Elon Musk focuses on the company’s biggest bottleneck

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 21:18

   going to bring that to the government for the first time. How is Elon so productive? Have you ever deconstructed this? Actually, I've known Elon for a long time. I didn't work with him for a very long time. We're working on different things, but I've been working with him quite closely for the last couple of years, starting with the X acquisition, and then we've also invested in XAI and in SpaceX.

2. 21:41

   And so we now work on three companies together to different degrees and now the government stuff. Yeah, I mean, there's basically, he has an operating method that he's developed that I would say is very unusual by modern standards. Actually, I'm not aware of another current CEO who operates the way that he does. And I think probably the single biggest kind of question in all of business right now is why don't CEOs operate the way that he does?

3. 22:05

   And it's a complicated question we could talk about. Um, but, um, I, if you go back in history, you find characters, um, more like him. And so, um, especially like the industrialists of the late 1800s, early 1900s, um, you know, people like Henry Ford or Andrew Carnegie, uh, or Thomas Watson who built IBM. If you go back and read the biographies of people like that, Andrew Mellon, you know, those guys, Cornelius Vanderbilt, like those guys ran very similar to the way that, that, that Elon, Elon runs things.

4. 22:30

   And it's just this, like, the top line thing is just this incredible devotion from the leader of the company to fully, deeply understand what the company does and to be, you know, completely knowledgeable about every aspect of it and to be in the trenches and talking directly to the people who do the work, deeply understanding the issues and, you know, being the lead problem solver in the organization.

5. 22:53

   and basically what elon does is he shows up every week at each of his companies um he identifies the biggest problem that the company's having that week and he fixes it right and then he and then he does that every week for 52 weeks in a row and then each of his companies has solved the 52 biggest problems that year like in that year and you know most other large companies are still having the planning meeting for the pre-planning meeting for the board meeting for the presentation for the this for the you know with the compliance review and legal review and like so so he's just like it's it's this it's this level of both like incredible intellectual capability coupled with incredible force of personality moral authority execution capability focus on fundamentals um that um is just like really amazing to watch and then by the

6. 23:34

   way the the side effect of it um is he attracts you know many of the best people in the world to work with him um because if you work with elon like the expectations are through the roof in terms of your level of performance and he is going to know who you are and he is going to know what you've done and he's going to know what you've done this week. Um, and he's going to know if you're underperforming and he may fire you in the meeting. Um, if, uh, you're not, if you're not, if you're not carrying your weight, but if you're, if you are as committed to the company as he is and working hard and can't bolt.

7. 24:00

   many people who have worked for him say that they had the best experience of their lives when they were working for him. And so then there's this attraction thing. And that's why I think his companies compound the way they do is because they just, because of this, they just keep reading. They're a black hole that sucks in the best talent. If you're the best in the world, you want to work harder than anybody else, come here. That's right. And people look at this on the outside and they're like, how can people tolerate, you know, all the criticisms, okay, tolerate this guy and da, da, da, da, da. And inside the company, people are like, Like, finally, I get to work for somebody who's- Someone gets it.

8. 24:28

   Yeah. Somebody gets it. Somebody, there's a famous line. Somebody used to work in one of the other defense space, aerospace companies and went to work at SpaceX and said, that's what it was like. And he said, it's like being dropped into a shocking zone of competence, right? It's just like, it's just like, is that your point? Like everybody around me is like, so absolutely competent and look, most of, most people, most of us never have that experience.

9. 24:51

   You know, most people are never in an organization where like the bar is held that high. And as a consequence, the competence level is so high and stays so high and even rises over time. And again, to his master credit, he has been able to do that repeatedly. So detail-oriented, focusing on everything from A to Z in terms of the business, sort of intimately familiar with it and prepared to get his hands dirty from a, I will get in there and actually look at solving the problem myself.

10. 25:20

    So is that, you know, that suggests to me although this can't be the case because you couldn't run this many companies if you were doing it this way um there may be some challenges in learning when to delegate uh when to hand off tasks because in order to get that level of uh resolution to be able to see things with that that much finitude uh you also need to spend a lot of time on it and then if you're solving the problems how do you choose the problems that are yours to solve and the problems that aren't so on and so forth so that must be that must be a challenge uh delineating between what is my problem to solve and what is somebody else's? Yeah. So I would say most leaders, like most CEOs we work with have exactly that problem for exactly the reasons you described. I think the Elon method is a little bit different. And I don't know if you'd agree with this, but the way I think

11. 26:04

    about it is he actually delegates almost everything. Like he's not involved in most of the things that his companies are doing. He's involved in the thing that is the biggest problem right now until that thing is fixed. And then he doesn't have to be involved anymore. And then he can go focus on the next thing that's the biggest problem for that company right now so like like for example manufacturing there's this concept of the bottleneck right and so in any manufacturing chain there's there's always some bottleneck there's always something that is keeping the manufacturing line from running the way that it's supposed to and sometimes the bottleneck is up is at the beginning of the process it's like we can't get enough raw material sometimes the bottleneck is at the end of the process we don't have enough warehouses for the finished product

12. 26:42

    or the bottleneck might be somewhere in the middle and if you run a manufacturing company there's always a bottleneck whatever the bottleneck is is holding everything up um and and and you The job number one is to remove that bottleneck and get everything flowing. And I think he basically has universalized that concept. And he basically looks at every company like it's some sort of conceptual assembly line, sometimes a literal assembly line, making cars and rockets.

13. 27:03

    And basically, any given week, there's a bottleneck. There's guaranteed to be the main bottleneck. There's going to be one thing that's going to be the thing that's holding people back. And so the answer to your question, the resolution of the paradox is I'm going to micromanage the solution of that. I don't need to manage everything else because everything else by definition is running better than that, right?

14. 27:23

    And so I can go focus on that. The other part of it that is so compelling, and this is where I think a lot of especially non-technical CEOs would really struggle to implement the method, is he really, when he identifies the bottleneck, he goes and he talks to the line engineers who understand the technical nature of the bottleneck. And if that's people on a manufacturing line, he's talking to people directly on the line.

15. 27:41

    Or if that's people in a software development group, he's talking to the people actually writing the code, right? So he's not asking the VP of engineering to ask the director of engineering to ask the manager to ask the individual contributor to write a report that's to be reviewed in three weeks. He doesn't do that. He would throw them all out of the window. There's just no way he would do that. He goes and he goes and personally finds the engineer who actually has the knowledge about the thing.

16. 28:05

    And then he sits in the room with that engineer and fixes the problem with them. Right. And again, this is why he inspires such incredible loyalty from the from the especially the technical people who he works with, which is they're just like, wow, if I if I if I'm up against a problem, I don't know how to solve freaking Elon Musk is going to show up in his Gulfstream and he's going to sit with me overnight in front of the keyboard or in front of the manufacturing line.

17. 28:28

    And he's going to help me figure this out. wow right and so it's like how do you possibly like how yeah and this is the thing it's like okay you're like a normal ceo running a normal company like how can you possibly compete with that um what are the other reasons that uh ceos of similar companies or comparable companies don't do that technical uh understanding i get that that you need to be able to get your hands dirty from a