Elon Musk is known for keeping a tight grip on every venture he creates. But after being pulled over by the financial cops, he agreed to hire a driving instructor rather than have someone else take the wheel at Tesla Inc. TSLA -13.90%
Mr. Musk, Tesla’s longtime chief executive, will relinquish the chairman role for three years under a deal with regulators. The Securities and Exchange Commission also wants two new independent directors and more scrutiny applied to Mr. Musk’s tweets, which are often treated like company disclosures and serve as a running commentary for his nearly 23 million followers. Mr. Musk remains a director.
Students of Tesla know the odds of the directors picking a new chairman from the current board are high. The auto maker is insular, with two-thirds of directors having been in place since Tesla went public in 2010. Many have close relationships, familial and financial, with Mr. Musk, who owns 22% of the company.
Tesla’s chairman job, however, should go to someone without ties to the Silicon Valley electric-car maker.
The outsider approach would follow a precedent set by U.S. rivals— General Motors Co. and Ford Motor Co. —when they were on the brink. It also gives the chairman the ability to attack Tesla’s long list of problems with fresh eyes and no baggage.
“Tesla doesn’t need someone with experience in cars or electricity or batteries,” said Steven Rattner, an investment adviser who ran the Treasury Department’s effort to bail out the industry in 2009. “It needs an experienced CEO or former CEO or experienced chairman capable of getting Mr. Musk to act like a grown-up.”
Mr. Rattner said the company needs to let a new chairman reshape the board with a few new directors, like telecom veteran Ed Whitacre did when he took GM’s chairmanship at Mr. Rattner’s request. The current board has failed to hold Mr. Musk accountable as the CEO has routinely failed at meeting financial and production targets.
It was Mr. Musk’s lack of discipline with his Twitter account and a premature tweet about taking Tesla private that got him here in the first place. There are other instances, including appearing to smoke marijuana during a recent podcast, that gave fodder to critics.
Industry insiders I talked to passed along some interesting names of the kinds of businesspeople who could rein him in, including: Warren Buffett; former Ford CEO and longtime Alphabet director Alan Mulally; PepsiCo’s departing CEO, Indra Nooyi; or Starbucks ’ longtime leader, Howard Schultz. They all have the management chops and potentially the time to tackle Tesla.
Mr. Mulally is a master of creating simple step-by-step solutions to complex problems. Ms. Nooyi weathered tough criticism and took the long view. Mr. Schultz reinvigorated a coffee company in the 1980s and actively managed it for the better part of 30 years.
Mr. Musk’s agreement with the SEC to let go of the chairman’s job but keep the CEO title tells you a lot about the billionaire entrepreneur. As much as he casts himself as a visionary, he is a tinkerer who ping-pongs among Tesla, rocket venture SpaceX and the tunnel-construction firm The Boring Co., burying himself in minutiae of each.
For instance, I recently asked him why he doesn’t hire a third party like Canadian auto supplier Magna International to help him figure out Tesla’s manufacturing glitches. He looked at me as if I’d asked him why there’s no gas tank on a Model 3. “If we don’t solve the production, we’re going to die,” Mr. Musk said. “I need to create a case example of what can be done.”
The right chairman is someone who can balance the bravado with the cold, hard truth that Elon Musk can’t save the world alone.
Abigail Johnson, CEO of Fidelity Investments, doesn’t have the time (she recently said her job requires her full attention) but does have the type of shared financial interest that could make her a good fit. Her firm is a longtime Tesla investor.
Ms. Johnson recently offered her view on running a company, guidance that could help Tesla’s C-Suite members look beyond the fires they seem to be constantly trying to put out. “You’ve got the machine in motion, but there is a different kind of need to first of all make sure that you appropriately find and manage small problems so they don’t become big problems that could potentially mess things up for you,” Ms. Johnson told financier David Rubenstein on his Bloomberg TV show.
She runs a company with trillions of dollars under management and increasingly takes the long view: “When everybody’s running the machine…there’s a tendency to look at the short term and focus on incremental opportunities and not look ahead to the really big opportunities.”
Those are wise words for Mr. Musk, whose attention to detail can get in the way of his bigger ideas.
Mr. Whitacre says being the chairman requires the ability to give tough love.
“You check back often enough to make sure what the CEO says needs to happen is happening,” he told me this week. “If not, you find a new CEO.”
Write to John D. Stoll at john.stoll@wsj.com
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