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As this man reaches for the sun, so he grasps the ability to reason from first principles

To Reason from First Principles, You First Need to Understand

Every year, at the same time, the same thing happened, and the company I worked for responded to it in the same way. It was a crisis, a moment of panic as work threatened to overwhelm the business, damaging client relations along with it.

No-one could see the repeating pattern and after five years – and five new department managers, my manager decided he wasn’t going to be number six. He – we – looked at the historical data, and realised the same thing happened every year.

A fixer: a firefighter would step in and manage the crisis. She was great at putting temporary systems in place to deal with the chaos, which had everyone running around like headless chickens.

The irony – the firefighter didn’t know what the cause of the problem was.

She couldn’t explain it. No one could. Everyone could explain the effects, but no-one could explain why. Earlier managers had gone to great lengths to manage the effects, but none had dealt with the why.

We didn’t want to manage the effects, we wanted to understand the problem – and so, we started asking why.


First Principles - the building blocks of life

Why we reason from first principles

Clever people reason from first principles. Reasoning from first principles is a process of critical thinking. It is a way of understanding how the world works, from any level we want. What’s more, it offers a way to solve problems and to find alternative solutions when we become stuck.

It is a means of considered thinking broken into two parts.

  • Understanding the fundamental truths which sit at the heart of a problem or question.
  • Use this understanding to find an alternative solution.

Finding a solution when you’re faced with a problem requires a new way of doing the same thing. This is how people like Elon Musk solve problems. Having grasped the fundamental principles of flying in space, or working with batteries, Elon can reason from these points to reinvent what’s gone before.

Understanding why launching rockets cost so much, enabled Elon and Space X to create reusable rockets – thus dramatically reducing flight costs.

We all want to be clever – hell – we all think we’re clever.

Seizing on the language of first principles is easy.

But here is the thing, when you try and find examples of people who successfully use first principles thinking, it’s hard. Yes, we know about Elon of course. A Google search reveals a lengthy list of articles, of which, I’m sure this will become one.

But where else are there examples?

I found several involving Nick Kokonas, the CEO of Tock, and the co-owner of Alinea, Next, The Aviary and others including:

  • Tuesday is not Saturday.
  • Food costs money
  • How to self-publish your book

I’m going to reference the first two below, but this link to Nick’s article explains the book deal he crafted for himself.


Tuesday is not Saturday.

When Grant Achatz, Nick’s partner and head chef fell ill with Cancer, it led to Nick becoming more involved in operations at the restaurant. Observant as he was, he quickly noticed empty tables on a Tuesday evening, but overbooking on a Saturday night. [1]

“Why?” he asked.

As he searched for answers, so began to learn what was happening. Demand for tables on a Friday and Saturday was massive, with tables booked ahead for weeks. But some wouldn’t turn up, leaving empty tables and lost revenue. Customers made a verbal reservation, meaning if something came up, it was easy not to go.

The customer stood to lose nothing.

Some would turn up having booked a table for six when they wanted a table for two – and only two would attend – losing the restaurant more revenue. To factor against this and the no shows, the restaurant would overbook, allowing customers to wait as they juggle tables on busy nights.

It was a poor experience for the customer – and the restaurant.

The beginning of Tock

Nick now understood the fundamental truths of selling seats in a restaurant. He understood the first principles and could now reason from them. He could see this was a supply and demand problem.

Reasoning from first principles enabled Nick to mimic other supply and demand businesses. Nick could see his restaurant was no different from a theatre selling tickets. In a theatre, the better the view, the more the seats cost. Applying the same logic in a restaurant, the busier the night, the more a table should cost. Conversely, the less demand, the cheaper the table could be.

The other issue Nick could see was prepayment. When you go to the theatre, you pay upfront for your seat, not after, or not even at all if you don’t show up.

So, Nick opted to build an online booking system which would enable customers to book online – and pay a deposit – to secure their table. Tuesdays were cheaper than Saturday’s, and so on. It became a system of dynamic pricing for restaurant reservations.

The skin in the game – the payment to secure the booking – changed everything. Empty tables became a thing of the past. As quickly as they released new dates for reservations, they would sell out, the demand beyond expectation.

It not only led Nick to increase seating occupancy at The Aviary, but it also turned the cashflow model on its head. Oh, and it also led Nick to create Tock, a software system he could licence to other restaurants to use. [2]

Food costs money

As previously noted, taking payments upfront from customers changed the cash flow model for the restaurant. Instead, of collecting payment at the end of the meal, The Aviary had a huge chunk of it paid in advance.

Nick began thinking about how they could use this to their advantage. Typically, like most restaurants, suppliers got their money several months after they had supplied their products. Credit terms were sometimes as high as 120 days – 4 months after supply. [3]

With the cash in the bank, Nick contacted a meat supplier and asked him a question.

“What the price be if paid you in advance for the next four months meat orders?”

“I’ll get back to you.” came the reply. The reply blew Nick away. The price was now $18 a kilo, down from $34 kilo, which was nearly half.

 “I’ll pay you $20, if you tell me why”, Nick wanted to know.

The answer lied in the hidden cost of selling meat. Once beef went past a certain age, price reductions occurred to help sell it or dispose of it. With the security of the payment and the amount the supplier needed to deliver, disposal costs were irrelevant.

Of course, Nick was quick to try this with other suppliers, and the restaurant’s food costs tumbled, increasing margins significantly.

Nick’s method is the same as Elon’s. First, they understand.


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First, you need to understand.

We think we understand things, but we don’t – not like Nick and Elon.

More importantly, we don’t take the right steps to understand. We miss opportunities to learn; we don’t ask questions like a child.

Assumptions dress up our knowledge, fooling ourselves and others we understand. When I think of the way Elon looks to learn, I can see how we fool ourselves. Elon takes a subject, and like a tree, he is only interested in the trunk and main branches. These reveal the fundamental truths, which he focuses on, as these are the first principles. The detail, the assumptions – all lie within the smaller branches and leaves.

A child needs to learn.

Children’s reasoning from first principles – understanding.

As any parent will know, when a child reaches the age of 3-4, they suddenly become inquisitive of the world around them. They seek understanding – not knowledge –they want the tree trunk.

The word ‘why’ is a word parents begin to fear from their pre-school children. The reason is simple. Children want the trunk; they want to understand, and they can’t accept assumptions – they must understand. And so, they ask why.

In my piece, First Principles Thinking: Why We Need to Ask Questions Like a Child, I explain how children ask questions not to learn, but to understand.

My nephew is five. Like every five-year-old, he questions everything. “Why is it bedtime?” “Because it’s dark and time for you to get some sleep.” Replies dad. “Why does it get dark?” and often this is swiftly followed by “Why do I need to sleep?” My brother-in-law tolerates the questioning to a point, but as with most parents’ his patience soon disappears. 

Like every five-year-old, my nephews’ brain is like a sponge, and he wants to fill it. But, even at such an early age, his mind wants to utterly understand what is in front of him. If the first answer he gets doesn’t make sense to him, he keeps asking why until the explanation is something he understands.

First-principles thinking is the way children learn until they reach school age, at which point memorization becomes the dominate way they learn.

Young children have an innate urge to want to understand. It drives their questioning and their thinking beyond just knowing something. They want to fully understand what they see and hear.

Richard Feynman said it best when he said, “If you can’t explain it to a six-year-old, you don’t understand it yourself.” The simple reason being a child will keep questioning. It is the first principles thinking in action.

First Principles thinking: why we need to ask questions like a child

Understanding is the quest for young children with hollow brains. They aren’t interested in the second part I highlighted earlier. All they need is to develop an understanding of the world around them.

Nick Kokonas is no different. He always asks why – he is looking for the same tree trunk of knowledge so he can understand.

Of course, this takes effort. Which is why as adults we don’t ask questions. Instead, we accept assumptions, we accept the insights from the leaves and small branches of knowledge, rather than look for the fundamental truths of something.


Reasoning from first principles

As my boss and I began to ask why, so the trunk of the knowledge tree in this situation revealed itself. One fundamental truth was the algorithm the company used to distribute work – and unsurprisingly – no-one understood it.

As we unpacked this pathway, so the historical data made sense. Surges in work, combined with a limited ability created bottlenecks the software couldn’t process. The effects were clear and highly visible to clients and customers.

The first principles of this business were now within our hands – and now – we could reason from them to overcome the problem. We understood. The trunk from the tree of knowledge was where we focused, and thus, we developed the understanding so we could reason from first principles.

We were able to make tweaks to the algorithm, but also increase our ability to handle surges in work. The crisis became a thing of the past, meaning no more firefighting.

Maybe the earlier managers weren’t aware of first principles. The firefighter wasn’t. But whether they were or weren’t, without understanding the fundamental truths of the problem, they had no hope of fixing it.


Concluding Thoughts

It sounds utterly simple, doesn’t it? To reason from first principles, you first need to understand. But understand what exactly?

The answer: The fundamental truths of what you’re trying to reason from.

We all marvel at first principles thinking. We lap up the wisdom which flows from Elon Musk and his use of this powerful way of thinking.

But then, we ignore the hard part.

We assume we understand. We don’t question our assumptions or what others are telling us. Instead, we try and solve problems without understanding the underlying principles of what stands before us.

To reason from first principles, you first must understand what those first principles are. This means – as Elon puts it – boiling things down to their fundamental truths.

The challenge we all face is we think we know those truths already. So, when we reason from them, we’re reasoning by analogy, not first principles. We end up with saying like “We’ve always done it this way.”

We accept what’s gone before as fact.

And that’s the crux of this. If you want to reason from first principles, first, you must understand.


Sources

[1] Tim Ferriss Podcast with Nick Kokonas – 18th October 2018 – Nick Kokonas — How to Apply World-Class Creativity to Business, Art, and Life (#341) – The Blog of Author Tim Ferriss

[2] Medium – Nick Kokonas – https://medium.com/tock/tocks-bridge-to-the-future-tock-20-2f510b0d1938

[3] Nick Kokonas – Know What You Are Selling – Podcast with Patrick O’Shaughnessy Know What You Are Selling – Colossus (joincolossus.com)


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To Think Differently, First, You Need to Think Deliberately

Think differently.

I bet you tell yourself you think differently, don’t you? You’re the crazy one, the round peg in the square hole, the rule breaker. The one who can change the world.

I bet you gorge yourself on the iconic apple advert. You know, the one with Richard Branson, Muhammad Ali, Jim Henderson, and John Lennon and others. Yes, you could be a crazy one.

Okay, you’re not going to change the world. But you can change things at work and in your life. You tell yourself you see the world differently, with your energy and enthusiasm for life. Somehow, though, you can’t break free. The monotony of living every day – of doing the same things – takes over. No matter your thoughts, the ideal of thinking differently isn’t changing your life.

 You say you think differently – that you can be the crazy one – but you can’t. You want to think differently, but just end up the same as everyone else.

How hard can it be to think different?


Think Different

Steve Jobs and Apple’s second most famous marketing campaign (after the 1984 advert) derived from a response to IBM’s one-word pitch; ‘Think’. Between Chiat Day and Steve, they produced the sharp two-word mantra.

Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify, or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

Steve Jobs, 1997

The video, the imagery, the script, the mantra; they each embody a culture which captured colleagues and customers alike. Two words – that’s all it took. But it was more than words; it was a spirit, an understanding of who and why the world could be changed.

Yes, two words defined it, but the culture it showed was to challenge the status quo.

It is, and was exciting, uplifting, and inspiring. But there was a small detail missing. How do you think differently?


Think deliberately.

If you want to think differently, first, you need to think deliberately.

How often do you think deliberately? I mean to think with purpose; with vigour as you ponder with intent, thinking in patterns to make a major decision, or solve a hard problem. Do you think deliberately by using mental models to gain perspective on the challenges you face?

If I posed the question to a group, most would argue that they do think deliberately. Of course, they would. I’m sure, as you’re reading this you are telling yourself you think deliberately too.

What does it mean to think deliberately then?

Before I jump into the answer, I want you to appreciate the complex world we live in. As humans, we barely understand ourselves and how our bodies work. We can’t explain how we think, or how our emotions work. Then there is the complex environment around us. Most of which is beyond our understanding.

Over time, humanity has worked out some of the answers. There are laws; facts which when repeated we see repeatedly. We have defined these laws and, in many cases, simplified them. It makes them easier to learn, understand, and remember.

We define them as mental models, but another, easier way to think of them is as patterns.


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Thinking deliberately means thinking in patterns.

The sweet spot of computer science is pattern matching. We teach computers to look for sequences in data and when they’re seen, implement a response.

Our brains are no different.

Most of the patterns in our minds are subconscious ones. Think of how and why we hydrate. We react to feelings of thirst; a dry throat and mouth represent a pattern. We then respond by drinking to quench the thirst, but more importantly, to keep our body hydrated.

Now, ask yourself what patterns you look for consciously when thinking?

The chances are you’re not.

To think differently means thinking deliberately. It is this one skill which separates most of us from the crazy ones. The round pegs in the square holes; the ones who change the world.

If Apple re-shot the iconic crazy one’s video today, Elon Musk would certainly be one of those crazy ones. He is changing the world, firstly with PayPal and now with Space X and Tesla.

His quest to make a difference to the world begins with a childlike mental model; first principles thinking. Using this mental model, he looks first to understand. He views knowledge as a semantic tree – making sure he understands the fundamental principles – the trunk and the big branches – before getting to the details.

Thus, his approach ensures he understands the first principles of anything he is working on. Elon is clearly thinking deliberately which is causing him to think differently. From this, he can think from first principles to improve whatever he is working on, whether it be electric cars or space rockets.


To Think Differently, First, You Need to Think Deliberately

The key to thinking differently is to think deliberately. It means using proven methods of critical thinking to maximise your thinking time. Use the power of patterns to look at the world around you.

Humanity has an inbuilt drive to want to improve the world around us. We want to be quicker, smoother, healthier, and more creative than the last person. Without it, we would still be living in caves, rubbing two sticks together to make fire.

To evolve is to think differently. But that urge must start with an action to think deliberately. Only then can you unlock the power of your mind to begin tackling the issues before you.

I wrote this article for two reasons. One, to clarify my thoughts on what it means to think differently. What steps can I take to transition to a crazy one? But, also to nudge you, the reader. Think about the Apple video, who would appear in it today, if it were reshot?

I can’t help but think there aren’t enough Elon Musk’s in the world right now.

We all have the capacity to think differently, but first we need to think deliberately. An attribute we can all display with effort. Thinking in patterns, learning mental models; the truths of life can enable you to think beyond your normal limitations. Then you’re thinking differently.


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Thinking from First Principles: Why You’ll Need a Mindset Shift to Think Like This

Thinking from first principles requires a mindset shift which will challenge most of us. Often, we are too comfortable living with our assumptions to want to change.  

Assumptions litter our thinking. They define our beliefs, our behaviours, and often our outcomes. Guided by our earlier experiences we build assumptions – and live by them. We don’t grasp the consequence of luck, the impact of others, or entropy on future outcomes.  

When tasks before us are simple and repetitive – assumptions are fine. They make life easier to live. The problem comes when we apply old assumptions to new situations. We don’t expect the unexpected. So, when things go wrong, or the outcome isn’t to our liking – we rarely see it is our assumptions that have failed.

Thinking from first principles changes everything. Instead of living with assumptions, you go looking for them. You question them, you pull them apart – as you look to find the underlying elements of your assumptions. Now, you’re questioning everything. You’re asking questions as a child does; why, why, why?

Now you can see the horror of the ‘because it does’ answer parent deploys to their kids.

As you find them so you must challenge them with open questions, test your conclusions and then tweaking them and tuning them as you redefine what you know, by seeing what you don’t know.

Thinking from first principles is hard. Living by your assumptions is easy – it’s your choice.


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The One Thing Most of us Miss with Musk’s Use of First Principles

We use first principles to solve problems. Getting to the granular level of a problem, reveals the fault.  

The story of Elon Musk of wanting to reach space is legendary. Faced with a huge cost, he asks why? By deconstructing a rocket down to the materials, he discovers it isn’t rocket science to build one himself.

He then started Space X, and reduced NASA’s rocket costs by 90% in the process.

For many, the lesson ends there.

We miss the not-so-secret sauce. What makes us different to Musk is we think of reasoning from first principles as a process with a decision at the end. With Musk, first principles thinking form’s the foundation of his brain software.

It is the way he thinks.

Crucially, he is forming hypothesis’s and testing them – everywhere. It forms the building blocks of his wants, his – and others – ability to deliver them, and his goals and strategy to deliver them.

Musk is living in a continuous feedback loop.

The rest of us make some decisions and live out our lives accordingly. It’s as if we’ve walked into a puddle of quick-drying cement.

Life is a process of trial and error. You form an idea – you test it – and you learn from the outcome, revaluate and test again. With success, you can push the boundaries to make further improvements.

It is this continuous process we miss with Musk’s use of first principles.


First Principles thinking through the eyes of a child

First Principles Thinking: Why We Need to Ask Questions Like a Child

First Principles thinking has incredible benefits, just ask Elon Musk. The approach has led him to increase battery capacity, making electric cars more practical and from there, building Tesla cars into a multi-billion-dollar company. Not only that, but Elon used the same approach; first principles thinking to dramatically reduce the cost of space travel. So, with examples such as these, why aren’t there more examples of this skill in use?

The answer is a sad one. A failing reality of our education system is it focuses on memory function rather than core skills, such as problem-solving and decision-making. Our schools crush the curiosity found in every child over the age of three or four. The curiosity is first principles thinking…


First Principles Thinking from a Childs Perspective 

My nephew is five. Like every five-year-old, he questions everything. “Why is it bedtime?” “Because it’s dark and time for you to get some sleep,” replies his dad. “Why does it get dark?” And often this is swiftly followed by “Why do I need to sleep?” My brother-in-law humour’s the questioning to a point, but as with most parents’ his patience soon disappears.  

Like every five-year-old, my nephews’ brain is like a sponge, and he wants to fill it. But, even at such an early age, his mind wants to utterly understand what is in front of him. If the first answer he gets doesn’t make sense to him, he keeps asking why until the explanation is something he understands.

“If you can’t explain it to a six-year-old, you don’t understand it yourself.”

Richard Feynman

First-principles thinking is the way children learn until they reach school age, at which point memorization becomes the dominate way they learn.

Young children have an innate urge to want to understand. It drives their questioning and their thinking beyond just knowing something. They want to fully understand what they see and hear.

Richard Feynman said it best when he said, “If you can’t explain it to a six-year-old, you don’t understand it yourself.” The simple reason being a child will keep questioning. It is first principles thinking in action.


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The Difference between Knowledge and Understanding

As children at school, and then through college and into working life, we become accustomed to knowing. In some specialist matters, we might undertake the learnings to understand something, but often we don’t.

We become conditioned to accept that if we don’t need to understand something, we can get away with having a level of knowledge. When the world of whatever you’re doing works, it’s okay. Knowledge is sufficient to enable you to keep doing the same thing day after day. But what if something goes wrong, what if it fails, or stops working. Knowledge without understanding is useless.

Knowledge doesn’t enable you to think outside the box.

Understanding does.

Understanding comes through using first principles thinking. Breaking down systems or functions to their parts enables you to develop a granular appreciation of how a system works. By getting to this level, you have grasped the process in its simplest form.


First Principles: Asking Questions as a Child Does

We’ve covered how we see first principles at work in young children. I have also explained why we need to develop an understanding over knowledge. So now, it’s time to look at how we can apply first principles thinking as an adult.

Without re-living your education, it’s hard to break the knowledge – and the assumptions – you’ve made. So, therefore, it’s practical to opt to use first principles thinking in selected situations. A good example is the need to solve problems.

Problem-solving is complex, particularly with difficult problems because our assumptions decide our approach and response. A first-principles approach will look like this:

  1. Break the problem down into its core parts
    • What forms the foundational blocks of the system in operation?
  2. Ask powerful questions to get to the truth of the problem
    • How do the parts fit together?
    • What was the original purpose of the system working in this way?
    • Name and separate your assumptions from the facts
  3. Remind yourself of the goal and create a new solution

A child might steam-roller through these, asking pointed ‘why’ questions at each stage. As an adult, we must apply the same logic to solve the problem at hand. “Why does the system work like this”?


Elon Musk, Space X and First Principles Thinking in Action

If we step back to Elon Musk and his explanation of first principles thinking, we can see this approach in operation. A bold problem such as do we get to Mars opens a vast number of foundational blocks. He would have to hire a rocket from NASA, with the cost – a huge amount. Why were rockets at NASA so expensive?

As Elon quickly discovered, it is because each one has a one-time use. From a commercial point of view, Elon had found a big problem. But it only led to more questions. What are the foundational blocks of a rocket? More importantly, what happens once a rocket has jettisoned its payload?

Ask a NASA scientist, and you’ll get a raft of assumptions about why they can’t return a rocket to earth once it’s finished in space.

It is first principles thinking in action and it is breath-taking. Even more so when you consider Space X has launched 650 satellites into space and is making money doing it. Although Space X hasn’t made it to Mars yet, this demonstration shows the logic of problem-solving using first principles.


Concluding Thoughts

There is a power to first principles thinking which breaks with conventional thinking. It is this step away from knowledge to understanding. The language of assumptions litters our thinking, it limits our decision-making and often stops us from making progress.

It is a behaviour we’re all capable of. We all did it as children, much to our parent’s annoyance. We pushed the limits of our parent’s knowledge and understanding, which sadly ended most of our inquisitiveness.

I see it being a power in decision-making as well. Decisions are all too often made from the assumptions of past behaviour, as we see in our System 1 thinking. The automatic, impulsive act of making decisions comes from an earlier learned experience. And as Daniel Kahneman points out in his book, Thinking Fast and Slow, this is a dangerous way to make important decisions. Far better to slow down and use system 2 to think through the choice ahead. Applying first principles thinking will impose a more methodical decision-making process, and that is a good thing.


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