First Principles Thinking

When it comes to creating breakthrough products, as the slightly cliché saying goes; you have to think outside the box. You have to find a new way of creating customer value, and make a product that’s technologically advanced and creatively superior to any other existing products in the market. But usually good advices end about right there... Be a genius, come up with something superior, or something that doesn’t even exist yet. But frankly, there is a method to madness, and there’s a blueprint on exactly how to think outside the box. It’s called First Principles Thinking.

Let's say you're trying to come up with a new business. The lame way to do this is to find an existing business model that seems to be working and spin it just as much as to get a little funding for it, but the product will probably fail to justify its existence and most likely be dead on arrival. Usually customers don’t change their habits for an extra feature. We only get excited for the hail marries. So what if you used First Principles Thinking instead? In this case you would look at the same business model, and instead of trying to add an extra feature, you’d break it down to its absolute basic and most fundamental parts.

The reason why this is so important because thinking outside the box is actually all about insights that define conventional wisdom. And by breaking down an idea, reexamining, and recombining it, you can see the world in fresh, unorthodox ways. Once you start playing with the building blocks, you can start asking the big questions, like "Why do things have to be this way?" and "What if we did things completely differently?” If you can learn to think like a first principles thinker, you'll be able to come up with creative solutions to problems that others haven't even thought of.

One of the biggest proponents of this method is Elon Musk. Let’s see how he used it in practice to make SpaceX a success.

Around the time NASA retired it’s space shuttle program, Musk looked at the the dying space industry that has been in a downward spiral almost since the end of the Apollo program and identified a core problem. Getting a rocket to reach escape velocity has been an incredibly expensive endeavour. Not a lot of things could justify the price tag. So Musk boiled down how we’ve been thinking about rockets for about 60 years and realised that using, single-use rockets makes as much financial sense as to use single-use airplanes. Getting a rocket to space, and bringing it back to reuse it again and again would make the use of resources much more efficient, not to mention the price tag on a rocket launch would be down by magnitudes on the long run. So, he identified the problem, realised the need for it, and worked hard to come up with a solution. And now we’re never going to look at rockets the same way while the space industry is thriving again.

That’s what First Principles Thinking is all about. By breaking down common wisdoms into their basic truths and creating solutions from scratch, we can come up with ingenious solutions to complex problems. That’s how we can all think outside the box. And that's how you can build the next big thing.