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Elon Musk once wrote: “Perhaps the most common mistake smart engineers make is optimizing something that shouldn't be there.” So, as a smart accounting firm, are you spending time streamlining parts of your processes that you shouldn't be using? For example, you might be spending too much time improving processes that touch on team members, operations, customer service, etc.
The model was revealed by Musk during an interview after he was asked whether the grid fins on SpaceX's latest rocket design would fold inward or outward. Musk explained that the fins don't fold inward, but then explained the five-step process SpaceX uses to “rigorously enforce” what led to the grid fins decision.
Elon Musk's 5-step design process
1. Make the requirements clear. “Your request is probably a stupid one, it doesn't matter who gave it to you,” Musk says. Musk uses this step to test assumptions, noting that requests from “smart people” are often the most dangerous because they may not be questioned enough.
2. Delete the part or process. “If you're not adding it back in at least 10% of the time, you're clearly not removing enough.” Musk suggests starting with lean and then adding as needed, but warns that there's a tendency to add “just in case.” Additionally, he argues that each requirement or constraint should be accountable to an individual, not a department, because you can ask that person what the relevance and purpose is, rather than having a requirement that no one owns and that persists for years despite being redundant.
3. Simplify or optimize the design. As mentioned above, Musk believes the most common mistake smart engineers make is trying to optimize something that shouldn't be there. Musk emphasizes the importance of taking the first two steps before attempting any optimization. He points to a past mistake where engineers poured huge resources into reducing the weight of a rocket's engine but didn't adequately address the equivalent problem of reducing the weight of the payload, and argues that each engineer needs to look at the project holistically.
4. Reduce cycle times. Musk welcomes the willingness to speed up but warns against putting efforts in the wrong direction, saying, “If you're going to dig your own grave, don't dig it fast.” Only once the first three steps of his process are met can you be sure you're moving fast in the right direction.
5. Automate it. Musk warns against automating before addressing the above points. He tells the story of streamlining the robotic process of assembling battery mats for the Tesla Model 3. He spent a great deal of time and effort automating and streamlining that problematic process, only to ultimately ask what the mats were used for. He discovered that the mats were created to reduce noise, but were no longer needed.
Which of the five steps above do you think your company could focus on improving over the next 90 days? For example, does your company have requirements for your team (like logging time) or customers (like formatting documents in a certain way) that, when you step back and think about it, seem a bit silly? “Because that's the way we've always done it” is not a good enough reason to continue doing it that way. For more information, see step 1 above.
What parts of a process can you remove if they're not absolutely necessary for your company to function? Musk says that as you streamline and make a process more efficient, you should add at least 10% of the essential parts back into the process. If you don't, you may not have removed enough of the original process. For more information, see step 2 above.
Next, ask your team what parts of the process can be simplified if they can't be removed entirely. Musk is always questioning the requirements you use: Are they really necessary to the way the company operates? If so, can they be simplified or reduced? For more information, see step 3 above.
The fourth step is to accelerate your “cycle time.” Cycle time is the time it takes for your team to actually work on producing an item and have the product ready to ship. For CPAs, replace the word “product” with “deliverable” or “assignment” and you get the picture. We all want to get our work done faster, but Musk, a notorious speed freak who rarely sleeps more than four hours a night, warns that you shouldn’t go at lightning speed if you’re directing all your energy in the wrong direction. He suggests not moving faster until you’ve met the first three steps of his process to make sure you and your team are moving fast in the right direction. I think every CPA firm leader can relate to this. For more information, see step 4 above.
Finally, Musk is a big advocate of automating everything that can be automated. Every CPA firm can relate to this. Think about how many human hands are involved in the process of onboarding clients, sending documents, and filing taxes. What if you could automate these mundane processes? How many hours of your team could be freed up to do more impactful activities, like better serving clients or generating new business opportunities? See step 5 above for more information.
Musk credits his 5-step guide to building a highly complex rocket ship by eliminating unnecessary parts from the process. I'm sure you can apply this guide to your company too. What is your company doing to accelerate growth and provide a high-value service to your customers?