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Elon Musk explains his 5-step algorithm for running companies

December 27, 2024

“First, make your requirements less dumb. Your requirements are definitely dumb… It’s particularly dangerous if a smart person gave you the requirements because you might not question them enough.”

In this interview at Starbase, Elon elaborates on his methodology for shipping everything from electric cars to rockets.

Here’s his “algorithm” quoted in full from the Walter Isaacson biography:

  1. Question every requirement. Each should come with the name of the person who made it. You should never accept that a requirement came from a department, such as from "the legal department" or "the safety department." You need to know the name of the real person who made that requirement. Then you should question it, no matter how smart that person is. Requirements from smart people are the most dangerous, because people are less likely to question them. Always do so, even if the requirement came from me. Then make the requirements less dumb.

  2. Delete any part or process you can. You may have to add them back later. In fact, if you do not end up adding back at least 10% of them, then you didn't delete enough.

  3. Simplify and optimize. This should come after step two. A common mistake is to simplify and optimize a part or a process that should not exist.

  4. Accelerate cycle time. Every process can be speeded up. But only do this after you have followed the first three steps. In the Tesla factory, I mistakenly spent a lot of time accelerating processes that I later realized should have been deleted.

  5. Automate. That comes last. The big mistake in Nevada and at Fremont was that I began by trying to automate every step. We should have waited until all the requirements had been questioned, parts and processes deleted, and the bugs were shaken out.

Elon shares a costly example of doing this process in reverse on the Tesla Model 3 production line and optimizing a part that didn’t even need to exist.

“It’s possibly the most common error of a smart engineer to optimize a thing that should not exist. Everyone’s been trained in high school and college that you answer the question — convergent logic. You can’t tell the professor your question is dumb or you’ll get a bad grade. You have to answer the question. So everyone, without knowing, basically has this mental straight jacket on and they’ll work on optimizing the thing that should simply not exist.”