Mental Models & Product #2: First-Principles Thinking

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I recently finished watching “The Last Dance” on Netflix — a documentary about Michael Jordan and the Bulls. “Why would I think about missing a shot I haven’t taken?” was an excellent summary of MJ’s mentality and ability to stay present in every game. It was the perfect example of a growth mindset and great insight into how MJ was determined to be different by working on all elements of his game to become the most multi-dimensional player in the game.

This made me curious about how can someone’s mindset transform from being a good player to a superstar, and the mental model of “first-principles thinking” stood out. Looking at the example above, Michael understood the “flavor profiles” of basketball and the possibilities of different combinations at such a fundamental level that he doesn’t even use a “recipe”. He has real knowledge as opposed to know-how.

The tl;dr.

It’s most important to reason from first-principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. We’re doing this because it’s like something else which was done or it’s like other people are doing. It’s mentally easy to reason by analogy rather than by first-principles. First-principles is the Physics-way of looking at the world. What that really means is that you boil things down to the most fundamental truths and then reason up from there. That takes a lot more mental energy. — Musk, 2013

Sometimes called “reasoning from first-principles”, first-principles thinking is one of the core mental models to reverse-engineer complicated problems by breaking them down into smaller thinking blocks and building them back up from the basic elements. As Elon Musk would say, it’s to “boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy.”

Before we dive into the difference between reasoning by analogy and reasoning from first-principles, we need to understand the difference between deductive and inductive reasoning.

Deductive reasoning or inductive reasoning?

Deductive reasoning is the basic form of valid reasoning, starting out with a general statement (or hypothesis) and examines possibilities to reach a specific, logical conclusion.

Inductive reasoning is the opposite of deductive reasoning, where it makes broad generalizations from specific observations.

Let’s use the extreme example of a cup of tea.

In inductive reasoning, we start with specific observations.

1. Observation: Cup A and cup B have green tea. [PREMISE]
2. Notice a pattern: All observed cups have green tea (let’s pretend we’re in a Japanese restaurant). [PREMISE]
3. Develop a theory: All cups will have green tea. [CONCLUSION]

Inductive reasoning is extremely common because there is no theory to test. Without having a theory to test, the conclusion can never be proven, causing it to be mostly unreliable. Hans Rosling even wrote an entire book on how to be careful of defaulting to inductive reasoning.

In deductive reasoning, we start with a theory (the outcome of inductive reasoning):

1. Start with a theory: All cups have green tea. [PREMISE]
2. Develop a hypothesis from theory: If someone orders a cup of tea, it will always have green tea. [PREMISE]
3. Collect data to support the hypothesis: Survey all cups of tea in at least 3 different restaurants. [PREMISE]
4. Analyze the results: 96 out of 120 cups surveyed have green tea in their cups = the hypothesis is not supported. [CONCLUSION]

Notice that the conclusions of deductive reasoning can only be conducted if there is a theory to test. And with deduction, the conclusion is certain if all premises are true. In contrast, inductive reasoning’s conclusion is only probable if all premises are true — the more premises there are, the more probable the conclusion is true.

(source: One Minute Economics)

This is, although, not to say that either one is worse off than the other. Most of the time, larger research projects combine both inductive and deductive reasoning so that there can be a clear way to develop a theory, and then confirm the conclusion.

So let’s talk about differences in reasoning.

Reasoning by analogy (or also known as “argument by analogy”) is a type of inductive reasoning. When we reason analogically, we assume that two or more things are similar in some respect, so we conclude that they are similar in some other aspect as well. Reasoning by analogically always involve likeness.

Let’s go back to the example of the cup of tea.

1. Alice has a warm cup of green tea at ABC cafe, which costs $2.
2. Bennett has a warm cup of green tea at ABC cafe, which also costs $2.
3. Caroline has a warm cup of green tea at ABC cafe.

So, Caroline’s cup of green tea will also cost $2. This conclusion is derived from noticing similarities in the first two cases, where they both have a cup of green tea, at a warm temperature, at ABC cafe, and they both cost $2. Since Caroline shares the relevant features, we can conclude by analogy that it also costs $2.

The key to concluding by analogy is to identify similarities, differences, and then notice if dissimilarities dominate similarities, the analogy fails. Also, we have to ensure that the likeness is relevant to the conclusion (i.e. the likeness needs to be a core component and a good foundation to the comparison). Reasoning by analogy is essentially building knowledge and solving problems based on prior assumptions, beliefs, and widely held “best practices”.

(source: CUNY School of Professional Studies)

Now, what does concluding by first-principles look like? In short, first-principles thinking is actively questioning every assumption known about a given problem or scenario, and then create new knowledge and solutions from scratch.

According to Aristotle, a first-principle is “the first basis from which a thing is known”. They are the fundamental building blocks of an idea. It is starting with the question “what are we sure are true?” by analyzing situations by first breaking them down to their fundamental truths to understand what is true unconditionally.

(source: Aristotle’s First-Principles)

Concluding by first-principles is a form of combining both inductive and deductive reasoning. As mentioned above, the inductive approach relies on first-principles in the form of specific observations to build general theories, while deductive reasoning utilizes them to create a top-down system of logic in which specific conclusions are drawn from basic premises.

(source: Innovative Policy Solutions)

Aristotle used the above in practice by dissecting animals to gain real-world knowledge and use his capacity for reason to categorize and organize the information, by going back-and-forth between experience and reasoning.

Instead of using our example of a cup of tea, let’s look at a cup of coffee instead.

A great cup of coffee is delicious to consume but difficult to reproduce without understanding its fundamentals.

A great cup of coffee is a collection of activities. The activities are a collection of methods. The methods are a collection of ingredients. The ingredients are the fundamental building blocks of a great cup of coffee. Once the components of a great cup of coffee are understood, we can look at improving each collection (from simple to complex). Without knowing how each component works, it is impossible to make improvements.

The key in this type of thinking is to create hierarchies. Most ideas are nested inside or outside one another, so first-principles thinking maps out how these ideas are linked. First-principles thinking starts with questions like “why” and “how”. First-principles thinking deconstructs and then reconstructs.

(source: Freedom in Thought)

Elon Musk has a 3-step approach in first-principles thinking:

1. Identify and define current assumptions.
2. Breakdown the problem into fundamental principles.
3. Create new solutions from scratch.

(source: mission.org)

With the 3-step approach, he starts with what is true, and not with his intuition. Instead of “following the crowd” by determining what could be done and what cannot be done, he looks at the fundamentals and bases his reasoning on that. From there, he validates his conclusion, despite it potentially being different from what people have done in the past.

(source: Wait But Why)

How does it relate to Product?

Let’s start off with the question on how we can establish first-principles: a common best-practice in product is to practice “the 5 whys”. That is an excellent basis for establishing first-principles and getting to the root of a problem. Here is a process improvement example on how to use the “5 whys”:

Problem: We were not able to release this new feature in the latest deployment.

1. Why didn’t we release it during the latest deployment? The new changes were not implemented in time for testing.
2. Why were the new changes not implemented in time for testing? Because developers were still trying to fix critical bugs that came up.
3. Why were developers still working on critical bugs at that time? We did not anticipate that there were going to be critical bugs that came up.
4. Why did we not anticipate that there were going to be critical bugs? We underestimated the scope of the changes.
5. Why did we underestimate the scope? We did not identify all the critical dependencies that were involved in making the change.

By understanding the root cause, we can shift our future behavior during sprint planning or refinement sessions based on the root cause to achieve continuous improvement.

Another way to establish first principles thinking is to practice Socratic Questioning, through a disciplined questioning process.

(source: Farnam Street)

Interestingly, the Socratic method is often described as the cornerstone for Cognitive Behavioural Therapy (CBT) by asking a series of open-ended questions that encourage reflection. By using a series of focused yet open-ended questions, we can unpack our beliefs and those of others. Socratic Questioning involves 6 different questions:

1. Questions for clarification: “Why do you say that?”
2. Questions that challenge assumptions: “How do we know this is true?”
3. Questions for evidence: “What would be a few examples?”
4. Questions for perspectives: “What is another way to look at this?”
5. Questions for consequences: “What are the consequences if we’re wrong?”
6. Questions about the question: “Why are we asking this question?”

This process slows down the emotional responses and reveals underlying assumptions.

By utilizing first-principles thinking, we can find better ways for optimization, integration, dissemination, and innovation within our organization.

(source: Freedom in Thought)

1. Optimization: Fundamental component can be changed in order to improve an idea or a product. This can help us put each critical component of our product under scrutiny to see how it can be its best.
2. Integration: Easily integrate foundational components of an idea with new knowledge. This can help us scale our products quickly by incorporating market updates and new trends.
3. Dissemination: Transfering a complex idea to another person by starting with the simplest component and building up from there. This will help us determine exactly what the true MVP (minimal viable product) should be and how we can ladder up future feature improvements through meeting our user’s core needs.
4. Innovation: Rearrange the fundamentals of an idea that can create a new idea or product. This can help us build new products that can be market leaders and gain a first-mover advantage.

I found that as someone who is determined to be as data-driven as possible, I have a tendency to mostly make decisions through comparison and analysis of data points, but most of the time, I forget to step back and take a look at any other context beyond the numbers that will help me understand the root cause of the problem, which eventually would help me understand the impact of the decision made. Instead of solely relying on existing information based on trends, it is important to take a step back and ensure that we understand the fundamentals of the feature, bug, or need, before making a quick decision.

Consolidating and disseminating information.

As product managers, we are expected to balance a load of information and communicate them at the right time, to the right people. Said information consists of settings/tracking KPIs, gaining knowledge about industry/market trends, customer feedback, how the tech stack works, and the business’ vision, to name a few. That being said, it can often feel overwhelming to consume all the information out there, and yet it can feel like we are dropping the ball on not knowing what we are missing either.

With first-principles thinking, the key is to seek out the variables that will impact our portfolio the most. Using the 80/20 rule (Pareto Principle), understanding which 20% of the information will provide 80% of the consequences. We don’t have to read and know everything, but understanding key variables in our information intake will help us better identify what we need to know to move the needle.

The Pareto Principle can be also extremely helpful in shipping more valuable products. Through using first-principles thinking to identify the right user problems, we can know that our users will always be happy with whatever we deliver. Many times, it is easy for us to default to “solutionizing” by breaking down the solution instead of the problem.

That is why the “thinking toolbox” is so important for us to start establishing first-principles thinking. By building a latticework of mental models, it would form the foundation in establishing the ability to ask intelligent questions, while maintaining a deep understanding of fundamental principles from various fields. From there, it would be a lot easier to connect grids of ideas together through identifying the core principles that will help us categorize new information.

It is important for us to know how to categorize and organize information so that we can find the most optimal way to store them in our minds. As Musk says, “it is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, i.e., the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.” By first focusing on the fundamental questions and then 2–3 more “whys”, it will help us gain more clarity in the fundamentals of the problem.

(source: safal niveshak)

After understanding the fundamental problem of our users and what they need, it is about learning to disseminate those findings to the rest of the team and our stakeholders. Through educating our stakeholders on “the simplest component” of the problem, and then build up the idea from there on why the solution we should be focusing on is the most crucial. Also, by ensuring that everyone in the organization understands the importance of the 80/20 rule in agile teams, we need to train our stakeholders and our team to start breaking down problems instead of solutions. By asking the right “whys” and removing all assumptions, we can eliminate unconscious bias whenever we make decisions.

With that being said, thinking in first-principles is going to be a constant work in progress. Learning to think for ourselves is not easy, as it requires us to retrain our brain into abandoning our allegiance to what we think we know and focusing on the basics. But with practice and the constant reminder to question existing assumptions using the Socratic method or the 5-Whys, we can get closer to becoming a better first-principles thinker.

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