How You Can Use Feedback Loops to Make Great Decisions Like Elon Musk

Why Elon Musk Uses Feedback Loops

Elon Musk understands our imperfect world.

I can say this because of two factors. The first comes from the following statement:

A decision is nothing more than a strategy to test a hypothesis.

Elon clearly understands that you cannot make permanent decisions from temporary information. He...we can't possibly predict the actions of others with absolute certainty. Then there is the second law of thermodynamics to contend with.

Entropy delivers an ever-increasing amount of chaos and disorder to our world.

It means that every decision is a theory. A hypothesis to prove or disprove an idea or suggestion of what might happen.

When you accept imperfection, you open yourself to feedback.

Feedback is the second factor that confirms Elon's perspective on our imperfect world.

According to Tim Urban, Elon Musk's mind operates by processing feedback as new data. He is constantly updating his models. Feedback loops essentially follow a test which then help Elon update his hypothesis. His feedback loops give him the ability to adjust or take action.

Progress is a natural by-product for Elon when he makes decisions this way.

How Elon Uses Feedback Loops

So the argument for using feedback loops is clear. When you see the giant gains Elon and his companies have achieved, it makes sense to understand it more.

Tim Urban got the chance to spend time with Elon Musk. He was able to see the whole Elon decision-making process in action.

What Tim saw was a strategic approach to achieving a specific goal. Now most of us do the same thing. But, what Tim recognised was how naturally Elon receives new information. His strategy — his approach — evolves with new information.

Tim explains:

But the goal-achievement strategy you came up with was just your first crack. It was a hypothesis, ripe for testing. You test a strategy hypothesis one way: action. You pour your power into the strategy and see what happens. As you do this, data starts flowing in—results, feedback, and new information from the outside world. Certain parts of your strategy hypothesis might be strengthened by this new data, others might be weakened, and new ideas may have sprung to life in your head through the experience—but either way, some adjustment is usually called for.

This flow chart shows us how Elon makes decisions.

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Elon understands that decisions are experiments. There is circuit that Elon is following and feedback is a critical part of it.

This is what feedback means to Elon.

"I’m a huge believer in taking feedback. I’m trying to create a mental model that’s accurate, and if I have a wrong view on something, or if there’s a nuanced improvement that can be made, I’ll say, “I used to think this one thing that turned out to be wrong—now thank goodness I don’t have that wrong belief.” —Elon Musk

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Changing the Way You Make Decisions

I wonder if you've ever mapped out the way you make decisions?

Seeing Elon's — taken from Tim Urban's excellent article, titled The Cook and the Chef: Elon Musk's Secret Sauce — is very helpful. Elon's framework operates so well because he recognises the uncertainty we live with. He also embraces feedback and encourages it.

I wonder whether your decision-making map follows a traditional path. It's probably more binary than Elon's.

At a very basic level it might flow like this:

You're presented with a decision. In many instances, the outcome offers a benefit so great, that you don't think it about it for long. Other times, You take what you know, and probably some of what you think you know and say yes or no. Sometimes you might question the information you have. Sometimes you might even think about the likelihood of the outcome.

But all to often, you decide quickly.

The first problem is the starting point.

We frequently make decisions to deal with short-term issues. We firefight, rather than look to root causes or focus on long-term goals.

The moment you do this, things change.

With goals come questions.

• How can I achieve this?
• What do I need to change?
• What are my next steps?

These questions are good, but they are the wrong ones to ask.

Questions should be invitational. Ones that create a strategy that is yet unproven.

1. How could I make this happen?
2. What do I know to be true that helps this strategy succeed?
3. What am I unsure of that if true would make this strategy succeed?

Now your answers create a strategy you can test. With the test comes feedback.

You have a negative feedback loop. One that tells your theory didn't work and gives you information to help adjust and try again. On the other side, you have a positive feedback loop. A positive outcome that shows you strategy works. You can invest fully, gaining new information in the form of results and feedback.

Elon's process shows how fluid decision-making should be.

When I look at Elon's decision-making process, I see a simple way to embrace uncertainty. I see a process that is progressive in testing. By seeking  new information — and then creating a new test to further evolve the strategy. There is no restriction on feedback. It isn't even defined by the outcome, which the traditional model sees as the end of every decision.

That's the key. Elon's decision-making is progressive.

Concluding Thoughts

Some of us dismiss feedback as unwelcome criticism.

Look at how Elon embraces feedback, via feedback loops, and it's fair to say that this is the wrong approach. I'll go even further. I will pour scorn on those that limit their decision-making without considering uncertainty.

You can't ignore the uncertain world we live in.

Your decision-making has to reflect the environment.

You have to see that the world is fluid. Just as time passes from the present to the past and we move to the future, so things change.

To be blind to this opens the door to reckless choices. Decision-making needs to mirror the world it operates in. It should be reflective of the fluidness of time and our surroundings. As George Box noted, "All models are wrong, but some are useful."

Thinking, and deciding with an evolving model, like Elon's, embodies this. It allows for the concept that all models are wrong to stand tall.

Often, we use mental models like binary decisions. We can't accept they are not strong enough to work in our complex world.

Decisions have to be open to new information. They have to evolve as a result to allow us to make the progress we demand of our choices.

This is why we need to embrace feedback loops to make better decisions.

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