The Algorithm

Lately I’ve been listening to Elon Musk by Walter Isaacson on Everand. One particularly interesting topic to me is what Elon calls The Algorithm. It is the factory optimization method that he learned from running the factories at SpaceX and Tesla. I’d like to share my reaction to it.

Here it is, The Algorithm:

  1. Question every requirement. Each should come with the name of the person who made it. 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. Then you should question it, no matter how smart that person is. 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 requirement less dumb.
  2. Delete any part or process you can. You may have to add them 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. This should come after step two. A common mistake is to simplify and optimize a part or a process that should not exist.
  4. Accelerate cycle time. Every process can be speeded up. 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. That comes last. The big mistake in Nevada and at Fremont 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.

My first reaction: I love it. It is harmonious with everything I’ve learned about optimizing systems. I’m happy that millions of people will see it.

My first exposure to The Algorithm reminded me of how I felt during my first exposure to Eli Goldratt’s The Goal. Although The Goal is a story that’s explicitly about optimizing a factory, I can remember thinking, if you realize that the factory nouns in the story can be swapped out for nouns about other systems, then The Goal becomes a method for optimizing anything. It’s the same way with The Algorithm.

The harmony I feel is because The Goal, and The Algorithm, and my team’s Method R all share the same core value: just as the fastest call is no call, the fastest process is no process. All three methods are weapons against waste.

The Algorithm begins with a bang: “question every requirement.” I love it. Seeing that step laid out so prominently and so plainly made me ask myself, “Hey, so where’s the ‘question every requirement’ chapter in my How to Make Things Faster book?”

The content is there, it’s just not its own chapter. It’s in Look Left (chapter 33):

Ask whether apparent requirements are really legitimate requirements. There’s no more efficient way to reduce load than to realize, hey, we don’t actually even need to run that.

How to Make Things Faster, page 93.

My stories of Nancy and Debra and Martha (chapters 4, 49, 51) demonstrate the kind of relief you can achieve by deleting requirements. And my chapter about efficiency (chapter 52) is careful to note that a system can’t be efficient if it’s creating output that nobody needs.

The “question every requirement” message is there, it’s just factored as part of the filter early regime.

The Algorithm reminds me of a consultant I used to know who had a trick for freeing up resources on overworked financial systems. He would set up a help desk to respond to complaints. Then he would turn off all the report printing. All of it. Whenever a user complained about a missing report, the help desk would promptly turn that report back on. Sometimes, nobody would ask for more than about 20% of the reports back, which freed up a lot of computing power for doing work that people really did need.

The thing is, though, …it’s easier to make bold moves like this when you own the place. It’s harder when you’re a shy 23-year-old accountant or database administrator with little influence or authority. But be curious. You may well find that there’s an Emperor’s New Clothes story going on around you, and that what people need is for you to just speak up.

If you read Elon Musk, you’ll see one thing quite clearly: The Algorithm came from Elon’s deeply intimate hands-on connection with his factories.

How can you reach that level of understanding if you are not Elon Musk?

Begin by connecting with the people you are serving.


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