First Principle Thinking

The success of new, disruptive companies affects the personal and professional lives of most likely like each of us. What they all have in common is a special way of thinking.

Disruptions in everyday life

Tesla's electric cars, which are particularly notable for their attractive software rather than one hundred percent accurate gaps, are shaking up the market. AirBnB wants us to rethink how we stay overnight while traveling, and is reshaping the housing market in big cities as well. Apple created a market that has put a wearable device in – what feels like – every pocket in the world during the past few years. Apple's “think different” has given us something “Star Trek”-like.

What all these incisive companies have in common is an apparent and particular way of thinking. In today's world, the term “First Principle Thinking” is particularly closely associated with the name “Elon Musk”. His controversial and striking way of working enabled him to build three disruptive, billion-dollar companies (PayPal, Tesla, and SpaceX). Their success is attributed, among other things, to his special, fast way of thinking when solving problems.

Think different

The underlying thinking technique is not new. The ancient philosophers used it, as did Einstein and Edison. “First Principle Thinking” is about getting to the bottom of things and uncovering the lowest, fundamental truth.

For Socrates and his student Plato, “the truth” was an aspect of the good life. The Greek word for truth (“aletheia”) means roughly: the negation of the hidden.

If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.
Albert Einstein

In an Interview with Chris Anderson, Elon Musk explains his approach to getting to the bottom of things:

Well, I do think there’s a good framework for thinking. It is physics. You know, the sort of First Principles reasoning. Generally, I think there are — what I mean by that is, boil things down to their fundamental truths and reason up from there, rather than reasoning by analogy. Through most of our life, we get through life by reasoning by analogy, which essentially means copying what other people do with slight variations.
Elon Musk

Here, Musk ultimately applies the principle of “non-contradiction”, which Aristotle – a student of Plato and founder of formal logic – already formulated.

So “First Principle Thinking” is the procedure of actively questioning everything one assumes and knows about a particular problem. Thereafter, one can create new knowledge and solutions on the analyzed green field.

Practical FPT

So, what might this thinking look like in practice? A nice example can be found in Kevin Rose's interview with Elon Musk (starting at minute 23:30)

Somebody could say that Battery packs are expensive and that’s just the way it will always be. Because that’s the way it has been in the past. […] Historically, they cost about $600 per kilowatt-hour, and so it's not going to be better than that in the future.

So, what are these batteries made of? With first principles, you say: what are the material constituents of the batteries? What is the stock market value of the material constituents? It’s got cobalt, nickel, aluminum, carbon, some polymers for separation and a seal can. Break that down on a material basis and say: If we bought that on the London Metal Exchange, what would each of those things cost? It’s like $80 per kilowatt-hour.

So, clearly you just need to think of clever ways to take those materials and combine them into the shape of a battery cell, and you can have batteries that are much, much cheaper than anyone realizes.
Elon Musk

Steps of “First Principle Thinking”

Recognize your assumptions and “preconceptions”

The first step is to question fixed assumptions and preconceptions. Things that have always been so and therefore must remain so, are worked out. Basic attitudes are questioned with the goal of rethinking. Not for nothing is there the calendar saying on many walls in offices: “Everyone said, 'that won't work!' then someone came along who didn't know that and just did it.”

So, as a first step, write down everything that seems to you to be an unquestioned assumption about a topic.

  • We have to do that with Excel.

  • We need an external person for that, we can't do it alone.

  • We can't do that, it costs too much money.

  • There is no alternative to the current process.

Breaking down the problems

Now, the second step is to analyze and decompose the problem into its fundamental components. Asking “W” questions to get at the details of the various assumptions lends itself.

Toyota Industries Corporation Inc. founder Toyoda Sakichi used his “5-Why” concept to get to the bottom of issues. Ask “why” five times to find out the cause of the issue. Then change the process so that the difficulty can no longer occur. The method is also found in the “Six Sigma” management system for quality improvement.

It is important to leave conventional thinking out of the equation to allow for creative thinking.

An example with fewer questions to illustrate:

  • A bakery does not use ready-made baking mixes. (Why?)

  • Ready-made baking mixes don't taste good. (Why?)

  • Baking mixes are cheap because they contain only cheap ingredients, and the taste suffers. (Why?)

  • The purchase of high-quality ingredients is only worthwhile in large quantities. (Could already be a solution here?)

The challenge here is to approach a core in at each question and to avoid a continuous loop with always new aspects. However, the principle becomes clear.

New composition

The third step involves the novel and unconventional composition of the individual components to design innovative solutions.

In the last answer from the example of step two, a possible approach can already be found. One could actually use baking mixes if one can find a supplier who buys the high-quality ingredients in large quantities and can therefore make a better offer. This doesn't sound like a wonderful innovation yet, but it possibly solves a blockage in thinking and existing beliefs.

Think different

When confronted with complex problems, people often rely on their existing experiences (heuristics) to help them react quickly. These ready-made recipes provide quick reactions to everyday situations and give a certain security. However, they are relatively easily led astray by emotions. Creative ideas, however, cannot really be expected from these procedures. “First Principle Thinking” can be a very exhausting, conscious and goal-oriented method here.

For more in-depth information about the brain processes behind it, I can recommend the excellent book by Daniel Kahneman “Thinking, Fast and Slow” and right after that “Noise”.

(Classification: the further book recommendation comes from me, I don't get any remuneration for it and don't want to. I have linked directly to the publisher and not to an internet mail order company, so the advertising is unpaid).

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