From Outsiders to Market Leaders
For decades, the prevailing wisdom in business was that companies should focus solely on what they do best and outsource the rest. This mantra, famously championed by GE’s Jack Welch, encouraged businesses to stick to their core competencies and avoid venturing into unfamiliar territory. Yet history has repeatedly shown that some of the greatest successes come from companies that ignored this advice, boldly diving into industries where they initially had no expertise.
From the rise of personal computers to electric vehicles, the stories of Tesla, BYD, and other disruptors demonstrate that innovation often comes from those willing to challenge the status quo.
The Outsiders Who Defined Entire Industries
Google and Data Centers
In its early days, Google could have followed conventional wisdom by renting or replicating standard data center setups. Instead, it rethought how data centers should operate, designing custom hardware, building energy-efficient facilities, and optimizing server software to manage search traffic at an unprecedented scale. These decisions didn’t just improve Google’s performance—they redefined how modern data centers are built and set a new standard for the tech industry.
Microsoft and the Operating System
When Microsoft launched MS-DOS and later Windows, its products were far from perfect. They lacked many features that rival systems already offered. But instead of waiting to perfect their software, Microsoft iterated quickly, learning from customer feedback and market trends. This approach allowed it to dominate the operating system market and become synonymous with personal computing.
The Rise of PC Makers
The personal computer industry itself was largely driven by newcomers. Companies like Dell, Compaq, and Apple weren’t entrenched hardware manufacturers—they were startups and outsiders. Even the IBM PC, which sparked the industry’s growth, was built as a skunkworks project outside of IBM’s traditional corporate structure, allowing it to move faster and take risks that wouldn’t have been possible otherwise. These companies didn’t have decades of expertise but succeeded because they learned and innovated as they went.
Tesla: Reinventing the Car Industry from the Ground Up
When Tesla was founded in 2003, it was a tech startup with no experience in car manufacturing. Traditional automakers dismissed it as a niche player destined to fail. Building cars is hard, they said—requiring decades of expertise in supply chain management, manufacturing, and vehicle design. Tesla had none of these, but it had something even more important: the willingness to question everything about how cars were made and used.
Learning by Doing
Instead of outsourcing core processes, Tesla committed to mastering them in-house. From battery production to software development, the company learned by trial and error, enduring costly mistakes but gaining invaluable knowledge. By vertically integrating key components like battery manufacturing, Tesla avoided the bottlenecks that plagued traditional automakers during the EV transition. It also turned its lack of legacy infrastructure into an advantage, allowing it to design its Gigafactories and manufacturing processes from scratch.
Breaking the Mold
Tesla didn’t just build electric cars—it reimagined what cars could be. By treating software as central to the driving experience, Tesla introduced over-the-air updates, autonomous driving features, and a user-centric interface that disrupted the industry’s focus on hardware alone. Its outsider status allowed it to question long-standing conventions, from dealership models to supply chains, giving it the agility to innovate where traditional automakers were entrenched.
Revolutionizing Manufacturing with Gigacasting
Tesla’s most remarkable innovation in manufacturing is its pioneering use of gigacasting technology. Leveraging massive casting machines from IDRA Group, Tesla redefined car production by creating large, single-piece components for its vehicle chassis. The Model Y, for example, features an underbody that combines what used to be over 400 individual parts into one or two castings. This breakthrough reduced production complexity, lowered costs, and improved the structural integrity of its vehicles.
BYD: From Batteries to Automotive Powerhouse
China’s BYD (Build Your Dreams) began its journey as a battery manufacturer, supplying mobile phone batteries to major electronics brands. When the company entered the automotive market in 2003, it had no background in car manufacturing. Skeptics doubted BYD’s ability to compete with established automakers. Yet, just like Tesla, BYD’s lack of legacy baggage allowed it to innovate in ways traditional companies could not.
Turning Weakness into Strength
BYD’s expertise in batteries became a cornerstone of its automotive strategy. While most automakers outsourced battery production, BYD built its own, gaining full control over a critical component of EVs. This vertical integration not only lowered costs but also allowed the company to innovate rapidly in energy density and battery safety.
Learning Through Experimentation
Rather than aiming for perfection out of the gate, BYD embraced a culture of continuous improvement. Its early vehicles were far from perfect, but the company iterated quickly, applying lessons learned to each new model. Over time, it developed a reputation for reliability and value, particularly in China’s growing EV market.
Diversifying to Dominate
BYD’s success isn’t limited to passenger cars—it has become a global leader in electric buses, trucks, and even energy storage solutions. This diversification is a testament to its willingness to take risks and enter markets it knew little about, leveraging its battery expertise to expand its footprint in the green energy ecosystem.
Why Starting from Behind Can Be an Advantage
The journeys of Tesla, BYD, and other disruptors highlight an important truth: coming from behind can be a strategic advantage. Here’s why:
Freedom from Legacy Constraints: Established players are often bogged down by entrenched practices and outdated infrastructure. Newcomers have the freedom to design processes, systems, and products from scratch.
Learning by Doing: Companies entering unfamiliar industries are forced to learn quickly, adapt, and innovate. This iterative approach often leads to breakthroughs that incumbents, tied to their existing playbooks, fail to achieve.
Breaking the Mold: Outsiders question norms, challenging assumptions that insiders take for granted. This fresh perspective enables them to redefine markets and disrupt industries.
Vertical Integration for Control: Both Tesla and BYD achieved success by vertically integrating critical components of their value chains. Their ability to control battery production gave them an edge over competitors who relied on external suppliers.
The Lessons for Other Industries
Tesla, BYD, Google, and Microsoft all show that challenging conventional wisdom and venturing into unfamiliar territory can lead to extraordinary success. Whether it’s redefining data centers, iterating on operating systems, or revolutionizing car manufacturing, the key is a willingness to learn, adapt, and innovate. Starting without expertise isn’t a weakness—it’s an opportunity to question the status quo and build something entirely new.
Conclusion: The Value of the Outsider’s Perspective
Focusing on core competencies and outsourcing the rest has its place—but it’s not a universal truth. As Tesla, BYD, and the early PC industry have shown, venturing into the unknown can yield transformative results. Success often comes from having the courage to explore what you don’t know and the persistence to turn those explorations into market-leading innovations.
For legacy automotive companies, this is a pivotal moment. To stay relevant, they must reinvent themselves in almost every area: from manufacturing technologies like Tesla’s gigacasting to speeding up design and development cycles, reimagining vehicle architectures, and building a seamless software ecosystem that facilitates steady feature rollouts. They must also transform the purchasing experience and rethink how vehicles are serviced to meet modern customer expectations.
This journey won’t be easy. Bureaucracies within large organizations build powerful antibodies to resist change. Dealership laws can make alternate sales and service channels challenging to implement. And for an industry that has thrived on incremental progress, the risk of disruption can feel terrifying. But if they don’t embrace this transformation, someone else will—as Tesla and BYD have already proven.
The good news? The path forward is clear. Legacy automakers have resources and decades of experience to draw upon. By adopting an outsider’s mindset—questioning norms, learning quickly, and embracing the challenge—they can not only survive but thrive in the EV era. Some will fail but the companies that succeed will be those bold enough to break their own molds and chart a new course. The future of mobility is being written now, and there’s no reason legacy players can’t be a part of that story.
For companies willing to take the leap, the rewards can be extraordinary.
About Sanboca Insights
At Sanboca Insights, we specialize in tackling challenges unique to the automotive industry, enhancing the journey from concept to deployment. We partner with leading automakers across the Americas, Europe, and Asia, where we deliver strategic guidance to refine technology roadmaps, accelerate development, forge partnerships, and unveil new opportunities.
Are you ready to lead the charge in redefining the automotive user experience? Contact us today to start your journey toward a more integrated and data-driven future.