Elon has said several times: “The public tends to respond to precedents and superlatives.”
So let’s start by defining those words so we’re clear on them…
Precedent Google definition:An event or action that is regarded as an example or guide to be considered in subsequent similar circumstances.
Example: “There are substantial precedents for using interactive media in training”
Superlative Google definition: Of the highest quality or degree.
Alright now that we’ve got those definitions let’s get into why Elon says precedents and superlatives are so important.
Elon discusses how the initial mission of SpaceX was:
To do a low cost mission to Mars called “Mars Oasis” where you would land seeds with dehydrated nutrient gel [on Mars], and then you hydrate them upon landing, and then you’d sort of have this great money shot of green plants on a red background…
And the public tends to respond to precedents and superlatives.
And this would be the first life on Mars and the farthest that life’s ever travelled as far as we know, and I thought well that would get people really excited. And therefore increase NASA’s budget.
So obviously the financial benefit of such a mission would probably be zero so anything better than that was on the upside.
This story Elon shares because it emphasises the importance of precedents and superlatives.
Elon was willing to finance the entire mission simply so he could move the goal of greater space exploration forward with the power of precedents and superlatives. Elon has been able to market his businesses efficiently by using the natural marketing power of word of mouth marketing, fueled by the remarkability of precedents and superlatives.
Debug Your Thinking: A Guide to Elon Musk’s Self-Correction Process
In a Starbase Factory Tour with the Everyday Astronaut YouTube channel Elon explained his five step engineering process which he explains he wants everyone at Starbase to implement rigorously:
“The sort of five step process is:
(1) First make your requirements less dumb.
If the requirements are definitely dumb; it does not matter who gave them to you.
It’s particularly dangerous if a smart person gave you the requirements, because you might not question them enough.
Everyone’s wrong. No matter who you are, everyone is wrong some of the time.”
(2)Try very hard to delete the part or process.
This is actually very important. If you are not occasionally adding things back in you are not deleting enough.
parts are not being added back into the design at least 10% of the time, not enough parts are being deleted.
Musk noted that the bias tends to be very strongly toward “let’s add this part or process step in case we need it.”
Additionally, each required part and process must come from a name, not a department, as a department cannot be asked why a requirement exists, but a person can.
(3) Simplify and optimize the design.
This is step three as the most common error of a smart engineer is to optimize something that should not exist.
(4) Accelerate cycle time.
Elon says: “You’re moving too slowly, go faster! But don’t go faster until you’ve worked on the other three things first.”
(5) Automate.
An important part of this is to remove in-process testing after the problems have been diagnosed.
If a product is reaching the end of a production line with a high acceptance rate there is no need for in-process testing.
Everyone is wrong sometimes. Work on being less wrong and you’ll get the right results.
During the speech Elon gave on June 15th, 2012 he shared the following advice with the young graduating class:
“Now is the time to take risks.
You don’t have kids, and your obligations are limited, but as you get older your obligations increase.
Once you have a family you start taking risks not just for yourself but for your family as well. It gets much harder to do things that might not work out.
So now is the time to do that, before you have those obligations. So I would encourage you to take risks now, to do something bold, you won’t regret it.”
The older you get the riskier risks become because your biological clock is ticking.
So while you are still full of youthful vigor you should do something bold. Be bold before you grow old or suffer the regret from never doing what you could have done.
It takes hard work and dedication, which become harder with mounting family obligations.
If you do not have children yet and are considering starting a business I recommend you start your business sooner than later.
Fewer obligations mean a greater ability to invest your time into creating success for your business, projects and brand.
Elon shared his thoughts on risk and innovation at an ISSRDC talk:
“I don’t really like risk for risks sake, and I do think that a lot of things are risky with a low chance of success, but if you want to try to come up with an innovative breakthrough that’s going to be how it is.
Anything that is significantly innovative is going to come with a significant risk of failure.”
Yes, significant innovations come with significant risks. However they also come with significant rewards if you can achieve them.
Elon recommends taking risks when you are still young as obligations only increase over time.
“Once you have a family it gets much harder to do things that might not work out.”
It’s worth keeping in mind that Elon started SpaceX and Tesla with a young family so his family obligations have certainly not slowed him down.
With greater risks, such as those needed to carve out a new niche, comes the potential for far greater rewards. However many people are not willing to sacrifice the heroic way Elon does so you must sacrifice while you are young.
Musk poured so much of his money into SpaceX and Tesla that he had to borrow money from friends to cover his living expenses.
However the risk of pouring his money into his companies has paid off.
Today SpaceX and Tesla are thriving and Elon is many billion dollars wealthier than he was previously. Deservedly so due to the massive amount of value he has added to the world.
The harder you work the more you can mitigate your risk and increase your odds of achieving your goals.
So work hard, innovate often, and do your best to take bold action early to ensure your products and/or services are awesome.
Saving Lives on Earth and in Space: Elon Musk’s Vision
At Tesla, safety is the number one priority.
Certainly at SpaceX safety is a priority as well and this is reflected by the fact SpaceX has flown many crew missions to space and the ISS with a 100% survival rate and without any casualties or major problems.
At Tesla, not surprisingly, the great priority of safety combined with Tesla’s incredible rate of innovation have made Tesla into the safest car company in the world.
Tesla is the only car to ever receive better than a five star safety rating. The rating system since it gave them what was deemed an unfair advantage so they are now technically “5 star” even though the latest built Tesla are the safest Tesla’s ever built.
Rapid iteration of safety and other innovations are the reason Tesla vehicles do not correspond with model years: Teslas are improving and becoming safer all the time.
In his interview where Elon had turbulent words for bankers when on an investors call he said: “There are over 1,200,000 automobile deaths per year. How many of them do you read about? But if it’s an autonomous death it’s headline news.”
In fact Tesla vehicles are significantly safer than the competition and are the safest cars on the road.
The mission of SpaceX is directly related to human survival as making life multiplanetary is essentially a backup of humanity and human consciousness.
With The Boring Company the tunnels they create have the potential to create a significant solution for the problem of traffic, which will contribute to many lives being saved.
The Boring Company saves lives with their tunnels by preventing accidents when they ensure vehicles travel along a path, and without the fumes of a combustion engine.
Over 3 million people have already been transported with these tunnels.
Millions of lives can be saved by utilizing tunnels and self-driving cars to mitigate hostile traffic and death caused by cars.
Setup Your Strategy for Survivalism
Any product or service which can be positioned as a lifesaver will find itself with a strong value proposition.
Humans are hardwired for survival.
Emphasise the survival aspect of the products and services you have to offer and human instinct will compel people to buy more of what you have to sell.
Market Leadership: What It Is and How to Achieve It.
By carving out a new market segment and being a market leader you are able to give yourself and your company a head start on the competition.
As Elon’s friend (PayPal co-founder) Peter Thiel likes to say:
“Competition is for losers.”
Being a leader means leading the way with products and services other companies have not yet executed on.
When Tesla first got started none of the major automakers were building electric cars. Now they all are.
Another way Elon helped Tesla establish itself as a leader is by open sourcing all Tesla patents and creating the Tesla patent pledge.
This leadership is irrevocably entrenched with the Patent Pledge on the Tesla website.
Patent Pledge
On June 12, 2014, Tesla announced that it will not initiate patent lawsuits against anyone who, in good faith, wants to use its technology.
Tesla was created to accelerate the advent of sustainable transport, and this policy is intended to encourage the advancement of a common, rapidly-evolving platform for electric vehicles, thereby benefiting Tesla, other companies making electric vehicles, and the world. These guidelines provide further detail as to how we are implementing this policy.
Tesla’s Pledge
Tesla irrevocably pledges that it will not initiate a lawsuit against any party for infringing a Tesla Patent through activity relating to electric vehicles or related equipment for so long as such party is acting in good faith.
The market leadership from Tesla and their core mission of accelerating the advent of sustainable transport.
The virtuous mission that guides Tesla moving forward has helped them to create cooperative agreements to create components for a number of their competitors.
Tesla encourages competition. Because of their market leadership now Tesla is both the clear leader of electric automobiles, and the leader of all automobile manufacturers in America.
In the documentary Elon Musk: The Real Life Ironman an early PayPal employee who worked with Elon in PR shared a story about his high expectations:
“Elon expected a lot out of the people, but we all expected a lot of each other, that’s how you get it done.”
“In the culture of startups the expectation is that everybody is working all the time. You get there at 9 or 10 in the morning and not leave until 9 or 10 or maybe after that at night and Elon was definitely working until midnight every night…
It was just what we did. And it was exciting. Rarely did anyone complain…”
It’s important to keep in mind that the first person Elon had high expectations of was himself. And if he was not working until midnight every night the people he worked with probably would have been less vigilant about holding themselves to such a high standard also.
Elon fully acknowledged the improbability of starting SpaceX at the Living Legends of Aviation dinner:
“In the beginning when I told people I was trying to create a rocket company, they thought I was crazy. That seemed like a very improbable thing. And I agreed with them – I think it was improbable. But sometimes the improbable happens.”
Elon is living proof of the power possible when you go all in and work hard to make the improbable into reality.
Rhymes are enduring and Elon has some catch phrases that pack a punch of memorable management info.
When he gave a Starship Update he explained his management mantra, which enabled them to build the ship in just four month:
“If the schedule is long it’s wrong…
If it’s tight it’s right…
The best part is no part…
The best process is no process.
It weighs nothing, costs nothing, can’t go wrong.”
Elon explains “Time is the ultimate currency” and an extension of this means optimizing for time efficiencies is the ultimate optimization.
“If the design takes too long to build, it’s the wrong design.”
By utilizing a recursive feedback loop Elon is able to speed up the production schedule.
Another time optimizing insight Elon shared is to minimize the amount of needed parts:
“The tendency is to over complicate things…The thing I am most impressed with when I meet with the design team at SpaceX is what did you undesign?”
The tighter the feedback loop and the fewer parts needed in production are two key factors in production time optimization, and you can apply these strategies to your own life.
“The best part is no part. The best process is no process. It weighs nothing, costs nothing, can’t go wrong.”
Keep Elon’s advice in mind and always seek ways to optimize your time.
On a call in 2018 with investment bankers where Elon refused several bone headed comments and told day traders or investors afraid of volatility straight up not to buy Tesla stock because:
“I am not here to convince you to buy our stock…I could care less.”
What Elon does care about is innovation.
1. Innovation is What Matters Most
Innovation is defined as when you: Make changes in something established, especially by introducing new methods, ideas, or products.
He shared some powerful insights about innovation on the on investors call:
“What matters is the pace of innovation. It is a fundamental determinant to competitiveness…
Let’s say competitors, maybe they come out with something new every six years. We’re maybe every two to three years.
So if our innovation is let’s say twice that of any given competitor…
And this is true generally of companies in any industry…
Whichever company has the highest rate of innovation, unless that company is actively killed by it’s competitors in some way that’s nefarious, or shoots itself in the foot, it will at some point exceed those competitors…
Like this is obvious that this would occur with Amazon and Wal-Mart because Wal-Mart’s rate of innovation was negligible.
And Amazon’s was very high. The outcome was obvious a long time ago.”
[Here is an image of Amazon Robots in one of their warehouses]
In a more recent interview about the AxelSpringer Award (Which Elon won) he echoed similar sentiments saying:
“The company with the higher rate of innovation will unequivocally win long term.”
The lesson here is clear: Innovate or you will lose ground to companies who do.
2. Accelerate Your Rate of Innovation
Moreover the more aggressively you innovate and iterate the faster you will dominate.
“Innovation per year is what matters. Not innovation absent time. Because if you want to make say 100% improvement in something and that took 100 years, or one year, that’s radically different…
So it’s like: “What is your rate of innovation? matters and is the rate of innovation accelerating or decelerating?”
The part minimization of the SpaceX Raptor engine is a great example of efficiency promoting innovations.
At InvestHK Elon said: “Innovation comes from questioning the way things have been done before…
And if in the education system you’re taught not to do that that will inhibit entrepreneurship.
Interviewer: “Being able to question what you were taught?”
Elon: “Being able to say: ‘Is there a better way?”
Elon has innovated with Tesla to the point where multiple sources, and undeniable facts, confirm Tesla has created the best car ever.
That’s the game changing level of innovation you need to have a position in the marketplace where you are in a category of your own.
Here are some of Elon’s quotes on innovation:
“Starting and growing a business is as much about the innovation, drive, and determination of the people behind it as the product they sell.”
“Great companies are built on great products.”
“Failure is essentially irrelevant unless it is catastrophic.”
Although Elon does not strive from failure, he certainly does not hide from it either.
His ability to push on and succeed with SpaceX after their first three rockets failed and he was down to his last money is why SpaceX made it to orbit when they did.
3. Failure is An Option
Facing failure head on and learning from it is a lesson I learned the hard way. Once I got a speeding ticket and rather than setting the court date in my calendar I shoved the ticket in a folder and forgot about it.
Since I missed the court date I got the maximum fine in my absence.
Had I faced that situation head on maybe I would have emerged successful.
At least I would have gotten a lesser fine, or perhaps the cop would not have shown up for the court date and my ticket would have been dropped.
These days no matter how difficult the issue I might be facing I deal with it head on because that is the only way to resolve the issue at hand.
Action is the antidote to despair.
And facing failure is the only way to overcome it.
As Elon says:
“Failure is an option here. If things are not failing, you are not innovating enough.”
“If every time somebody came up with an idea it had to be successful you don’t get people coming up with examples.”
Failure is not to be feared. In fact just the opposite: It should be encouraged!
With the Cybertruck, for example, at first the window broke when they unveiled the truck. This event did not derail them.
Perhaps the publicity it created even helped them make more sales!
Tesla produced a shirt even, which shows the broken window.
Broken window or not Tesla has produced the safest pickup truck on the market.
With more experiments in innovation, more failures will occur, and by acting on them you will ultimately end up with more successes and a faster pace of innovation.
Tesla having safety as the #1 priority of their company certainly helped them innovate and achieve their 5 star safety rating as well.
4. Gaining a Competitive Advantage
Innovation is absolutely a vital key to gaining a competitive advantage in your industry…
At MIT Elon explained “In terms of our competitiveness, it mostly comes down to our pace of innovation. Our pace of innovation is much, much faster than the big aerospace companies or the country driven systems…
This is generally true: If you look at innovation from larger companies and smaller companies, smaller companies are generally better at innovating than larger companies…because smaller companies would die if they didn’t try innovating.”
Innovate or die. And don’t let the small size of your company deter you…small, smart and technically strong often trumps large, clunky and wasteful.
Elon is an extremely strong thinker and as such the intellectual waters he swims in and the decisions he makes may appear risky to others but make perfect sense to him.
Almost everything new has an element of fear at first.
Without an element of fear and risk a great reward is rarely found.
Safe is risky and risky is safe.
Because innovation is how you win and innovation requires risk.
Avoiding innovation is a bigger risk than not innovating at all.
Innovation requires a focus on what could be rather than what already is.
5. What Matters is The Rate of Innovation
Elon has said “What matters is the rate of innovation.”
“What exactly is innovation?” you might be wondering. At Tesla AI day Elon explained “In general innovation is how many iterations and what is the average progress between each iteration. And so if you can reduce the time between iterations the rate of improvement is much better.”
Innovating more effectively and rapidly than your competition gives your business the best chance of success…
So always be innovating!
The faster your rate of innovation the faster your business will rise to power and capture market share.
Tesla has been innovating faster than other car companies and the compounding effect of all of these innovations are an essential part of the reason why Tesla is now the most valuable car company with no signs of slowing down.
Amazon has been innovating more than Wal-Mart and this makes it clear how Amazon has been gaining market share from Wal-Mart.
6. Innovation is Future Focused
Innovation is future focused and being future focused is key if you want a more fantastic future.
Elon certainly is and says:
“I think within the next five years we will see the electrification of aircrafts. First propeller, then turboprop, then jet engines.“
“What is important is that we establish a self-sustaining city on Mars so the future of consciousness and life as we know it can survive.“
Elon goes on about innovation in an interview with Offshore Northern Seas.
“Establish an expectation of innovation, and the compensation structure must reflect that…there must also be an allowance for failure because if you are trying something new, necessarily there is some chance it will not work.
If you punish people too much for failure they will respond accordingly and the innovation you get will not be very incremental.“
So keep thinking ahead because the future is where we’ll be spending the rest of our lives.
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