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In Good Company with Nicolai Tangen · 2 min · Sep 16, 2026
Mapping the work reveals steps customers do not pay for
Jon McNeill
Jon McNeill maps each step and asks which work the customer pays for.
In this episode
Full analysis- 1:22Tesla cut online car orders from 300,000 configurations to twoPro pick 5 min
- 10:25Speed reveals broken processes before it improves themPro pick 6 min
- 15:47Tesla nearly went bankrupt by automating too early4 min
- 8:30Tesla targeted 30% gross margins against a 10% industry norm2 min
- 5:59Mapping the work reveals steps customers do not pay for2 min
- 20:24Ambitious targets force teams to rethink the operating system4 min
- 27:34Curiosity and financial levers guide McNeill's management calls3 min
“if it's not of high quality you can pass it back and we're measuring the passbacks”
Jon McNeillat 7:17 · In Good Company with Nicolai Tangen
Takeaways
- Map each step, then mark what creates the product.
- Let workers own quality instead of inspecting after every step.
- Track passbacks to find where quality still breaks.
About this segment
Jon McNeill maps each step and asks which work the customer pays for. Tesla dropped intermediate quality checks and combined battery and cabin cooling into one heat-pump system.
Jon McNeill is CEO and co-founder of DVx Ventures; author.
Founded and scaled six companies, then grew Tesla revenue from $2B to $20B as president.
Nicolai Tangen, Host · CEO, Norges Bank Investment Management
From “Jon McNeill: The Algorithm Behind Tesla and SpaceX | Podcast | In Good Company”, Sep 16, 2026. Watch the full episode
Thanks. We'll look at and fix what's off.
Transcript
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.
- 6:04
does that look like so that then uh the practical step that we had our managers take was to literally take a wall and put sticky notes on the wall and map the entire process that we were looking at. So whether it was a manufacturing process, a sales process, map each step, and then put a sticky note for each sub-step underneath the step. And then we would ask the critical question, which of these steps does the customer pay us for? They don't pay us for quality checks. They don't pay us for purchase orders. They pay us for the product. So which of these things circle the things that are actually involved in producing the product. When you do that, it looks like about 90% of the steps may not be necessary. Tell me about some of the stuff you cut.
- 6:53
Yeah. So there was in some manufacturing processes and some loan processing processes, a quality check between each step. So a person would do work, it would sit and wait. A quality person would look at it, it would sit and wait, it would go back into the flow. We took the quality checks and eliminated them and basically said to the person doing the work you do not pass this along until it's it's it's ready to be passed along and therefore we don't need a quality check and we said to the person downstream if it's not of high quality you can pass it back and we're measuring the passbacks uh and so we can tell where the good quality is and where it isn't and that helped us eliminate quality checks which exist in every organization worldwide I think there's a quote from you somewhere.
- 7:39
The best part is no part. But I mean, clearly, if you've got no part, you've got no business. So, you know, examples of things where you took away too much and had to add back. Yeah, there's plenty of those. And so that was a clue to us. When we had to start adding back, we'd cut too far. But to your point, the best part is no part. What that means is, can we combine? things uh and so for instance an electric car you have a cooling system that cools the battery and you have another cooling system that cools the cabin for the passengers we said hey the best part is no part can we eliminate one of these and combine it uh and so teslas today have one single heat pump system that cools the battery and cools the cabin rather than two that's uh one less system that can break and one less system that we have to manufacture