Every now and then, we find ourselves in problems where we wish we had easier solutions. Our minds are fogged by countless advice and opinions of other people, the burdens of how our ancestors did things, and the general landscape of just how things work. Despite so much information, we struggle to find appropriate solutions in our work and personal lives.

This may be because we do not break down the problem into its fundamentals. The sheer amount of information and established norms around us are sometimes precisely the things that are holding us back. In this article, I opine that "first principles thinking" is a prime method for tackling such issues.

Aristotle and "archai"

Like most intellectual stuff, first principles thinking finds its roots in ancient philosophy, particularly in the works of Aristotle. Aristotle introduced the concept of “archai” or “Archē”, the term he used for the foundational principles that underpin everything else. These principles are unique because they stand alone and cannot be deduced from anything else. They serve as the basis for all other knowledge and reasoning. They are, in simpler words, just strong and independent.

Aristotle's “methodos,” or method of inquiry, revolves around archai, suggesting that to understand any complex system, one must first understand its fundamental building blocks.

Reasoning by first principles is a powerful tool for developing independence and innovation. By stripping a problem down to its core elements, we free ourselves from the constraints of conventional thinking and open the door to novel solutions. This method encourages a mindset that challenges assumptions and looks beyond the surface to understand the underlying truths.

A simple example: the coffee shop

Consider a small coffee shop struggling to compete with large chains. Let’s break down the business to its basics: making coffee and providing a space for people to enjoy it. This is what the business needs to do at its core.

Instead of merely mimicking the competition by lowering prices or expanding the menu, which are usual practices in business, we can apply first principles thinking.

Analyze the core costs—coffee beans, labour, rent—and consider what customers truly value. Perhaps buying coffee beans directly from farmers could reduce expenses, and creating a unique, cosy atmosphere might justify higher prices. By focusing on these fundamental aspects, the coffee shop can devise innovative strategies rather than just copying others.

Independence from established tradition

First principles thinking helps us move beyond reliance on norms and the authority of traditions. Many practices persist simply because they are established, not because they are the most effective. But the world we live in is increasingly fragmented and different cultures are diffusing all the time. This brings plenty of mental confusion when it comes to finding solutions to critical issues.

By cutting down to the essence of a problem and shedding the superficial biases and bloat accumulated over time, we can uncover simpler, sharper solutions. This approach encourages us to question everything and not take anything at face value.

The notable case of Elon Musk

Many successful individuals today advocate for first principles thinking, with Charlie Munger and Elon Musk being prominent examples. Elon Musk, in particular, has demonstrated the power of this approach through his company SpaceX.

Traditionally, space travel involved purchasing expensive rockets from established agencies or corporations, making it prohibitively costly. The “barrier to entry” was simply too much. Musk, however, did not accept this norm. He broke down the problem of space travel into its fundamental components: the cost of materials and the engineering required. He realized that the high costs were due more to existing industry structures than the inherent expense of the technology.

So he built rockets from the ground up and bypassed the existing industry norms. By basing his method only on the fundamental needs, namely good engineering and sourcing raw materials, SpaceX significantly reduced costs. If you have been following the news, you would know it did not take long for Musk to profit immensely from this approach.

Understanding the opposite: reasoning by analogy

Now that we know how first principles thinking works, it's helpful to understand its opposite: reasoning by analogy. This method involves comparing a new situation to a familiar one and assuming similar outcomes. While it can be useful as a starting point, it’s no good for true innovation.

The coffee shop revisited

Let's revisit our coffee shop example. Suppose the owner decides to compete by mimicking a successful strategy from a nearby bakery, such as introducing a loyalty card program. This is reasoning by analogy: assuming that because loyalty cards work for the bakery, they will work for the coffee shop.

While it might bring some benefits, it doesn't address the coffee shop's unique challenges and opportunities. It limits creativity by sticking to existing models rather than exploring fundamentally new ideas. At worst, it can completely obscure the original goals and vision of the coffee shop business.

Reasoning by analogy confines us to the limitations of existing models. In sharp contrast, first principles thinking requires breaking down a problem to its fundamental truths and constructing new ideas from there.

Aiding first principles thinking: the five whys

If you want to start applying first principles thinking to your own life, the “Five Whys” technique can be very handy. Although not directly related, it serves as a good starting point for critical thinking.

The five whys is a problem-solving method that involves repeatedly asking "why" to uncover the root cause of an issue. This top-down approach starts with the problem and drills down to its origin.

Let’s apply it to our original coffee shop problem:

The Coffee Shop’s Revenue Has Decreased.

Why has the coffee shop’s revenue decreased?
Because fewer customers are coming in.

Why are there fewer customers coming in?
Because a new competitor opened nearby.

Why is the new competitor attracting more customers?
Because they offer faster service and a wider variety of drinks.

Why is their service faster and their drink variety wider?
Because they have more staff and a better supply chain.

Why do they have more staff and a better supply chain?
Because they invested in efficient hiring processes and established strong relationships with multiple suppliers.

Through this questioning, we discovered that the root cause of the revenue decrease is the competitor's investment in efficient hiring processes and supply chain management. The Five Whys can help identify core issues quite easily this way. You’ll be surprised to see how many of our assumptions go unquestioned once you As our work and life require more critical thinking than ever, it is prudent not to rely on others for pre-made solutions. We can see new possibilities by reasoning from first principles, and break free from history and conventional wisdom along the way.

Creativity isn’t a rare trait—it’s in all of us. However, it can be suppressed during our formative years by societal pressures and traditional schooling. As adults, we tend to rely on convention for ease; conventions such as reasoning by analogy. That kind of reasoning is easier, but it can't replace true understanding. First principles thinking, though more demanding, leads to better answers and fuels true understanding.