No Problem too Big

Every business has its challenges. These can include cash flow issues, employment problems, lack of direction or poor brand awareness. As a business owner, how do you tackle these challenges? 

Let's introduce Elon Musk (entrepreneur) and First Principles Thinking. In 2002, Musk began investigating what was involved in sending a rocket to Mars. However, he quickly discovered, after visiting a number of aerospace manufacturers around the world, the costs involved where not going to make it a financially viable option. Given the high price, he began to rethink the problem.

In an interview Musk said. “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.”

So instead of buying a rocket he decided to set up his own company, purchase the raw materials, and build the rockets himself.

First principles thinking is the act of boiling a process down to the fundamental parts that you know are true and building up from there.


Example: Tourism in the off peak season

Business Owner: "During winter and spring, I hardly have any visitors to my motel. This puts a real strain on my cash flow and reduces my profitability as my fixed costs remain constant throughout the year."

Breaking the problem down:

* Winter and spring bring inclement and unpredictable weather which puts tourists off

* The existing products target customers who participate in summer / outdoor activities (fishing, water sports, hiking)

* All business in the region suffer due to the seasonal reduction in visitation

Solution: develop a community wide product / service that is not weather dependent, harnessing resources from all businesses in the region e.g. A winter festival or series of activities / events such as mud-run / slide, mid-winter swim, (where you are designed to get wet), or foreign movies / theatre nights, book launches, fashion shows (designed to be held inside).


Results: increased visitors to region, consistent increase in annual sales (cash flow) across multiple industries, improved community relations, sustainable economic growth.

By focusing on the 'function' (increasing cash flow), we avoid falling into the trap of limiting our thinking to the 'form' (selling motel bookings).

What problems do you need to break down and re-frame?

“We can't solve problems by using the same kind of thinking we used when we created them.” Albert Einstein