first-principles-thinking

First-principles Thinking In A Nutshell

First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Understanding first-principles thinking

First-principles thinking has been employed by many greater thinkers over the years, including military strategist John Boyd and ancient Greek philosopher Aristotle.

In modern times, Elon Musk is the thinker most associated with the concept. When the entrepreneur attempted to source rockets for an expedition to Mars, he ran into a major challenge right away. After consulting with several companies, Musk learned the cost of a single rocket would be an astronomical $65 million.

This presented a major obstacle to his ambitions, so he used first-principles thinking to reframe the problem. “Physics teaches you to reason from first principles rather than by analogy. So I said, okay, let’s look at the first principles. What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. Then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around 2% of the typical price”, Musk would later remark.

Everyone knows that SpaceX was born soon after. However, the reasons for establishing the company are perhaps more interesting. Instead of spending tens of millions of dollars on rockets, Musk decided to create SpaceX so he build the rockets himself using cheaper raw materials.

Fundamentally, first-principles thinking encourages individuals to think like scientists who do not assume anything to be true. The method requires actively questioning every assumption one has regarding a problem or situation and creating new knowledge from the ground up. 

Indeed, first principles can be described as basic assumptions that cannot be reduced or questioned any further. At this point, creativity and innovation begin.

Engaging in first-principles thinking

To harness the power of first-principles thinking, simply work through the following steps:

  1. Identify and then challenge your assumptions – the next time you are faced with a problem or challenge, write down long-held assumptions about them. If you are trying to lose weight, you might assume you don’t have enough time to do so. If you are trying to grow a business, you might assume it can’t be done without a large sum of money. Challenge your beliefs. How do you know an assumption is true? What would happen if you believed the opposite?
  2. Separate the problem into its fundamental principles – what are the most basic truths or elements of your problem? Asking powerful questions is one way to identify these truths or elements. When Musk was faced with historically expensive battery pack manufacturing, he used first-principles thinking to break the problem down. He asked himself what the constituent parts of a battery were and how much every part was worth if purchased separately on a commodities exchange.
  3. Create new solutions – with the constituent parts identified, how can they be recombined in a different way to produce something new and insightful? Someone who believes they have no time for losing weight could try less frequent, high-intensity workouts to burn fat. A budding entrepreneur could joint-venture with a high-profile player in their industry to share costs and promote themselves to a new audience. At this point, it’s important to be bold and courageous. As Musk once said, “Good ideas are always crazy until they’re not.

Key takeaways:

  • First-principles thinking helps individuals reverse engineer complex problems and think creatively.
  • First-principles thinking has been popularized by Elon Musk, who has used the strategy to reverse engineer the rocket and battery pack manufacturing process.
  • First-principles thinking requires that we identify and then challenge our sometimes long-held assumptions around problems. We must then separate problems into fundamental elements and combine them in useful ways to create viable solutions.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"