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First principles thinking is a problem-solving approach that breaks down complex issues into their most basic, fundamental truths and then builds up solutions from there. Instead of reasoning by analogy (which relies on existing knowledge, assumptions, or conventional wisdom), first principles thinking focuses on what is absolutely true and unchangeable.
Elon Musk used first principles thinking when trying to reduce the cost of batteries for Tesla. Instead of accepting that batteries were expensive, he broke the problem down:
This led to Tesla rethinking battery manufacturing and reducing costs significantly.
How First Principles Thinking Works:
- Identify Assumptions – Challenge what is commonly accepted and separate facts from assumptions.
- Break Down the Problem – Reduce the problem to its most fundamental truths (the "first principles").
- Rebuild from the Ground Up – Use those fundamental truths to construct new solutions, without relying on existing methods or traditions.
Example: Elon Musk and Batteries
Elon Musk used first principles thinking when trying to reduce the cost of batteries for Tesla. Instead of accepting that batteries were expensive, he broke the problem down:
- Common Assumption: "Batteries are expensive."
- Breaking It Down: What are batteries made of? Lithium, nickel, cobalt, etc.
- Rebuilding from First Principles: How much do these raw materials cost on the open market? Much less than the cost of a manufactured battery.
- New Insight: If Tesla could buy raw materials and build batteries differently, they could dramatically lower costs.
This led to Tesla rethinking battery manufacturing and reducing costs significantly.
Why Use First Principles Thinking?
- Avoids conventional wisdom and common misconceptions.
- Leads to breakthrough innovations.
- Helps you see opportunities others miss.
- Encourages deep, independent thinking.