In many ways, Elon Musk is reshaping what it means to be an entrepreneur. For years, his unorthodox management style at Tesla and SpaceX has spawned a template for how people should run their businesses.
But 2018 certainly hasn’t been the best year for Tesla. Struggles to hit milestones and reach production goals have landed the famed electric car brand in hot water.
However, every time Musk gets pushed back a step, he seems to recover by taking two steps forward. Back in April, Musk sent out an email outlining the changes about to take place behind the scenes at Tesla. These changes include halting production of the Model 3 for a few days and returning to the drawing board to revamp the manufacturing process. Recently, production of the Model 3 has been steadily increasing north of 2,000 units per week. The new plan is to push this number up to 6,000 per week with 24/7 production!
As it would seem through the email, Musk has plenty of unforgiving wisdom for skyrocketing the operations taking place at Tesla. Here are a few of the major lessons entrepreneurs can learn from it.
1. Be precise in your offering.
In my favorite line of the email, Musk wrote: “Our car needs to be designed and built with such accuracy and precision that, if an owner measures dimensions, panel gaps and flushness, and their measurements don’t match the Model 3 specs, it just means that their measuring tape is wrong.”
This is perhaps the most powerful part of the email. It’s clear that Musk’s goal is to reach every employee on an emotional level and light a fire beneath them.
In the business world, you are only as good as your word. Success as an entrepreneur is all about accountability. As an owner or manager asking your crew to increase productivity, the last thing you want is to sacrifice the quality of what you offer or not deliver what you promise. If this happens, word gets around. If it becomes a pattern, you eventually have a giant problem on your hands: a cracked reputation.
The seriousness of this concept cannot be overstated. While there were a million ways Musk could have communicated this, the words he chose certainly leaves a strong impact throughout the company.
2. Control cost and focus on profit.
One of the major points of criticism Tesla faced this year involved their profit margins. Musk made this clear in the email: “A fair criticism leveled at Tesla by outside critics is that you’re not a real company unless you generate a profit, meaning simply that revenue exceeds costs. It didn’t make sense to do that until reaching economies of scale, but now we are there.”
He then elaborates on the details and problems that are affecting the bottom line. These include the number of contractor and subcontractor companies used to support Tesla’s output. Musk stated that the result of these practices leads to “a lot of middle-managers adding costs but not doing anything obviously useful.”
The biggest takeaway from this part of the email is that business owners must take a step back every once in a while and evaluate costs, along with the processes behind them. If things are working well, it’s surprisingly easy to get comfortable in the “if it’s not broke, don’t fix it” mindset. However, if you let this go on too long, especially as the company is growing, you could be flushing copious amounts of profit down the drain.
As an entrepreneur, you can’t fall in love with a process. If your ongoing goal is to boost profit margins (which I sincerely hope it is) you need to accurately (and consistently) assess the ROI of each aspect of your business operations and adjust the model accordingly.
3. Eliminate productivity killers, no matter how small.
Ultimately, the main theme of this email is productivity and efficiency. Musk has no tolerance for BS. Furthermore, his management style challenges convention and the older ways of getting things done. At the end of the email, Musk gives his employees a handful of tips to increase productivity here and there.
The first one discussed meetings. “Excessive meetings are the blight of big companies and almost always get worse over time.” He urged his managers to do away with large meetings unless they are certain that it will provide value to everyone. Even if this is the case, he said to keep them short.
In my experience, frequent distractions are the biggest productivity killer. Studies have found that it takes about 25 minutes to fully return to the original task after an interruption. When you call a meeting, you are separating your workers from their duties entirely. If frequent meetings are the norm at your company, you are probably wasting hours in productivity.
Another highlight Musk brought up dealt with communication. “Communication should travel via the shortest path necessary to get the job done, not through the ‘chain of command.’ Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.”
As a business owner with a team in India and the United States, this one hits close to home for me. Over the past two years, it has never been more clear that communication makes or breaks a company. Being as how the international teamswork on complete opposite schedules, any lapse in communication can stop productivity and delay a project for days. The greatest lesson entrepreneurs can learn from this part of the email is to get rid of unnecessary rules for communication. Productivity thrives on good back-and-forth. If there is a question, what is the point of requiring a path through multiple gatekeepers to get the answer? We are living in the age of constant connectedness, for crying out loud. There should be no barroers whatsoever in going to a department head or even the CEO to communicate a problem. Plain and simple.
You need to understand the ripple effect of every single snag and how it impacts the big picture to achieve the productive company culture you want.
Musk has no problem pointing out flaws in the status quo. and he famously makes bold claims about how he will improve it. It remains to be seen how this plan to improve Tesla’s production levels will pan out. Regardless, the email he sent out is jam-packed with lessons and takeaways you can apply to your own practices, in some form or another.