202501081517 Status: #idea Tags: #elon #productivity #business #entrepreneurship #theory_of_constraints # Elon's approach to business and Goldratt's Theory of Constraints > [!tldr] > Both Elon and Goldratt arrived at the same core insight: **nothing matters in your business except the bottleneck.** By definition, if there is a bottleneck somewhere in your business, then spending time improving the non-bottleneck part of your business will yield little-to-no returns. As such, all effort should be devoted to identifying the bottleneck, solving the problem, and then moving rapidly onto the next bottleneck. All other problems in the business need to be delegated aggressively to allow for focus on the current bottleneck. ### Elon’s Method 1. **Identify the single most critical bottleneck (the biggest problem) each week.** 2. **Personally “micromanage” that bottleneck.** - Work directly with the people who have the deepest technical knowledge of the issue. - Stay involved until the problem is solved. 3. **Delegate or trust the rest.** - By definition, everything else is running more smoothly than the bottleneck. Elon’s style fuses **deep technical engagement** with the relentless pursuit of **unblocking the highest-leverage constraint** in each of his companies. This is different from conventional CEO approaches involving multiple tiers of management sign-off and long planning cycles. Elon essentially cycles through: - **Find** the largest constraint. - **Fix** it personally with the relevant engineers. - **Move on** to the next largest constraint. ### Goldratt’s Theory of Constraints Eliyahu Goldratt’s Theory of Constraints (TOC) provides a structured framework to do exactly what Elon is doing: 1. **Identify** the system’s constraint (bottleneck). 2. **Exploit** the constraint (focus on improving or removing it). 3. **Subordinate** all other processes and decisions to align with eliminating that constraint. 4. **Elevate** the constraint (if needed, invest time/resources to increase its capacity). 5. **Repeat** as new bottlenecks emerge. In _The Goal_ and other TOC writings, Goldratt often uses manufacturing examples (similar to how Elon and Marc Andreessen talk about Tesla’s assembly lines), but TOC applies to any system—software teams, data pipelines, supply chains, etc. The fundamental logic is: **until the major bottleneck is improved, you will see only marginal improvements from optimizing elsewhere.** ### Key Parallels - **Single Biggest Bottleneck**: In TOC, we always ask, “Where’s the main choke point?” Elon does the same weekly, diving into each company’s most pressing constraint. - **Direct Technical Engagement**: Goldratt emphasizes “exploiting” the constraint with the right knowledge/skill. Elon solves the bottleneck with the actual engineers who own the code or the specific piece of hardware. - **Iterative and Ongoing**: Once one bottleneck is addressed, you find the next biggest bottleneck. It’s a cycle. [[Elon Musk's approach to business]] [[Elon's effectiveness stems from his ability to find the highest order bit and focus all his attention on it]] --- # References https://www.youtube.com/watch?v=FQ4wBv0w9ew