First Principles

First principles thinking is breaking down complicated problems and generating original solutions. It's practice of actively questioning every assumption you think you know. And reasoning up from there. 

First principles

First principle thinking is the idea that everything you do is underpinned by a foundational belief, or first principles. Instead of blindly following directions or sticking to a process, a first principle thinker will constantly ask, What’s best for the company? and, Couldn’t we do it this other way instead? — Reed Hastings

Aristotle

The beliefs we begin with are ‘prior to us’.

First principles are known unconditionally

First principles are known unconditionally because they are naturally appropriate for being known.

The naturally proper direction of our road

The naturally proper direction of our road is from things better known and clearer to us, to things that are clearer and better known by nature; for the things that are known to us are not the same as the things known unconditionally. 

Hence it is necessary for us to progress, following this procedure, from the things that are less clear by nature, but clearer to us, towards things that are clearer and better known by nature. 

The beliefs we begin with are ‘prior to us’

The beliefs we begin with are ‘prior to us’ (i.e. ‘prior from our point of view’), since they are what we begin from; but the principles we find will be ‘prior by nature’, and when we have found them they will also be ‘prior to us’; for then we will recognize that they are more basic and primary than the principles we began from.

To have doubted one's own first principles is the mark of a civilized man. — Oliver Wendell Holmes Jr

Jeff Bezos

Good process serves you
so you can serve customers.

Day 1 philosophy

I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

Day 2 is stasis

Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.

If you’re not watchful, the process can become the thing

But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right.

Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process.

The process is not the thing

The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second.

A customer-obsessed culture

Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.

Embrace external trends

The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.

High-velocity decision making

Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations.

The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too.

Never use a one-size-fits-all decision-making process.

First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong? I wrote about this in more detail in last year’s letter.

Most decisions should probably be made with somewhere around 70% of the information you wish you had

Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.

Disagree and commit

Third, use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

Recognize true misalignment issues early and escalate them immediately

Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. 

Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.

How do you fend off Day 2?

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it.

Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.

There’s a tendency to manage to proxies

As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle, and very Day 2.

The process is not the thing. Jeff Bezos

Peter Thiel

Find value in unexpected places… by thinking about business from first principles instead of formulas.

As a founder, your first job is to get the first things right

As a founder, your first job is to get the first things right, because you cannot build a great company on a flawed foundation.

No authority can prescribe in concrete terms how to be innovative

Because every innovation is new and unique, no authority can prescribe in concrete terms how to be innovative. Indeed, the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.

Find value in unexpected places

The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.

No one can predict the future exactly, but we know two things: it’s going to be different, and it must be rooted in today’s world. — Peter Thiel

Richard P. Feynman

Study hard what interests you the most in the most undisciplined, irreverent and original manner possible.

You are the easiest person to fool

The first principle is that you must not fool yourself and you are the easiest person to fool.

I don't know what's the matter with people

I don't know what's the matter with people: they don't learn by understanding, they learn by some other way — by rote or something. Their knowledge is so fragile!

It doesn't matter how beautiful your theory is

It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong

I don't know what's the matter with people: they don't learn by understanding, they learn by some other way — by rote or something. Their knowledge is so fragile! — Richard P. Feynman

Elon Musk

First principles is kind of a physics way of looking at the world. You boil things down to the most fundamental truths and say, what are we sure is true?

With first principles you boil things down to the most fundamental truths

With analogy we are doing this because it’s like something else that was done, or it is like what other people are doing. With first principles you boil things down to the most fundamental truths…and then reason up from there.

We get through life by reasoning by analogy

We get through life by reasoning by analogy, which essentially means copying what other people do with slight variations. And you have to do that. Otherwise, mentally, you wouldn’t be able to get through the day. But when you want to do something new, you have to apply the first principles approach.

Nobody wants a car because horses are great and we’re used to them

You can’t say: ‘Nobody wants a car because horses are great and we’re used to them. They can eat grass and there’s lots of grass all over the place and there’s no gasoline people can buy, so people are never going to get cars. People did say that, you know.

First principles means

People would say, ‘Historically it’s cost $600 per kilowatt-hour, and so it’s not going to be much better than that in the future.’ 

And you say, ‘No, what are the batteries made of?’ First principles means you say, ‘Okay, what are the material constituents of the batteries?’

You just have to think of clever ways to take those materials and combine them into the shape of a battery cell, and you can have batteries that are much, much cheaper than anyone realizes.

Somebody could say, in fact people do, that battery packs are really expensive and that’s just the way they’ll always be, because that’s the way they’ve been in the past. 

Well, no, that’s pretty dumb, because if you applied that reasoning to anything new, then you would never be able to get to that new thing.

First principles is kind of a physics way of looking at the world

First principles is kind of a physics way of looking at the world. You boil things down to the most fundamental truths and say, ‘What are we sure is true?’… and then reason up from there. First principles is kind of a physics way of looking at the world. You boil things down to the most fundamental truths and say, ‘What are we sure is true?’… and then reason up from there. 

No one can predict the future exactly

No one can predict the future exactly, but we know two things: it’s going to be different, and it must be rooted in today’s world.

Boil things down to fundamental truths… and then reason up from there. — Elon Musk

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