-two map. The internal half uses Porter’s value chain to find the activities the firm will perform “differently or better” than rivals (p. 5). A SWOT then compresses it all into a short list of key issues the strategy must address (p. 5).

    What the discipline adds is direction. Analysis without a goal describes an industry. Analysis after a goal looks for the constraints on closing this gap by this date, and those are what the strategy in step 4 has to answer.

    One constraint, found by analysis

    In 2012 Tesla’s chief technical officer realised that the plan to sell 500,000 cars a year by 2020 would need the world’s entire 2012 output of lithium-ion batteries (Sull & Reavis, 2019, p. 12). That one line of analysis became the Gigafactory.

    External · macro and industry

    PESTEL and the five forces

    Quick read below; the full treatment is Session 3.

    External · competitors

    Ratios and a competitor map

    The map is below; the ratios are computed in the exhibit workshop.

    Internal

    The value chain: different or better?

    The sorter below; resources and the value chain in depth come in Session 5.

    Summary

    SWOT into key issues

    The list Tesla’s analysis would have produced closes this question.

    Quick read · Porter’s five forces at Tesla’s entry

    The industry a rational planner would have avoided

    Run the read as it stood before Tesla shipped a car. Select each force for the evidence from the cases and the verdict a Porterian analyst would have written. This is one input to step 3, not the whole of it; Session 3 builds the tool properly.

    The conclusion the framework produces

    Four of five forces are hostile and the fifth is no help. The Porterian recommendation in 2003 was do not enter. Tesla entered anyway, and on 29 June 2018 its market value, $58.2 billion, stood above General Motors’ $55.5 billion (Sull & Reavis, 2019, exhibit workbook; the case text has it still above GM in August 2018, p. 11). Either the analysis was wrong, or it was right and something outside it decided the outcome: the purpose and the gap from Questions 1 and 2.

    Competitor assessment · built from the exhibit workbook

    Eleven carmakers on one map

    Kaplan and Norton suggest plotting every competitor on a two-by-two whose axes are key competitive dimensions, with each firm drawn as a circle sized by sales, share or profitability (Kaplan et al., 2008, p. 5). Choose a screen. Circle area is 2017 revenue; hover or focus a circle to identify it.

    Show the map as a table
    FirmRevenue $m R&D % revOperating marginGross marginRevenue CAGR, 5 yr

    FY2017, computed in the browser from the Competitors tab of the Sull & Reavis (2019) workbook.

    Better, attempted and failed · operational effectiveness

    Excessive automation

    To save time Tesla skipped the “beta” production stage automakers use to debug a new line, automated 95% of the Model 3 line, and saw an estimated 40% of parts at Fremont need rework (Sull & Reavis, 2019, p. 13). Musk’s verdict: “excessive automation at Tesla was a mistake. To be precise, my mistake.” (p. 2).

    Different, by choice · strategic position

    Owning the battery

    The Gigafactory was not an efficiency move. The volume goal needed the world’s entire 2012 output of lithium-ion cells (p. 12). Making the scarcest, costliest component in-house answers supplier power directly: a different activity, not the same one done better.

    Sort these yourself: different, or better?

    Kaplan and Norton’s internal analysis asks which activities a firm will perform differently from rivals and which better (Kaplan et al., 2008, p. 5) — Session 1’s strategy against operational effectiveness. Two of these are arguable either way.

    0 / 6 classified

      The output of step 3

      Five key issues the analysis would have handed Tesla’s board

      1. 1. Battery supply

        The volume goal needed the world’s whole 2012 cell output, and three firms shared over 60% of battery sales (Sull & Reavis, pp. 7, 12).

      2. 2. Making cars at rate

        A new car could cost up to $6 billion and six years to develop, and none of the founding team came from the car industry (pp. 3, 10).

      3. 3. Reaching buyers

        Dealers earned 45–60% of their profit from service and parts, and franchise laws limited direct sales in several states (pp. 5–6, 14).

      4. 4. Charging

        The U.S. had 16,000 public charging stations against 112,000 gas stations, and who should pay for more was disputed (p. 7).

      5. 5. Cash

        Losses in all but two quarters from listing to mid-2018 (p. 11); the runway is computed in the exhibit workshop.

      Step 4 is the strategy that answers them. Read Tesla’s moves against the list: the Gigafactory, a factory designed “like a product” (p. 13), company-owned stores, the Supercharger network, and money from a public listing and a government loan (Serafeim & Migdal, 2024, pp. 6–7). Which issue did the strategy answer worst?

      The case · Elon Musk at Tesla (2024)

      Arguing all three questions on one company

      Bring the case having formed a view, not a summary. The prompts below map onto the three questions; the case supplies the evidence and you supply the argument. The case ends in January 2024 with Musk saying he is uncomfortable growing Tesla into a leader in AI and robotics without about 25% of the votes (Serafeim & Migdal, 2024, p. 15). Every question on this page eventually leads there.

      Note on the case. “Elon Musk at Tesla” (Serafeim & Migdal, 2024) is a Harvard Business School case and is not reproduced here — obtain it through the course pack. The companion case by Sull and Reavis (2019) carries a Creative Commons licence; its exhibit workbook supplies the figures below. The prompts and analysis are original to this session.

      From Session 1 · Porter (1996)

      Strategy is not operational effectiveness

      Doing the same activities better gets copied; doing different ones, and refusing what they preclude, does not. Sort Tesla’s troubles into failures of execution and choices of position.

      From Session 1 · fit

      Advantage lives in the system

      Ask what a legacy carmaker would have to give up to match Tesla, not what it would have to add.

      From Session 1 · Mintzberg (1987)

      Strategy also emerges

      The 2006 plan was deliberate. Much of what Tesla became was not in it. Today’s question is what held the pattern together.

      The trap this case sets

      It is easy to explain Tesla backwards: it succeeded, so the strategy was brilliant. Hold yourself to the harder standard. Say what you would have concluded from the 2018 data alone, and what evidence would have changed your mind.

      Against Q1

      Apply Collins and Porras’s tests to Tesla’s purpose. Is the 2006 sentence (p. 1) a purpose or a goal? Run the serial-killer test: what would be lost if Tesla stopped? Then set the 2022 remark that the mission “does somewhat broaden” with the Optimus robot (p. 15) beside it. Whose purpose is it, Tesla’s or Musk’s?

      Against Q2

      Write Tesla’s vision with all three of Kaplan and Norton’s components and size the gap as the board saw it in 2016: 500,000 a year against about 100,000. Which theme carried most of it? Tesla delivered 245,506 cars in 2018 and 499,647 in 2020 (Exhibit 11a). Against which deadline did it close the gap?

      Against Q3

      Run step 3 as a planner in 2012. Which key issue would you have ranked first, and did Tesla’s strategy answer it or override it? Name one finding of the five-forces read that the purpose made irrelevant, and one it could not.

      The number that frames the case

      A carmaker that barely made cars

      Commit to an estimate before you reveal. On 29 June 2018 Tesla’s market value was higher than General Motors’. How many vehicles did Tesla build in 2016 for every 100 that GM built?

      per 100

      Purpose and its bill

      The same trait, twice

      Each episode below comes from one disposition. Select one to see the case for reading it as an asset, what it cost, and where it lands.

      Trait, with case evidenceWhat it boughtWhat it cost
      Intensity — the “Ultra Hardcore” email of 2012 (p. 7)A workforce that pushed the Model S and then the Model 3 ramp throughDepartures: the engineering vice-president and two senior automation engineers left in 2018 (Sull & Reavis, p. 11); a short seller tied the exits to the working environment (p. 12)
      Ambitious targets — half a million cars for 2018, set in 2016 (p. 12)A stretch target that rallied people and capitalOverpromising: 2018 ended at less than half the target (p. 12); the Model S sold about 3,000 in 2012 against 5,000 (p. 8)
      Maniacal focus and a domineering style, visible from Zip2 on (p. 2)Execution against an industry built to resist entrantsTwo boards had already removed him as chief executive, at Zip2 and at X.com (p. 2)
      Risk-taking — his remaining money put into Tesla in 2009 (p. 6)Survival through the crisis yearsVolatility: the “funding secured” tweet led to a fraud charge and $20 million penalties each for Musk and Tesla (p. 11)

      The uncomfortable finding. You cannot keep the upside and remove the downside by hiring better. The willingness to stake the company is the same willingness that produces the tweet and the deadline nobody can hit. Governance is not a cure for it; it is a decision about how much of it to buy, and at what price.

      The decision the case ends on

      Would you grant about 25% of the votes?

      Musk held about 13% of Tesla’s shares and votes when he asked (Serafeim & Migdal, 2024, p. 15). Take a position, then pick the claims you would actually rely on in the boardroom. The page tells you what your case commits you to.

      Your position

      Claims you rely on

      Choose a position and at least one claim.

      The question the room usually splits on

      Is Tesla’s purpose the company’s, or the founder’s? Collins and Porras say the most lasting contribution of company builders is the core ideology (1996, p. 66), and that a good envisioned future keeps people going even if the leaders who set it disappear (p. 75). Tesla is a live test of that claim. If the purpose lives in the organisation — the engineers it attracted, the factory, the stores — the 25% request is a governance question. If it lives in Musk, it is a succession problem disguised as a strategy.

      Take a side before class. You will be asked which specific evidence would change your mind — a position you cannot imagine losing is not an argument, it is a preference.

      Discussion questions

      1. Was Tesla’s chaos a necessary, calculated cost of its strategy, or a preventable failure of execution?
      2. How did Tesla turn the industry’s barriers — suppliers, dealers, charging — into parts of its position, and what did each refusal cost?
      3. Why might investors in mid-2018 value Tesla above Ford and GM? As a GM executive, would you have treated it as a serious threat?
      4. Do SolarCity and the 25% request complete the purpose, or threaten the fit that sustains the strategy?
      5. Tesla’s stated purpose moved from sustainable transport to sustainable energy (Rothaermel, 2023, p. 50), and in 2022 the mission “does somewhat broaden” (p. 15). Core preserved, or core moving?
      6. As an investor or a director, would you vote to give Musk about 25% of the votes (p. 15)?

      The exhibit workshop · 25 minutes

      Raise capital now, or trust the ramp?

      It is May 2018. You sit on Tesla’s board. Analysts estimate the company must build at least 5,000 Model 3s a week to turn a profit this year, and some wonder whether it will run out of cash by December (Sull & Reavis, 2019, p. 1). On this month’s analyst call a question about capital requirements is waved away as “boring” (p. 1). The quarter just closed is in front of you. Decide whether to press for new capital before the summer.

      How to work it

      Figures come from the exhibit workbook of Sull and Reavis (2019), in $ millions unless stated, and every ratio is computed in your browser. Compute before you reveal; the reveal is worth nothing if you have not committed to an answer.

      This is Kaplan and Norton’s step 3 in miniature: the firm’s own numbers, then its ratios against competitors (Kaplan et al., 2008, p. 5), then the market’s verdict.

      Part A · the firm’s own numbers

      Will the cash last?

      QuarterCash at quarter endFree cash flow Deliveriesof which Model 3

      Free cash flow: EBIT plus depreciation, less capital expenditure, adjusted for the change in working capital, from the workbook’s own lines. The workbook’s total row also adds its EBITDA subtotal, counting EBITDA twice; the figures here are corrected.

      Compute, then reveal

      1. At the first quarter’s rate of cash burn, how many quarters of cash are left?
      2. At the average burn of the last three quarters?
      3. How many Model 3s a week did Tesla deliver in the first quarter, against the 5,000 analysts said it needed?

      Part B · ratios against competitors

      Eleven carmakers, one of them losing money · FY2017

      FirmRevenueGross profit R&DOperating income Gross marginOperating marginR&D % rev
      Median, excluding Tesla ———

      Who Tesla would have had to buy from

      The five largest automotive suppliers, FY2017 ($ millions): the supplier force with numbers attached.

      SupplierRevenue R&DShare of global auto supply

      Part C · the market’s verdict

      Is the demand real?

      U.S. unit sales, large luxury sedans, 2011–2017

      Show the sales as a table

      “n.a.” as in the workbook. Source: Luxury Cars tab, Sull & Reavis (2019) workbook.

      Compute, then reveal

      1. A discount is what a maker gives up to move a car it cannot sell at list. Guess the 2017 discount on a Model S 90D, and on a BMW 740i.
      2. Read the chart: in which years did the Model S outsell the Mercedes-Benz S-Class?
      3. If buyers paid nearly full price while Tesla missed every production target, what does that say about position versus operational effectiveness?

      After your vote

      What the next three quarters did

      Twelve quarters from the workbook, 2016 to 2018. Reveal only once you have voted.

      What the numbers do and do not settle

      They settle that the bet was a race. In May 2018 the cash covered two to three quarters at the burn rates of the time; the turn came inside that window, as Model 3 deliveries rose from 8,180 in the first quarter to 56,065 in the third and free cash flow turned positive. The position was real too: buyers paid close to list price for the Model S.

      They do not settle that the bet was wise. One more slipped quarter would have forced capital on worse terms, and 2018 still ended at less than half the 500,000 target (Serafeim & Migdal, 2024, p. 12). A board that pressed for a raise in May was not wrong; it was buying insurance against the ramp failing.

      Name the bet

      Which theme of the value gap was the cash buying?

      Name who pays

      If the ramp slips, who absorbs it: shareholders, suppliers, employees, customers with deposits?

      Give the number

      What weekly rate in June would have changed your vote?

      In the room

      Workshops & simulations

      Six workshops and two simulations. Workshops 1, 2 and 4, the vision-drift debate and the first simulation come from the earlier Purpose deck; Workshop 3 from this page’s earlier reading lab; the culture-versus-control vote from the earlier Tesla deck; the board simulation is new. All are stylised scenarios built on the cases. Facts carry a page reference; where a path leaves the record, it says so.

      How to run them

      In pairs. Agree an option before anyone clicks, read one outcome, then argue for a different option and read that one. The debrief line under each names the idea the outcomes illustrate.

      Workshops

      Simulations

      In the room

      Studio: two rounds, one decision each

      Round 1 · 12 min · pairs

      The four-line case brief

      From the 2024 case, write four separate lines: Tesla’s core purpose, one candidate core value, a dated ambition, and one operating choice. Cite a page or exhibit for each, and label your own wording as a proposal. Then your partner runs Collins and Porras’s tests on it: one more “why is that important?”; the Random Corporate Serial Killer (what would be lost if Tesla closed?); and, for the value, would Tesla keep it if it were penalised for holding it? Swap and repeat.

      What to hand in

      The four lines after the tests, each with its evidence, and the line your partner made you rewrite.

      Round 2 · 15 min · fours

      Role play: the board sets the target

      Roles: CEO (proposes a vision with a measure, a niche and a date), CFO (sizes the value gap against what the existing strategy would deliver by that date, and asks which theme closes how much), Head of Operations (names the binding constraint the analysis found; for Tesla in 2016, battery supply), Independent director (asks what can change and what cannot, and which stakeholder bears the cost if the gap is closed badly). Use Tesla in 2016 or a firm of your own. The CEO may not state a target without a date.

      What to hand in

      The vision sentence, the value gap as two numbers and a date, the theme carrying most of it, and one measurable signal that would make the board revise the strategy.

      Last 12 minutes — the in-class quiz (graded)

      The course outline makes the last 12 minutes of every class a graded quiz, taken with screens off. Today’s covers the three questions and the case: what a firm is for (core ideology, envisioned future, BHAGs), the value gap and how it is decomposed, what the analysis step adds, and the evidence on Tesla’s purpose, target and key issues.

      To prepare, make sure you can tell a purpose from a BHAG and a value from a practice; compute a value gap against a same-date baseline; say what step 3 produces; and back each claim about Tesla with a page or exhibit. The final quiz and the concept check below are practice, not the graded quiz.

      Knowledge check

      Final quiz

      Score: 0 / 0

      Test your grip on the session’s core ideas, including the workshops and simulations above. Each answer explains itself. The full practice bank for this session is at /teaching/quiz/1yr-02.

      Concept check

      Twelve questions, with reasons

      0 / 0 correct

      Answer first; the reasoning appears immediately. A wrong answer here is cheaper than a wrong answer in the exam.

      Your Session 2 resources · Watch, read, apply

      Keep the core. Give the future a direction.

      Use all three supplied resources with the framework and Tesla work already on this page. Start with the overview, read the two mandatory articles in your course pack, then test whether a purpose, a value and a dated goal lead to different decisions.

      Supplied teaching video · 7 minutes 58 seconds

      Core ideology and envisioned future

      This NotebookLM overview uses the star and mountain to explain enduring ideology and an ambitious future. Treat it as an AI-assisted learning aid; use the assigned readings to check definitions and historical examples.

      Audio begins when you choose Play. The supplied recording has no caption track; the written study companion below is available without playing it.

      Download the supplied videoRead the written companionApply the vision framework
      Find this video in the course pack

      Session 2 _Core Ideology and Envisioned Future.mp4

      Written companion: four ideas to take into the case

      This is an original study guide, not a verbatim transcript of the video.

      Core values
      Which principles should constrain action even when protecting them is costly? A value becomes visible when a decision has a price.
      Core purpose
      Why should this organisation exist beyond its current products or a profit target? Keep the enduring reason distinct from a time-bound goal.
      Envisioned future
      Pair an ambitious, long-horizon BHAG with a vivid description of what success would look like. A broad aspiration alone does not provide a finish line.
      Alignment
      Check whether investment, people, measures and routines support the stated core and future. Preserving the core does not require freezing every practice or product.

      Pause and ask: What stays stable? What can change? Which action would the organisation refuse? What evidence would show the goal has been reached?

      Try a hypothetical Indian venture: Nila Mobility

      Nila Mobility is fictional. It exists to make everyday commuting less resource-intensive. It refuses to conceal safety-test failures. Its proposed goal is to serve 10,000 regular commuters by December 2040; its vivid future describes reliable rides that users can afford. Classify these four statements before revealing the comparison.

      Reveal the comparison

      The enduring reason is purpose; honest safety disclosure is a proposed value; the dated scale target is a candidate BHAG; the customer experience is part of the vivid description. Whether 10,000 is truly audacious depends on the venture's starting point and capabilities—it is not a BHAG merely because it is numeric.

      Now test the value: would the firm delay launch and lose revenue rather than hide a failed test? Compare the fictional venture with the global and Indian illustrations, then apply the distinctions to the assigned Tesla case.

      Mandatory reading 1 · 2008 · Article pages 1–5

      Developing the Strategy: Vision, Value Gaps, and Analysis

      Robert S. Kaplan and David P. Norton, with Edward A. Barrows Jr. Balanced Scorecard Report, 10(1), January–February 2008; reprint B0801A.

      Read for: the sequence from mission, values and vision to a quantified value gap, analysis and strategy formulation. Separate the target from the actions expected to close the gap.

      Bring to class: a baseline, a dated target and one causal assumption that your analysis could disprove. Use the existing value-gap exercise to test that assumption.

      Official publisher listingCompare the two readingsPractise the value gapWork through analysis
      Locate it in the supplied PDF

      Mandatory Reading1_Session 2_ Developing the Strategy Vision_Kaplan & Norton.pdf. This file contains the complete 16-page January–February issue. The mandatory article occupies PDF pages 1–5; the other four articles are indexed below as optional extensions.

      Mandatory reading 2 · 1996 · Printed pages 65–77

      Building Your Company's Vision

      James C. Collins and Jerry I. Porras. Harvard Business Review, September–October 1996; reprint 96501. The article occupies PDF pages 3–15 in the supplied 16-page file.

      Read for: core values and purpose; the envisioned future's BHAG and vivid description; preserving the core while stimulating progress.

      Bring to class: one costly decision that demonstrates a value, one enduring purpose and one future goal. Explain why a new product need not mean a new purpose.

      Official article pagePractise core and futureGlobal, Indian and hypothetical illustrations
      Locate it in the supplied PDF

      Mandatory Reading2_Session 2_Building Your Company_Vision_by Collins & Porras.PDF. The cover and issue contents precede the article; the last page contains ordering and permission information.

      Use the supplied course pack for the full PDFs. The publisher pages above provide the official access routes and may require a subscription or purchase. This hub supplies original study guidance; it does not republish the articles.

      Also inside the supplied Balanced Scorecard Report issue

      These four articles complete the 16-page file. They are optional extensions, not additional mandatory reading or a change to assessment.

      Statoil: Scorecard Success—the Second Time Around

      Lauren Keller Johnson · PDF pages 6–8 · B0801B

      Investigate: how targets, information systems and budgets can support implementation. Which link would fail first if a company's strategy changed but its operating routines did not?

      Take an Initiative Management Health Check

      Peter LaCasse · PDF pages 9–10 · B0801C

      Investigate: how a strategic theme becomes an initiative with an owner and evidence of progress. What would you stop funding if the link to the intended outcome were weak?

      HR at the Heart of Strategic Transformation: The EMC Turnaround

      Anne Field · PDF pages 11–13 · B0801D

      Investigate: which capabilities and jobs a strategy requires. How would you recognise a mismatch between the proposed strategy and the people able to execute it?

      Why the BSC Is Just as Effective for Small and Medium-Sized Firms

      Mario A. Bognanno, with reporting by Anne Field · PDF pages 14–16 · B0801E

      Investigate: which cause-and-effect assumptions a small venture should test. For Nila Mobility, choose one customer measure and explain how it connects to a financial outcome.

      Page pointers refer to the course-pack issue. The questions are original prompts; read the articles before drawing conclusions about their historical cases.

      Preparation

      Readings for Session 2

      Read Kaplan and Norton first: they give the session its sequence. Then Collins and Porras, for what the first step is made of. Read the case last, with a position on the 25% question, and bring three things to class: one dated goal, one value that constrains a decision, and one case fact that challenges your strategy. Every item is obtained through the course pack or the session folder; none is reproduced on this page. The professor may show a short video in class.

      1. Required · the case

        Serafeim, G., & Migdal, A. (2024). Elon Musk at Tesla (HBS Case No. 9-123-044, rev. June 27, 2024). Harvard Business School.

        The session’s anchor case. It ends in January 2024 with the 25% request; come with a vote and a reason.

      2. Required · Q2 and Q3

        Kaplan, R. S., Norton, D. P., & Barrows, E. A. (2008). Developing the strategy: Vision, value gaps, and analysis. Balanced Scorecard Report, 10(1), 1–5. (Reprint B0801A)

        The four-step process; the quantified vision; CIGNA’s value gap; external and internal analysis.

      3. Required · Q1

        Collins, J. C., & Porras, J. I. (1996). Building your company’s vision. Harvard Business Review, 74(5), 65–77. (Reprint 96501)

        Core ideology and envisioned future; the five whys; BHAGs and their four types; the We’ve Arrived Syndrome.

      4. Supplementary · companion case

        Sull, D., & Reavis, C. (2019). Tesla’s entry into the U.S. auto industry (Case No. 18-186). MIT Sloan School of Management.

        The industry, the Model 3 ramp and the exhibit workbook behind every figure in the exhibit workshop. Licensed CC BY-NC-ND 3.0.

      5. Supplementary · course text

        Rothaermel, F. T. (2023). Strategic management (6th ed.). McGraw Hill. Chapter 2, Strategic leadership: Managing the strategy process.

        Vision, mission and values in the textbook’s sense, and Tesla’s change of vision from transport to energy.

      6. Supplementary · carried forward from Session 1

        Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61–78.

        Mintzberg, H. (1987). Crafting strategy. Harvard Business Review, 65(4), 66–75.

        Collis, D. J., & Rukstad, M. G. (2008). Can you say what your strategy is? Harvard Business Review, 86(4), 82–90.

      Earlier interactive decks

      • Purpose, Values & Strategy — built as Session 3 in the earlier numbering. Its five-whys, BHAG and value-gap workshops, the why-behind-the-chaos exercise and the vision-drift debate are all merged into this page; the deck keeps the original layout.
      • Vision, Purpose & the Value Gap — the 2-year course’s version (its Session 4). It adds a simulator for sizing a later value gap in market-value terms and a section on operations under uncertainty.

      More practice

      The Session 2 bank, on Tesla and the frameworks, is at /teaching/quiz/1yr-02. For purpose, values and the value gap, try /teaching/quiz/1yr-03.

      References

      APA 7th edition. Cited in the text by author, date and page.

      1. Collins, J. C., & Porras, J. I. (1996). Building your company’s vision. Harvard Business Review, 74(5), 65–77.
      2. Kaplan, R. S., Norton, D. P., & Barrows, E. A. (2008). Developing the strategy: Vision, value gaps, and analysis. Balanced Scorecard Report, 10(1), 1–5.
      3. Musk, E. (2006, August 2). The secret Tesla Motors master plan (just between you and me) [Blog post]. Tesla. tesla.com
      4. Rothaermel, F. T. (2023). Strategic management (6th ed.). McGraw Hill.
      5. Serafeim, G., & Migdal, A. (2024). Elon Musk at Tesla (HBS Case No. 9-123-044). Harvard Business School.
      6. Sull, D., & Reavis, C. (2019). Tesla’s entry into the U.S. auto industry (Case No. 18-186). MIT Sloan School of Management.

      A note on the figures on this page

      Every number in the exhibit workshop, the competitor map and the charts is read from the exhibit workbook of Sull and Reavis (2019), and every ratio is computed in the browser. Two corrections to earlier versions of this page: the market values in the workbook are as of 29 June 2018, not 2017; and the workbook’s free-cash-flow row counts EBITDA twice, so free cash flow here is recomputed from its components.

      The Harvard case and the HBR article are not reproduced; obtain them through the course pack. Sull and Reavis (2019) may be shared unmodified, with attribution, for non-commercial teaching.

      Back to the course outline More practice questions