“I was here a month ago… just over the fence. You had a tube and a pointy tube. And now you’ve got this!”, Tim Dodd exclaimed, pointing at the completed Starship prototype. “How do you do that? Is it just your will?”
“I’ve learned a lot of lessons about how to make things go fast and I’ve propagated those lessons to the SpaceX team,” Elon Musk responded in his typical fidgety, teenage-boy tone.
Such a scenario isn’t exclusive to SpaceX. It’s common across all of Elon’s companies.
Another example is how the team at Tesla went from conceptualizing to launching solar panels that looked like terra-cotta shingles, within eight weeks!
SpaceX began made reusable rockets when the entire community said it was impossible. Tesla made electric cars über-cool. The Hyperloop One is based on an open-source design released by a joint team from Tesla and SpaceX.
It’s as if each of Elon’s companies have thrusters attached (no pun intended).
Complacency is no longer a luxury any business can afford. Just to defend themselves from the competition, businesses must innovate to create better products, business models, and customer experiences.
Many companies move fast when they’re small and scrappy. But as they grow in size, bureaucracy slows them down to the speed of snails.
How then, do Elon’s companies move ahead at speeds that repeatedly break the innovation barrier?
Here are three philosophies that Elon embraces, and how leaders can apply them in their own companies.
1. Aligning Vectors
Every person in your company is a vector. Your progress is determined by the sum of all vectors.
In algebra, a vector is a quantity that has magnitude and direction. The sum of two or more vectors gives a resulting vector.
Elon equates each person to a vector whose magnitude is based on her competence and commitment, and direction is the path she moves in. (He sees everyone in computational forms, including his own children.) Add them and you can predict how much progress your company will make.
Elon Musk first introduced this concept to Dharmesh Shah who, in turn, introduced it to his employees at HubSpot. Everyone loved it so much that it became part of their everyday vocabulary.
Dharmesh explains three people-as-vectors scenarios:
a. The Null Vector
Take four people of equal magnitude. Two of them pull in one direction while the other two pull in the opposite. What you get is a null vector.
In this scenario, despite everyone being equally competent and committed, the team makes zero progress because of the alignment (the direction).
b. The Sub-Optimal Vector
Here, people move in the same-ish direction (except for those few who stand out, and not for the right reasons.)
The resultant vector is substantially higher than zero, but the impact is still not optimal because not everyone aligns in the same direction.
c. Aligned Vectors
This is the perfect scenario. When all people align towards a unified goal, you get maximum speed in execution which in turn, leads to maximum progress.
As a leader, you can either let your people choose the direction to move in, micro-manage every movement, or channel them to move in a specific direction.
Elizabeth Doty equates this to a river. When the banks are weak, the water spreads across the land and has little force. Likewise, your people make little impact when they have low guidance.
When the river has locks to regulate how much water can flow, it becomes restrictive. In an organization like this, leaders micromanage every step. The system crawls because management can never keep up with the exceptions and re-prioritizations.
But a river with strong banks flows strongly in a specific direction. Similarly, people direct their attention and energy to create maximum impact in teams and organizations that work in a unified direction.
According to Dharmesh, the following vectors need alignment:
- Align people with the organization’s goals.
- Align teams (product, marketing, sales, service, etc.) with the organization’s goals.
- Align the organization’s goals with the needs of the customer.
Assume you had to hold everything else constant — no new people, no “upgrades” to the skills of existing people and no additional funding. Even then, you can still improve your rate of progress and level of success by better aligning your vectors.Dharmesh Shah
You can move things faster with the people you already have by simply aligning their vectors better.
2. First-Principles Thinking
We get through life by reasoning by analogy, which essentially means copying what other people do with slight variations.
For most businesses, other people is the competition, whom they spend much time imitating or one-upping. The result is that every product resembles the other and customers’ latent needs lie ignored.
This is reasoning by analogy, according to Elon. An individual or entity defaults to thinking like everyone else. It makes people cling to prior assumptions and beliefs, follow outdated ‘best practices’, and make poor decisions even if they’re smart.
But first principles breaks things down to the fundamental, non-debatable, facts, helps you challenge assumptions and unearth ingenious solutions to complex problems, and make unique contributions in any field.
This method is quintessential Elon Musk.
For instance, when Elon began his quest to send the first rocket to Mars, he found the cost of rockets to be astronomical—up to $65 million. This made him redefine the challenge.
So I said, okay, let’s look at the first principles. What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. Then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.
Rather than buying rockets, Musk decided to purchase the raw materials, hire amazing engineers, and build them. Thus, SpaceX was born. And within years, it slashed the price of launching a rocket tenfold while still making a profit.
Most times you don’t have to break things down to such molecular levels. You can simply go two or three levels deeper to identify facts and piece them together to discover simple yet effective solutions.
First-principles thinking helps you break out of the herd mentality, think on the edges of the box and innovate to create new solutions for familiar problems.
This process drives clarity in people’s minds and aligns them towards a goal. It also forces naysayers to either back their skepticism with facts or leaves them with no excuse to not commit.
When people understand the Why, What, and How of a goal, it becomes easier to move faster.
3. Learn From Mistakes
If somebody can explain how to make this design better, I would say, ‘Thank you for the awesome gift.’
In the interview with Tim Dodd, Elon explained why he preferred a methane engine for the Starship over the conventional full-flow combustion aerospike engine.
When Dodd asked if this meant that a Starship would never use a full-flow aerospike combustion engine, Elon said that if someone could show them how the aerospike engine could deliver better results, SpaceX would switch.
Elon doesn’t shy away from admitting that he doesn’t have all the answers and that he’s wrong sometimes.
But many leaders constantly feel pressured to do it. They must have all the answers, be right and on top of things all the time. This pressure makes them cave into the sunk cost fallacy, where people continue pursuing an option because they invested time, money, effort, or some resource in it.
They stick with poor designs and incompetent people. They try optimizing useless processes rather than removing them. They refrain from refining their products though customers make it clear that they want something else.
They go to any lengths to avoid course correcting.
This psychological trap stems from various inherent biases. Like wanting to eke out some returns from a sunk investment. Or the fear of people’s judgment if they admit a mistake. Or because the known devil is better than the unknown angel. (At least solving recurring problems keeps them in their comfort zone.)
But innovation doesn’t occur in the comfort zone. Ever!
Failure and invention are inseparable twins. To invent, you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.Jeff Bezos
Every company that makes progress values speedy decision-making, which also makes the environment more fun.
In his 2016 letter to shareholders, Bezos outlined how Amazon makes quick decisions:
Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong?
Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%… you’re probably being slow… If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
Third, use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?”
This isn’t one way. If you’re the boss, you should do this too.
When leaders avoid owning up to their mistakes, people follow suit. This fosters a culture of stagnation where new decisions and actions get put off indefinitely. While this saves resources in the short term, it proves terribly costly in the long term.
Contrastingly, when leaders see mistakes as a stepping stone to innovation, they build a culture where people collaborate to learn from their own and each others’ mistakes.
For instance, some departments heads at NASA would applaud if an unmanned rocket exploded on takeoff, so that everyone knew their division had tried and failed, but at least tried.
Another interesting practice gets followed at Basecamp, where if a project takes longer than two weeks, people working on it call on a fresh pair of eyes to take a look. This ensures they don’t go down the wrong rabbit hole.
Learn from mistakes, even if it means walking away from something you invested time and energy in.
It’s futile to use a paddle in the age of motorboats and hope to survive.
Align people towards a larger goal, apply first principles to discover innovative solutions, and foster a culture where people learn from mistakes quickly. You won’t just have a solid motorboat; you’ll also have great fun building it.
Finish one thing and move on to the next. That’s how you build momentum and make things go fast.