← No Bullsh!t Leadership
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In the early days, Elon Musk ran Tesla's product design personally, convening weekly problem solving meetings, cross examining every detail of his people's work. The spectacular results that Tesla achieved might entice you to emulate Musk's leadership approach, but in this episode, I'll show you why that would most likely be disastrous.
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Welcome to the no Bullshit Leadership Podcast. In a world where knowledge has become a commodity, this podcast is designed to give you something more access to the experience of a successful CEO who has already walked the path. So join your host, Martin Moore, who will unlock and bring to life your own leadership experiences and accelerate your journey to leadership excellence.
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Hey there and welcome to episode 413 of the no Bullshit Leadership Podcast. This week's episode, Elon goes deep, should you. John McNeill, the former CEO and president of Tesla, is one of the very few people who's been able to work closely with Elon Musk for an extended period. And that period was one of the most explosive growth phases that any company could wish for. In his book, the Algorithm, McNeil lays out the five step formula that Musk used to drive that growth, as well as the cultural ingredients that form the foundations underneath it. People love to romanticise the image of the founder, who's so deep in the detail that he can solve the toughest technical problems far better than his own engineers. How many LinkedIn posts extol the virtues of entrepreneurs who lead like this? But for 99.9% of leaders, this could never work. In this episode, I pull the principles of Musk's algorithm apart and explore what he actually did, why it worked for him, and why trying to copy it will not only fail, but but also stunt the growth of your leadership pipeline. Instead, I'm going to give you six things that you can actually do if you don't have a brain the size of a planet. So let's get into it. My favourite book of the year so far is the algorithm by John McNeil. You may have heard me mention it in previous episodes. McNeil is the former CEO and president of Tesla. He got to work extremely closely with Elon Musk for a number of years. According to McNeil, during his tenure at Tesla, the company grew exponentially. Revenue went from $2 billion to $20 billion in less than three years. The book reveals the five steps of the algorithm and the underlying cultural ingredients that are required to achieve this explosive performance. The five steps question every requirement, delete every possible step in a process, simplify and optimize, accelerate cycle time and My favorite Automate Last Automate Last is something we need to take to heart as our organizations rush headlong towards various implementations of AI. If you don't understand the process profoundly before you try to automate it, what you'll end up with is a faster, more cost effective way to do the wrong thing. The five steps of the algorithm have echoes of previous works that you may have already come across, like the Goal and the Four Disciplines of Execution. The formula sounds pretty straightforward, but once you absorb the real life examples, you'll understand how they were able to make such staggering progress in a very short space of time. As much as the formula felt familiar to me, it was the three cultural ingredients that really struck me. I often say leadership drives culture, culture drives performance, and it's these three cultural ingredients that make the algorithm work. Of McNeil's cultural ingredients, the one that resonated most inject urgency and accountability into your organisation. As an aside, he also mentions one of my favourite expressions, eat your own dog food. I've been using that for decades without knowing its origin, and I'm sure it's not a Musk McNeil original either, but it's good to see the sentiment as a core cultural driver of one of the planet's most recognizable brands. But I digress. Urgency and accountability are undoubtedly the biggest execution levers. You've probably heard me say that nothing will improve your team's performance more than strong single point accountability. And you may have also heard me say that one of the most underrated ingredients of performance is momentum. But within this framework, I'm a huge fan of leaders working at the level they're paid to work at, not micromanaging or dipping down. Elon is well known for his Steve Jobs like tendencies to be in the intricate detail of his people's work when it comes to product design in particular, genius founders like Musk and Jobs see it as their role to oversee every little detail of product design. In order to do that, you have to have deep expertise in multiple complex domains, and you have to immerse yourself sufficiently to understand the intricacies and nuances of the problems your people are trying to solve. The overwhelming majority of us are nowhere near smart enough to be able to do what Steve Jobs did and what Elon Musk now does. So it begs the question, how do you create that type of culture without dipping down into your people's work and becoming an indispensable part of the design and execution process? I want to give you just a little sense of how this played out at Tesla. Apparently, Elon spent one and a half days a week there. He focused on the things that he believed mattered most to the company's survival. It was almost exclusively product related. What was the driver's experience of being in a Tesla? McNeil said that Musk kept a really tight grip on the product from design through to manufacturing. On one hand he was running the company and on the other he was sort of the de facto head of driver experience. Elon's philosophy was that the product should be so good that it wouldn't even need a marketing or sales force. The product would sell itself, literally. The pursuit of product perfection was absolutely relentless. Elon assigned teams to tackle any product challenges and once a week he'd get live progress reports where the teams would present in very specific terms, progress, learnings and results. They were fundamentally problem solving sessions and Elon's role was intense and it was hands on. McNeil's comment was, and I quote, I couldn't think of a better way to light a fire underneath a team than to set a firm goal with a deadline and make the team report on progress directly to the CEO. Well, on that we agree, but I'm not sure I agree with the actual method. In my world, that means that the CEO has to know how to interrogate the experts, understand their answers and push for clarity. It doesn't necessarily mean that the CEO has to be involved in the problem solving process itself. McNeill says that top management must have a firm grasp of the details involved, whether it's a technical issue, a customer relations challenge, or even an international expansion. It's important to be able to discuss and examine these issues, he said. It's not enough to simply set a goal and a deadline. Of course, once this rhythm is established, everyone knew what to expect in the weekly updates. They knew there was no room for excuses and they brought their A game every single time. Of course, this created an immediate sense of urgency and accountability. Well, here's where we part ways. In my experience, when you're constantly second guessing your people's work, you run the risk of doing a couple of things. You may dent their confidence, you may water down their personal accountability, and it's likely that you're going to render teams of people redundant. It should be enough to simply set a goal in the deadline, and if it's not, it's likely that you have a problem with the people you've employed to do that work. Work for your part, as a leader who's committed to driving performance, you don't have to know all the technical ins and outs of their work. But you do have to know when and how to drill down. At the senior leadership level, what's the alternative to knowing every little thing your people are doing? Because I don't know about you, but I'm nowhere near smart enough to be across that amount of complexity? Just for contrast to Elon, Alan Mullaley, former CEO of another big car manufacturer, Ford, spoke about his cadence of accountability and getting people to speak up without him being in the day to day nitty gritty detail of what they were doing. There's a short YouTube video that we'll leave a link to in the show. Notes Mully came in from outside. He wasn't a car industry veteran, but he had a long career in the related field of airline manufacturing with Boeing. Not knowing the specifics of what his people were dealing with didn't in any way impinge on his ability to turn the company around. But McNeil insists that the weekly meeting cadence was one of Elon's most effective time management tools. Focusing on the most critical issues and inspecting progress on a weekly basis enabled him to supercharge his best problem solvers. It was a force multiplier, which of course has echoes of another one of my favourite leadership books, Liz Wiseman's multipliers. There's one example of a critical design problem in the Tesla Model X that caught my eye. It was almost a showstopper for the future sales of that car. So as the story goes, Elon engaged with his engineers on a fundamental level. In one session, he was pushing the lead engineer on gravitational physics and he asked, do you know what the formula is? The engineer replied, well, no, not off the top of my head. Elon answered, well, I do. And apparently he went to the board and drew out the formula forcing the engineer to solve the equation on the spot. And that apparently is when the answer emerged. This is presented as evidence of Elon operating in his sweet spot because metallurgy and mathematics were were key to his ultimate mission. Putting a man on Mars. Elon managed to force a solution to a complex design problem. But isn't this precisely what he was paying his head of engineering to do? And in reality, how many leaders can actually do this? We all come from a particular technical background. For example, if you're a lawyer in your formative career, you may be able to go deep or on certain legal issues, but even within that field, if your specialisation was in commercial law, you may be relatively clueless on industrial relations law. Whatever the case, it's extremely Unlikely that you could go that deep in fields like manufacturing, finance, marketing or even operations. And you shouldn't have to. That's what other people who are experts in those fields and are getting paid to do. What's at the heart of this cultural element of injecting urgency and accountability into your organization? You don't need to be a genius in metallurgy or mathematics to create a culture of urgency and accountability. And although the success and effectiveness of the algorithm is undisputable, I get the sense that it would be almost impossible to sustain over an extended period. It feels more like a remedial troubleshooting technique than a long term sustainable culture that's driven through the whole of the company. My main objection is founded in the working at level principle. You shouldn't be dipping down into your people's work. It demonstrates a lack of trust in them and it leads to underutilisation of their skill and capability. People don't grow when you over function for them. So as much as it can be an incredibly effective way to get an immediate result, you will inadvertently stunt the growth of your leadership pipeline. That cultural principle of eating your own dog food is great, but I'm equally fond of Jeffrey J. Fox's other canine based principle. You don't buy a dog and then bark yourself. You're paying people to do a job. As a leader, your main focus should be to maximize the value that you can generate for your organization by putting the resources it's given to you to best use. Instead of being a hero who gets results through their own individual brilliance, as Elon does, you'll get a hell of a lot more leverage by improving the performance of every individual in your team. So in the absence of deep technical skills and the single minded compulsion to use them, you need to develop something far more adaptable. It's the thing that Alan Mullally used at Ford, although he didn't describe it specifically this way. You need a finely tuned bullshit detector. Now, for a start, it's pretty much a given that when your people report to you, they're not going to tell you everything. I call this the sanitization effect. Even when they're pretty diligent about reporting honestly, they can't tell you everything. They have to choose what to tell you as they summarise their team's progress. And at every single level between where the work is done and the report that ends up on your desk, the information goes through another round of sanitization. Leaders are obviously going to tell you things that cast them in the best light. You've got to know how to recognise something that doesn't smell right and then go after it. I agree with McNeill's basic tenet that you can't run a business properly from your air conditioned office. You've got to get out and smell and touch and feel what's happening closer to the action. But it doesn't mean you have to become actively involved in that work. What it does mean is that you have to observe and ask questions and learn what's happening at all levels of the business. And using this knowledge, you calibrate all of the information you get through formal channels to form a clearer picture of where performance really lies. We produced a podcast episode on this Fairly recently, episode 386, Truth Doesn't Travel up, which we'll link to in the show notes. As you move into leadership roles of increasing seniority, your core skill isn't to understand the intricate detail, but of the problems your people are trying to solve. It's more about knowing where to look for problems and then how to assign people to solve them. This is much more about pattern recognition than it is about deep technical expertise. In the absence of hands on problem solving sessions, how do you create a culture of urgency and accountability? I've broken it down into six fundamental elements and to finish, I'm going to touch on each of these briefly. The first element is focus on the biggest value drivers. More than anything else, you and your people have to be focused almost in a dysfunctional way on the things that are going to create the most value. And you have to be strong enough to eliminate everything else. Elon definitely put the focus on the things that mattered most to the Tesla brand. Second thing is establish clear metrics. Everyone needs to know what good looks like. How would you know if you were on the right track? How would you know if you were successful? Setting up clear measures that incorporate scope, quality, cost and time are critical for every deliverable. And once you've created the metrics, you can manage them as tightly or as loosely as you like. Tightly, of course, being the high performance approach. Number three, solve for the root cause of every problem. It feels like Elon Musk and John McNeil were really good at focusing on the root cause of any problem they encountered. At Tesla, too many organizations deal with symptoms and never really get to the root cause. They burn thousands of hours in rework simply because the same problems keep arising over and over again. I always hated having to solve the same problem twice and I made it very clear to my executives that not treating the root cause of the problem was completely unacceptable. Create a sense of Urgency When I was a CEO, everything happened way too slowly for my liking. I had a natural sense of urgency in everything that I did, and my position was to be unreasonably focused on speed, but not irrationally focused on speed. The difference is in targets that are achievable versus unachievable and that makes all the difference in the world as to how your people approach the problem. Number five Assign and execute individual accountabilities. Implementing single point accountability One head to pat, one ass to kick is the key to execution excellence. If you don't have single point accountability and strong empowerment for the leaders down the line who are making decisions, you're going to end up with an all care, no responsibility Culture and performance will predictably struggle to reach even the most mediocre levels. And finally, number six, create a reporting rhythm. Dashboards, exceptions and problem escalation all critical elements of keeping people on track. Musk's weekly meetings in Tesla gave the team clarity, purpose and urgency. I love that cadence, but I'm more Malay than Musk when it comes to this stuff. Building a culture of execution excellence is incredibly difficult and every CEO and executive approaches it differently depending on their bias towards leadership or technical pursuits. Very few people can do what an Elon Musk or a John McNeil can do. They are, once in a generation talent. For us mere mortals though, the higher up you go, the less able you are to get across every little detail of the company's value drivers. So in lieu of that, you need to put in place a cadence of execution that can be driven by your leaders at every single level. If you want to execute like Elon, without the galaxy sized brain, drill down into the six elements of execution culture that I just covered. Your job is not to solve every problem, it's to bring the relentless focus and commitment that's going to move your team's performance from underwhelming to outstanding. Alright, so that brings us to the end of episode 413. I really hope you enjoyed it, but as I'm sure you know, listening is easy, leading is hard, so keep up the momentum. But by following or subscribing to no Bullshit leadership on your favourite podcast player, I'm looking forward to next week's episode, spotting leaders who are likely to grow. Until then, I know you'll take every opportunity you can to be a no bullshit.