The human brain develops habits and subconscious behaviors to allow our conscious part of our brain to focus on creative thinking and to solve complex problems. When we encounter challenges as business owners, we often seek input from others or search online for lessons learned from fellow entrepreneurs. This method of problem-solving is called analogical reasoning.
Analogical reasoning is comparing something unknown to something known, which enables our brains to fill in what is missing. This type of reasoning also assumes all knowns are constant, which isn’t always correct either. Our businesses and customers are different, and when we default to analogical reasoning, we risk overlooking an opportunity or innovative solution.
Aristotle is the father of First Principles Thinking and defined the scientific approach by breaking down everything in the universe to “the first basis from which a thing is known.” In other words, to deduce a thing or problem to its lowest known truth. Throughout history, innovative thinkers and business owners have used Aristotle’s First Principles Thinking approach to develop new processes, solve existing problems, and launch new inventions.
Elon Musk, founder of Telsa and Reed Hastings, co-founder of Netflix, often speaks about their use of First Principles Thinking and how this approach has significantly benefited their companies. First Principles Thinking is not limited to famous entrepreneurs. We can use the scientific method when we encounter a challenge or need a fresh perspective on our business.
How to Incorporate First Principles Thinking into Your Business Strategy
Distill the Problem to the Lowest Known Truth
When we dissect a problem to its lowest known truth, we see a different perspective than viewing the issue as a whole. For example, customers are not purchasing a specific product or service. At first, we may think it’s the product or service itself that is not appealing to customers. However, we need to go another step further and break our product or service into pieces, similar to all the parts that make up a car or house.
Is there a known truth within each problem or challenge we encounter? For example, let’s examine a business experiencing a disconnect between potential customers and its website. To avoid analogical reasoning, we’ll need to identify the lowest known truth. To find the truth, we should separate the website into its components. It would be such as the individual pages, customized coding, theme, color, copy, navigation settings, etc. You can use a whiteboard, digital notepad or paper to draw each part to view the pieces instead of the whole website.
Is the known truth apparent? Could the fact be that all individuals search online before calling a company? Or is the truth more deep-rooted than a Google search? Could it be that customers are seeking a way to solve a problem? A problem they can’t wholly defined but know that they need a solution. Or is the lowest known truth written on a secondary web page that customers always visit or mention? Once the known truth becomes evident, use the known fact to develop a better solution.
Innovating Beyond Group Think
First Principles Thinking can be used to discover an innovative approach to an existing process. In an interview with Kevin Rose, Elon Musk discusses First Principles Thinking to conceive a plan for developing less expensive car batteries for Telsa. Musk shared, “It’s mentally easier to reason by analogical rather than First Principles. First Principles Thinking is a physics way of looking at the world. What that means is that you kind of boil things down to the most fundamental truths. What is that true? What is possible is true. What is and then reason up from there. That takes more mental energy.”
By drilling down to the battery’s raw materials, Musk was able to see an opportunity – to build the batteries inhouse. Telsa could purchase the materials and then build the batteries for less than buying them from a battery manufacturer. Musk’s innovative approach transformed Telsa into a battery manufacturer that happens to make cars.
Daily, as business owners, we all experience decision fatigue and default to analogical reasoning to search for similar solutions. Rarely do we feel like we have the time luxury to take a few hours to think with a scientific view when we encounter challenges. For the long term health of our businesses, we must think from a different mindset to uncover hidden truths and ultimately develop innovative approaches for our customers and businesses.