Elon Musk and Your Feedback Loop

Although I sometimes can’t decide whether Elon Musk is the business genius of our time or is two bricks shy of a load, he sure does get a lot of key principles right.

The latest instance is a little-noticed announcement last week about how he is using Tesla’s auto insurance offering to create a feedback loop to help him make better cars. When an accident occurs, his designers learn immediately through the insurance arm what happened and can consider whether some modification to the car would reduce the damage or at least lower the cost of the repair. Customers will become less likely to wonder, “That fender-bender cost how much to fix?” Word-of-mouth on the cars will improve, leading to more sales, creating more data via the insurance arm, allowing for more design improvements and so on, pumping ever more money into Musk’s pockets.

While emulating Musk won’t mean that you, too, can land spent rocket stages upright on floating platforms, insurers have a number of opportunities to create feedback loops and virtuous circles that could let them dominate part of the industry... continue reading >