First Principles Thinking
First principles thinking says that the best way to go about solving a complex problem is by boiling down the problem to its most fundamental elements. It is about removing all assumptions and looking only at what has been proven and true. And then reasoning up from facts. The idea behind this sort of thinking is pretty simple. A first principle is a foundational proposition or assumption that stands alone. We keep breaking down the problem until we arrive at base truths which are self evident facts and cannot be broken down further.
It’s the best way of untangling all the assumptions and myths around a problem which allows us to reconstruct a solution from this granular level of self evident truths. It’s a physics way of looking at a problem and was made popular by Elon Musk when he mentioned it during an interview. It allows us to cut through the fog of shoddy reasoning and inadequate analogies to see opportunities that others miss.
Reasonable minds often disagree when an underlying premise differs.
Every complex problem can be broken down to simpler smaller problems which are governed by basic assumptions of logic & science. Some examples of first principles thinking in action in everyday life:
1. Elon Musk’s approach to designing electric cars: When Elon Musk was first developing Tesla’s electric car, he didn’t start with the traditional approach of improving on existing gas-powered cars. Instead, he approached the problem from first principles by breaking down the components of a car and designing a battery-powered electric car from scratch, even redesigning the cells in the battery pack. This resulted in a car which was more efficient, more environment friendly and probably one of the safest cars in the industry.
2. Personal finance: First principles thinking can be used to approach personal finance by breaking down income and expenses into their fundamental components and understanding how they affect each other.
For instance, someone looking to increase their savings could start by first looking at their savings rate per month. Your savings rate is nothing else than (Savings = Income – Expenses). Now there are two ways to increase your savings, either you increase your income which doesn’t happen overnight or you decrease your expenses (which seems possible).
So you further breakdown your expenses and figure out the biggest 2 – 3 areas of expense, which you can then try and cut back on as much as possible. Ofcourse, you can’t cut back on things like rent or mortgage but you can definitely look at consumables.
Lets say, a major part of your daily expense is on a daily cup of Starbucks coffee (round Rs.300/cup = almost Rs.7500 per month), maybe learning how to brew a perfect cup of coffee every morning at home at a fraction of the cost (Rs.500 for a bag of roasted coffee beans which will last you the whole month) would help save you some extra money which can then be invested regularly. Rs.7000 saved monthly for a year gives you Rs.84000 per year!
3. Health and fitness: First principles thinking can be applied to health and fitness by understanding the basic principles of nutrition, exercise, and physiology. By understanding these principles, one can develop a personalized diet and exercise plan that is tailored to their specific needs and goals.
4. Scientific research: First principles thinking is essential in scientific research where researchers must break down complex problems into their fundamental components and design experiments to test hypotheses based on these principles. By doing this, they can make new discoveries and advancements in their respective fields.
Picture Credit : Shane Parrish, Farnam Street
