Use these 3 steps to think like Elon Musk

With Paypal, Elon Musk disrupted the finance sector. With SpaceX, he took on the aerospace behemoths. With Tesla, Musk looks to overhaul entrenched auto and energy interests globally. So how does he do it? Tom Popomaronis at CNBC attempts to uncover three steps to help anyone think like Elon Musk. 

Above: Tesla and SpaceX CEO Elon Musk (Flickr: Steve Jurvetson)

First principles thinking allows you to "boil things down to their fundamental truths and reason up from there... as opposed to reasoning by analogy," according to Musk in a 2013 TED talk. In a 2012 interview with Digg founder Kevin Rose, Musk explained first principles thinking by using the cost of electric vehicle batteries as an example.

1. Identify the problem and common assumptions

"Somebody could say, 'Battery packs are really expensive, and that's just the way they will always be. Historically, it has cost $600 per kilowatt hour," Musk said, referencing this "common assumption" about electric vehicle batteries.

Therefore, most people simply give up and accept that "it's not going to be much better than that in the future." However, there's a better way to analyze the problem and probe deeper using first principles thinking.

2. Break the problem down to fundamental truths

The key is to ask the right questions and challenge common assumptions. Keep digging deeper and deeper until you are left with fundamental truths.

"With first principles, you say, 'What are the material constituents of the batteries? What is the stock market value of the material constituents?' It's got cobalt, nickel, aluminum, carbon, some polymers for separation and a sealed can," explained Musk.

Then, he continued, "you'd break that down on a material basis and say, 'If we bought that on the London Metal Exchange what would each of those things cost?' It's like $80 per kilowatt hour."

3. Use fundamental truths to plot a new way forward

According to Popomaronis, fundamental truths are like building blocks. Once you've gathered them, you can use these building blocks to create a completely new, innovative solution.

With EV batteries, "you just need to think of clever ways to take those materials and combine them into the shape of a battery cell," Musk said. "Then you can have batteries that are much, much cheaper than anyone realizes."

Conclusion

"I think it's important to view knowledge as sort of semantic tree," Musk wrote in a 2015 Reddit AMA. "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."

Above: Elon Musk discusses his approach to problem-solving using a 'first principles' framework (Source: innomind)

In addition, during a 2014 commencement speech at USC, Musk explained: "Don't just follow the trend. It's good to think in terms of the physics approach — the first principles," he said. "This is a good way to figure out if something really makes sense, or if it's just what everybody else is doing."

He added: "It's very hard to do. You can't think that way about everything. It takes a lot of effort, but if you're trying to do something new, it's the best way to think. It's really a powerful, powerful way of thinking."

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Source: CNBC via NBC Chicago