Hey, maybe it will work? Credit - public domain

There, right there on page 1, of Management for Dummies is the stricture that when deep in the doo doo announce a restructuring. Thus we get Elon Musk’s announcement of just such a restructuring at Tesla. Without more capital – or an entirely unlikely surge in production and thus cash flow – they’re going to go bust in 6 months or so. Thus, sure, announce a restructuring:

Tesla is undergoing a major restructuring as the company battles to sort out its organisational problems and bottlenecks that are holding up production of its latest electric car, putting its financial targets in jeopardy.

Elon Musk, the founder of the company, warned of a shake-up during California-based Tesla’s earnings call a fortnight ago.

In a memo seen by The Daily Telegraph, Tesla chief executive Mr Musk told staff that “to ensure Tesla is well prepared for the future, we have been undertaking a thorough reorganisation of our company”.

“As part of the reorg, we are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.”

The point isn’t whether this is good or bad, it’s just that it is so traditional. Not quite what we’d hope for from cutting edge visionaries perhaps:

Chief Executive Elon Musk unveiled that news in a memo to employees, that lacked specific names or details. Musk made the announcement after the Wall Street Journal reported that Matthew Schwall, the company’s main technical contact with U.S. safety investigators, has left the company for self-driving-car maker Waymo LLC, a unit of Google parent Alphabet Inc. On Friday, Tesla said that its engineering chief, Doug Field, was taking a leave of absence to recharge and spend time with family.

No one quite does know exactly what is going on here but there’s an element of fleeing a sinking ship to be whiffed at.

Between Tesla’s recent spending guidance cuts and the restructuring that was just announced, it’s clear that Musk is serious about avoiding a fresh and expensive capital raise. A debt offering, assuming it’s possible given growing skepticism among bond investors about Tesla, would carry high interest rates. And a stock offering would both dilute existing shareholders (Musk is a big one) and pressure shares.

But avoiding a new capital raise will require Tesla, whose cash balance fell to $2.7 billion last quarter, to make a lot of progress with its ambitious Model 3 sedan ramp — both in terms of weekly production and profit margins.

Whether it’s traditional or not the big question is whether the restructuring will work. Well, obviously it could in one manner. Look, investors, I’m getting it sorted! That will at least preserve the possibility of capital raising should it come to that by supporting bond and stock prices. But will it actually solve the basic problem?

There opinion is very mixed indeed. Sure, there’s a problem, the problem needs to be fixed. But is changing the management structure the right way to do it, whatever it might signal to investors? In theory we could say yes, new blood comes in and sorts stuff out. In theory we could say no, the disruption of the embedded knowledge of those departing, the lack of it in those arriving, will further disrupt. Finally, we’ve the often true point that management makes little damn difference at the best of times. Switching people about makes no difference therefore. That last is hard to support in such a new organisation though – it’s where there’s an entrenched culture and bureaucracy that management doesn’t gain hold of the levers of power.

Will it work? Who knows – but it’ll all be over by Christmas, one way or the other. Err, yes, Christmas this year, not 1914.