Musk's 5 Step Algorithm to Cut Internal Bureaucracy at Tesla and SpaceX

Joost Minnaar
Written by Joost Minnaar November 12, 2023

I just read Walter Isaacson's biography of Elon Musk. It's an interesting and pleasant read, but, oh man, there are many things not to like about Musk's management style. There are, however, also some things we can all learn from his habits. For example, I like how Musk fights his allergy against internal bureaucracy. In particular, I'm inspired by what Isaacson describes as Musk's "algorithm"—his way of ruthlessly busting internal bureaucracy and complacency during production meetings at Tesla and SpaceX. 

Elon

The 5 steps of Musk's algorithm

Musk's algorithm to bust bureaucracy at his production sites contains five main steps.

1. Question every requirement

Before changing anything in your processes, the first step of Musk's algorithm is to create clarity about every requirement that exists today.

That clarity can be made by attaching a person—and a name—to every requirement. That is, each requirement should come with the name of the person who made that requirement.

Musk: "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."

Once that clarity is achieved—that is, when every requirement has the person's name attached—then you can start questioning whether these requirements make sense. No matter how smart or how 'powerful' that person is.

Musk: "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 of the process you can

The second step of Musk's algorithm is all about subtraction—a widely undervalued habit in management. In this case, it is all about deleting any part of the process you can.

In fact, it is all about deleting just a bit more than you feel comfortable with.

Musk: "You may have to add [parts or processes] 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

Only when you have walked through steps one and two can you start by simplifying and optimizing (parts of) your processes.

This particular order of steps protects you from doing unnecessary work—it keeps you from improving (parts of processes) that you do not need in the end.

Musk: "A common mistake is to simplify and optimize a part or a process that should not exist."

4. Accelerate cycle time

The fourth step of Musk's algorithm is all about speed. It is about finding ways to speed up your bureaucratic processes.

"Every process can be speeded up," says Musk. "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

The fifth and last step of Musk's algorithm involves automation. Now that you have clarity about your processes and have deleted any unnecessary parts to speed up your bureaucratic processes, it is time to start looking for what you can potentially automate.

Musk: "[Automate] comes last. The big mistake in [my factories] 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."

Go beyond

Musk's five-step process to bust internal bureaucracy sounds so simple, but the impact can be huge. This impact, by the way, can go far beyond just applying the five steps in production settings.

The steps are useful to keep repeating constantly in the entire organization. All should be wise to adopt them as an internal mantra for organizational improvement.

Just imagine how you can use these five steps to cut bureaucracy in all your organizational processes. Think about how internal bureaucratic processes, like budgeting, procurement, expense reimbursement, and so forth, could improve dramatically.

The possibilities seem endless.

Musk's five-step process to bust internal bureaucracy sounds so simple, but the impact can be huge. This impact, by the way, can go far beyond just applying the five steps in production settings.
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Musk's other management heuristics

Aside from the five main steps, Isaacson describes several other heuristics Musk uses to organize work at his companies.

These are the ones I liked as well:

Re: managers

"All technical managers must have hands-on experience. For example, managers of software teams must spend at least 20% of their time coding. Solar roof managers must spend time on the roofs doing installations. Otherwise, they are like a cavalry leader who can't ride a horse or a general who can't use a sword."

Re: failure

"It's OK to be wrong. Just don't be confident and wrong."

Re: leadership

"Never ask your troops to do something you're not willing to do."

Re: rules

"The only rules are the ones dictated by the laws of physics. Everything else is a recommendation."

Re: hiring

"When hiring, look for people with the right attitude. Skills can be taught. Attitude requires a brain transplant."

Re: problem-solving

"Whenever there are problems to solve, don't just meet with your managers. Do a skip level, where you meet with the right below your managers."

Back to progressive management examples

Isaacson's book was more than enough doses of Musk's management heuristics for me, for now. It's time to return my focus back to much more progressive management examples.

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Written by Joost Minnaar
Joost Minnaar
Co-founder Corporate Rebels. My daily focus is on research, writing, and anything else related to making work more fun.
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