Idiot Index

Elon devised a metric called the "idiot index" to calculate cost inefficiencies in the manufacturing process by comparing the finished product's cost to the cost of its basic materials.

Rockets had an especially high idiot index due to complacent adherence to numerous military and NASA specifications. Musk encouraged his engineers to question all such requirements, treating them as mere recommendations.

The Algorithm

The five-step process is simply dubbed "the algorithm."

1. Question the requirements. Make them less wrong and dumb. Then delete, delete, delete. Each requirement should come with the name of the person who made it.
2. Delete any part or process you can. It's better to delete a bit too much, so you have to add a bit later. If you didn't end up adding later, you didn't delete enough.
3. Simplify and optimize. Make sure you do this after deletion: it's a common error to simplify and optimize what shouldn't exist.
4. Accelerate cycle time. Speed up processes.
5. Automate. Only automate at the very end—after you've questioned all the requirements and deleted the unnecessary parts.

And a few corollaries:

• Technical managers must have hands-on experience. They should spend at least 20% of their time on the technical task. Don't let them be the general who can't use a sword.
• Comradery is dangerous as it makes it hard for people to challenge each other's work.
• "It’s OK to be wrong. Just don’t be confident and wrong."
• "Never ask your troops to do something you’re not willing to do."
• When there are problems to solve, meet with those a level below the managers, not just the managers.
• "A maniacal sense of urgency is our operating principle."
• "The only rules are the ones dictated by the laws of physics. Everything else is a recommendation."

Whenever an engineer would cite "a requirement" as a reason for doing something, he'd keep grilling them on who made the requirement. "The legal department" is not a satisfactory answer: you need the name of the actual person behind it. He believes that requirements are just recommendations. "The only immutable ones were those decreed by the laws of physics."

Video: Starbase Tour with Elon Musk by Everyday Astronaut, timestamped to start of 5-step process.

Maniacal urgency

Elon always insisted on maniacally short deadlines, even when they weren't strictly necessary. Basically, he told engineers to cut their most optimistic timeline in half. It may not always be possible, but it’ll get you insanely far. The urgency and thinking needed helps accelerate your progress. It'll force you to engage in first principles thinking.

Just be careful here. You can also demoralize by setting completely unreasonable deadlines. Musk isn't afraid of running that risk, though: increased productivity from the urgency matters more than potential demoralization.

Optimize every turn. In Polytopia, you get only thirty turns, so you need to optimize each one. “Like in Polytopia, you only get a set number of turns in life,” Musk says. “If we let a few of them slide, we will never get to Mars.”

Feedback loops

Musk took an iterative approach to design. Rockets and engines would be quickly prototyped, tested, blown up, revised, and tried again, until finally something worked. Move fast, blow things up, repeat. “It’s not how well you avoid problems,” Mueller says. “It’s how fast you figure out what the problem is and fix it.”

Ensure quick feedback loops to identify and fix problems fast.

"Try new ideas and be willing to blow things up."

Musk believed that innovation was driven by setting clear metrics, such as cost per ton lifted into orbit or average number of miles driven on Autopilot without human intervention.

It's important to set clear metrics. That also helps you learn whether you're going in the right direction or not.

On giving feedback

After some silence, he answered in the abstract. “I give people hardcore feedback, mostly accurate, and I try not to do it in a way that’s ad hominem,” he says. “I try to criticize the action, not the person. We all make mistakes. What matters is whether a person has a good feedback loop, can seek criticism from others, and can improve. Physics does not care about hurt feelings. It cares about whether you got the rocket right.”

It's about the action, not the person. We all make mistakes, but we can examine why we made those mistakes, and ensure that we learn from them. This also goes back to first-principles thinking: what is the exact process that led you to make this decision? What can we improve in the process such that we avoid poor decisions.

Highlights

On responsibility

Musk has a rule about responsibility: every part, every process, and every specification needs to have a name attached

On losing

Do not fear losing. “You will lose,” Musk says. “It will hurt the first fifty times. When you get used to losing, you will play each game with less emotion.” You will be more fearless, take more risks.

This was one of the lessons he learned from Polytopia (a game).

Be proactive: set the strategy

Be proactive. “I’m a little bit Canadian pacifist and reactive,” Zilis says. “My gameplay was a hundred percent reactive to what everyone else was doing, as opposed to thinking through my best strategy.” She realized that, like many women, this mirrored the way she behaved at work. Both Musk and Mark Juncosa told her that she could never win unless she took charge of setting the strategy.

On system design

He learned one very big lesson from these ventures: “It’s not the product that leads to success. It’s the ability to make the product efficiently. It’s about building the machine that builds the machine. In other words, how do you design the factory?” It was a guiding principle that Musk would make his own.

Doubling down

Double down. “Elon plays the game by always pushing the edge of what’s possible,” Zilis says. “And he’s always doubling down and putting everything back in the game to grow and grow. And it’s just like he’s just done his whole life.”