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First Principle Thinking - How Great Minds Think

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https://www.gurufocus.com/news/634228/first-principle-thinking--how-great-minds-think-

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First Principle Thinking - How Great Minds Think
Recently, the idea of "first principle thinking" came up quite a few times in my readings of various articles. If you have a doctoral degree or if you are a scientist, you may already be familiar with it. Unfortunately, I am neither and hopelessly ignorant.

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First Principle

First Principle

Is a basic, foundational, self-evident proposition or assumption that cannot be deduced from any other proposition or assumption.

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Elon Musk

"… it's important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. We are doing this because it's like something...

Elon Musk

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First Principles Thinking

First Principles Thinking

Is the act of deconstructing something to the fundamental parts that you know are true and building up from there.

Also called reasoning from first principles, it effectively he...

Elon Musk

Elon Musk

“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.”

First Principle

A first principle is a basic assumption that cannot be deduced any further. 

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First-principles thinking

Breaking down complicated problems into basic elements and then reassemble them from the ground up.

It’s one of the best ways to learn to think for yourself, unlock your creative poten...

A first principle

...is a foundational proposition or assumption that stands alone. We cannot deduce first principles from any other proposition or assumption.

Reasoning by first principles removes the impurity of assumptions and conventions. What remains is the essentials. 

Cutting through the dogma

If we never learn to take something apart, test the assumptions, and reconstruct it, we end up trapped in what other people tell us.

We remain trapped in the way things have always been done. When the environment changes, we just continue as if things were the same.

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Using Decision Trees

  • Understand the different outcomes that could happen (both positive and negative)
  • Calculate the expected return or loss of each outcome
  • Attach a probability to each outcome
  • ...

Use Decision Trees 

Elon Musk uses decision trees to make big decisions (a tool that uses a tree-like graph or model of decisions and their possible consequences, outcomes, and resources). They are particularly useful for avoiding stupid risks and big bets that aren’t likely to succeed.

Most became a billionaire by making unlikely big bets, as their expected return statistically was much higher than safer bets.

Build Deep, Long-Term Relationships

One of the best ways to get information is not from just being better at searching Google, it’s from learning how to build a network and get the information you need through that network. 

This network should include people’s lessons learned and hacks, topics that are too sensitive to talk about because they make someone look bad, and tacit knowledge (knowledge that people have but aren’t able to articulate).

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