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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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Rules for Reading which this younf might consider

5 Rules for Reading Books that will Improve Your Mind

Rules for reading that can help improve your mind are best not researched on Twitter. There is a broad spectrum of contrarian advice on reading, and this troubles me. Reading offers us a wonderful way to learn – both in practical and emotional ways. Love is an emotion most of us feel, but struggle to describe until we’ve read. Then there is our quest to grow and improve as humans. Our brains become exposed to the best that someone else has already figured out.

Reading is one shortcut to a more fulfilled life.

Twitter’s finest offer a platitude of polarizing comments on how to read. I stopped searching after reading this tweet though.

Why bother picking up the book in the first place.

An overriding consensus that’s gloated over is the power of speed reading. Skimming the contents page, and then skimming chapter by chapter to pick out the elements that are relevant or of meaning.

It appears context doesn’t matter anymore.


Why we need Rules for Reading Books

In a polarized world, it seems right to push back. Why should we speed-read a book? Why should we skim and skate over the surface of the author’s arguments? To fully understand the point the author is making, it’s equally important to see the relationships, the journey, the discovery, and the outcome of the book – or article.

We need rules for reading.

You see, I read a tonne of stuff every day. I read newsletters, articles, and books, and social media posts as well. My pocket account is drowning in saved articles and then there is my kindle which holds many titles – all of which I’ve consumed.

But…

There is always an interruption from me. It drives my wife mad, and frustratingly for her, it is an intrinsic quality of my INTJ type. I question everything, so ‘but’ seems a suitable word to use as I challenge the accepted knowledge outlined in the beginning. 

It comes in the form of the following questions.

  • How can I better filter what I read before I read it?
  • How can I remember more of what I’ve read?
  • What can I read and understand better to help others?

I want to get more from my reading – I think you do too. So, this is my quest. To create a framework that will help me learn more, improve my life more, and help others at the same time. I need rules – now more than ever as the hands of time seem to be spinning ever quicker. In sharing it here, I give you the chance to take my rules and use them yourself.


The Strategy behind my Rules for Reading

We think of strategy as a function of business – or war, not of an article we might have in our lives. We talk about plans or personal development, but most of us don’t have a strategy in place for life or anything more granular.

Effective and successful strategies offer a means to overcome a problem and grow from it. Apple created the iPhone because other smartphones weren’t that smart. By adopting touch screen technology, Apple brought together a phone, an internet device, and a music player into one.

Building a good strategy starts with a diagnosis of the current problem. Having a diagnosis leads to a guiding policy, followed by coherent actions.

Here is my reading diagnosis:

I don’t read with the right Intent

My mental process for reading stems from learning to read as an act of pleasure. My English teacher did her best to introduce me to literature, and in part, she succeeded. Fiction was my tipple. Historically, my book choices come from seeking entertainment, not to learn. Looking back, I didn’t consume a non-fiction book until I was in my thirties.

Since then, people like Tim Ferriss, Shane Parrish, Bill Gates, amongst others have guided my book choice. Yes, I’ve wanted to learn, but I’m guided by others on topics.

Rarely have I chosen a book having first thought about what I don’t know and filling that gap. 

I’m reacting to the knowledge and insights of others to guide me in my book choice. But who’s curiosity am I fulfilling?

I’m not Learning from what I Read

A quick look at my Goodreads account shows the seventy-five books I’ve read. I can remember some bits of information from them, but not the best bits. Not the bits that might inform or help me with problem-solving or making decisions.

I can recall the great chapters from Sapiens: A Brief History of Humankind, especially the ones on capitalism, and Yuval Noah Harari’s explanation on how imagination and communication used religion to build collaboration.

Then there are the two systems for judgement and choice from Daniel Kahneman’s, book. Thinking Fast, and Slow. I can remember that.

A glance at the books I’ve previously read draws some sorrow. I can vaguely recall the great strategy lessons from the Steve Jobs biography by Walter Issacson, or from Benjamin Franklin. Better yet, there’s Stephen Covey and his excellent 7 Habits of Highly Effective People. I remember little of note from these books.

I’m running out of Time

Lastly, I’m forty-six. If I’m lucky, I’ve forty-four years of reading ahead of me. I was reminded of this from Tim Ferriss and his one decision on not to read any new releases. He was led to this, in part by the tail end. Reading just five books a year leaves me with 220 books to consume.

I also experienced starting three books I couldn’t finish. Each one was repetitive, with the insights lost in a sea of excessive words and thoughts. That’s 1% of my reading opportunities gone.

When I chose a book, I want it to enlighten me. I know some of the words will be blatant filler – but I can live with that if the context is right. I must choose better.


My Guiding Policy for Reading Books

Accepting the 220 books I can comfortably – and hopefully – read before the end of my time, I will implement a top-down approach to reading.  A thoughtful examination of what I don’t know will leave me with a focused choice of topics to research. The focus within the research will be to find the book titles that might fulfil the knowledge gaps I have.

An assessment of each title will consider reviews – both good and bad – on Goodreads, Amazon, and Google. 

I’ll add the title to my Future Reading List with notes made as to why I selected the title and why.

My reading will take place on my Kindle, with highlights and notes made as I read. I will refine these as I add them to my Roam database; the home of my second brain. The purpose of which is to enable me to think more clearly and thus, make better decisions.

The focus is on extracting information that will improve my decision-making and problem-solving abilities.

I will still read for pleasure, intermixing biographies, and nonfiction throughout the year.


Coherent Actions: 5 Rules for Reading Books

  1. Read with Intent

George Raveling, at the age of eighty-two seeks to know what he doesn’t know. I accept that reading is a crucial way for me to learn. Therefore, I will think about what I don’t know and list topic areas to focus on.

Focusing on the right topics offers a return on investment to the effort of reading.

  1. Research Book Titles

There are thousands of books in circulation. Don’t opt for the current best sellers; In fact, don’t opt for any newly published book. Most of the gaps in our knowledge are out there in a book. The issue is that you haven’t found that book yet.

Once you have you several titles to consider, review the reviews.

Why shouldn’t you read this book?  

We always look for why we should do something, never the opposite. Inverting gives the value of perspective, an alternate question and answer to the normal. You might think this sounds excessive. Consider you’re going to read just five books in the next twelve months; each title needs to be high in quality to make the shortlist. Apply your filters so.

  1. Read Slowly

Speed read; speed read. It’s all the rage, with some saying it’s an essential skill to get ahead. At what cost – I challenge.

Read slowly, thus letting each sentence sink in. Observe the writer’s point of view. What is their perspective? Why is the author coming to these conclusions? I argued earlier that most of what we read; we forget. Yes, making notes will overcome this (see point 4), but to learn, rather than consume the emphasis changes.

  1. Record notes and share observations

I want to improve the process of clearing my mind. To achieve this, I must better manage the information I’m consuming. This means filtering information; books, article, and the like so I’m more able to digest the right information. It also means developing my second brain. The goal to keep more of the right models and biases to improve my thinking. 

  1. Don’t forget to read for pleasure

Nothing conveys excitement, drama, and tension the way a book can. The prized moments of pain, glory, and love enlighten my imagination in ways more visual entertainment can’t.

Never stop reading for pleasure.


Concluding Thoughts

My rules for reading books include some strong views on reading with intent, filtering, note-taking, and the pleasure of reading. My views come from a period of life I’ve wasted. Lost to a lack of understanding about what it takes to learn from reading a book. Like others, I’ve become caught up in the ‘read more’ game of speed reading and consuming content like it’s a badge of honour.

Without a rigorous process of highlighting, note-taking, and absorbing the context of what’s written, it’s a lost cause with little value in play.

The Resolve Blog is my opportunity to give back. To help others learn from the mistakes I made. Not having any rules for reading books was one mistake I’ve made.

Don’t let it be yours.


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Helping you make better decisions

In a world of irrational behaviour, Your Weekly Resolve will help you with making better decisions. Sign up here and every Tuesday, I’ll share valuable insights on the complex art of decision-making.

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