Tesla’s new Cybercab has no steering wheel or pedals. That’s the core innovation.
But it also creates a problem: many of the rules used to evaluate cars were written around the assumption that a human would be driving. And steering wheels and pedals are an assumed part of the equation.
Tesla began offering rides in Austin using the two-seated vehicle. The next day, the National Highway Traffic Safety Administration opened an investigation into whether the Cybercabs had been properly certified.
According to the Associated Press, the agency is reviewing the vehicles were certified. Tesla determined before launch that some federal safety standards designed around human drivers did not apply. And this may be the problem.
There’s a broader business lesson here. When an innovation simplifies a product or process (like removing pedals and steering wheels), the new solution can look deficient because the old model is being used to evaluate the new idea.
Old standards carry old assumptions
Federal vehicle regulations assume there’s a driver. They were built around things like steering wheels, brake pedals, and mirrors that a person uses. A driverless vehicle challenges the assumptions underneath those fundamental requirements.
Clayton Christensen described the problem in his work on disruptive innovation. New offerings often perform poorly against the established measures of success because those measures were created to reward what existing businesses already do well.
That’s exactly why leaders need to question the metric along with the idea.
Eventually the regulations will start to change. Last June, NHTSA proposed eliminating the manual brake pedal requirement for self-driving vehicles. The standard itself is being reconsidered as the technology changes, but this doesn’t guarantee hiccups don’t happen while standards are getting aligned to new technologies.
Your company may be doing the same thing
Uber faced its own version of the same issue more than a decade ago. In 2013, San Francisco International Airport sent cease-and-desist letters to ride-hailing companies and even had officers make citizen’s arrests of drivers for trespassing. The rules had been written for taxis and limousines. Ride-hailing didn’t fit the existing category.
Eventually, the rules adapted. Today, ride-hailing is routine at airports around the world.
You probably don’t have federal regulators reviewing your ideas. But your organization may be doing something similar every day.
A new product gets evaluated using the margin expectations of your mature business. A new process gets measured based on feedback from the employees whose livelihoods rely on the old way of doing things.
I’ve personally seen how ideas can get rejected because the organization evaluates them using assumptions tied to the business they’re intended to change. Christensen also found that familiar financial tools such as discounted cash flow and net present value can systematically undervalue your new investments and give your competitors a market opening.
Three ways to evaluate a new idea
When you’re evaluating something genuinely new, use three simple checks:
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- Name the hidden assumption. Identify what the current standard assumes must be true. Then ask whether your new idea has made that assumption irrelevant.
- Build the new yardstick. Start with what the new idea is supposed to achieve. Define success from that goal and describe how and why the old yardstick doesn’t apply.
- Separate absence from failure. If the innovation removes something the old model required, determine whether that missing element is actually a problem or part of the innovation itself.
Standards matter. But every standard carries assumptions, and those assumptions can outlive the world they were designed for.
Before you reject what’s new, make sure the problem isn’t the yardstick.
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