The 5-Step Algorithm (Elon Musk)

intermediate6 min read · updated 2026-06-20

As taught by Elon Musk · source

The 5-Step Algorithm

As described by Elon Musk for running SpaceX and Tesla, this is a process-improvement sequence —

and the order is the entire point. Most people jump to the last step and waste fortunes.

The five steps, in order

• Make the requirements less dumb. Question every requirement, no matter how senior its

source. Each requirement must carry a named person's name — "legal requires it" is not

allowed; a specific human who can defend it today is.

• Delete the part or process. Remove anything you can. If you don't end up adding back at

least ~10% of what you deleted, you didn't delete enough.

• Simplify and optimize — but only what survives deletion. "The most common mistake is to

optimize a thing that should not exist."

• Accelerate cycle time. Speed up what's left — only after steps 1–3.
• Automate. Last. Not first.

The order is non-negotiable: Musk has said he burned roughly $2 million automating Tesla

parts before realizing those parts shouldn't have existed at all. Automating a broken process

just makes the waste faster.

Two companions to the algorithm: first-principles thinking (reason up from physics and

fundamentals, not by analogy to "how it's done") and the idiot index (the cost of a finished

part divided by the cost of its raw materials — a high ratio flags a fixable inefficiency).

What to use in your business

• Audit one core process (onboarding, fulfillment, your sales flow). Write every step down.
• Attach a name to each step's requirement. Anything no named person can justify — cut it.
• Delete aggressively before improving. Removing a step beats optimizing it every time.
• Only then speed it up, and automate last — never automate a process you haven't first

questioned, deleted, and simplified.

• Run the idiot index on your costs: where finished cost vastly exceeds input cost, there's

margin or a better method hiding.