The initial requirements are definitely dumb. It’s particularly dangerous when they come from an intelligent person, as we may not question them enough. Getting requirements right is hard and requires research.
It is a common error of smart engineers — to optimize something that should simply not exist. Musk refers to a "mental straightjacket" that happens in traditional schools where you always have to answer the question regardless of whether the premise makes any sense at all. To avoid and eliminate dumb requirements, they should be owned by a particular person to enable quick reevaluation in the future.
Only once the design is simplified should we start to optimize.
It's important not start optimizing production before having fixed the product. During a wrongheaded process we should simply stop, not accelerate.
An important part of this is to remove in-process testing after the problems have been diagnosed. If a product is reaching the end of a production line with a high acceptance rate, there is no need for in-process testing.