It might seem like everything Elon Musk touches turns to gold, but behind his unparalleled drive and ambitious goals is a simple mental strategy: First principles thinking.
What is first principles thinking?
A first principle is a basic assumption that can't be deduced any further. As in, it is the thing you know about a complex problem that is absolutely sure.
First principles thinking is one of the most effective strategies for breaking down complex problems (like reusable space rockets and electric cars).
When Musk first decided he wanted to pursue sending humans to Mars, he discovered that buying a rocket was going to cost him up to $65 million. So, instead, he decided to re-frame the problem from "find an affordable rocket to buy," to "what makes a rocket so expensive?"
"I tend to approach things from a physics framework," Musk said in a Wired interview. "Physics teaches you to reason from first principles rather than by analogy. So I said, okay, let's look at the first principles. What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. Then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price."
Of course, there was the issue of labor and knowing how to put the pieces together. But Musk didn't let those complications stop him. And within a few years, he had slashed the price of launching a rocket nearly 10X, while still making a profit.
Musk used his first principles thinking to break down building a rocket into the fundamental parts--the pieces he knew were absolute truths--and then looked at how he could build it more effectively from there.
How to use first principles thinking for your own business
First principles thinking isn't simply about breaking a large piece down into a whole, but getting rid of your preconceived conceptions about what you're creating. In this way, it's the opposite of continuous improvement. Instead of building on what's already there, you break an idea down into its fundamentals and see how you can solve the problem in a different way. It's a process of continual deconstruction and reconstruction.
Many of the most groundbreaking ideas in history have come from boiling something down to the first principles and then substituting a more effective solution. Think of the first printing press, created from a modified screw press--meant for making wine.
Instead of being stuck on the "form" of what you're creating, first principles thinking allows you to focus on the "function" and find the absolute best way to get where you want to go.