By Tom Popomaronis

From building PayPal and SpaceX to running one of the world’s most disruptive automobile companies, Elon Musk has a number of impressive accomplishments under his belt. And he’s only 48 years old.

In a 2013 TED talk, the billionaire entrepreneur revealed his “secret sauce” to achieving extraordinary things: “First principles” thinking, a decision-making strategy in which you “boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy.”

Of course, Musk acknowledges that reasoning by analogy — or “copying what other people do with slight variations” — is something we haveto do throughout most of our lives. “Otherwise, mentally, you wouldn’t be able to get through the day,” he said.

A framework for deconstructing complex problems

The term “first principles” was coined more than 2,000 years ago by the ancient Greek philosopher Aristotle, who believed that the best way to understand a subject is to break it down to its most fundamental principles.

In a 2012 interview with Digg founder Kevin Rose, Musk explained how to apply the first principles method, using the cost of car batteries as an example:

Step 1: Identify the problem and its 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 the “common assumption” about car batteries.

Therefore, he continued, most people would just accept that “it’s not going to be much better than that in the future.”

Step 2. Break the problem down to its fundamental truths.

This is often the most difficult part, and the key is to ask the right questions — by challenging the common assumptions. Keep digging deeper and deeper until you are left with only the 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 seal 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.”

Step 3. Use the fundamental truths to plot a new course.

Fundamental truths are like building blocks. Once you’ve gathered them, you can use them to create an entirely new and innovative solution.

With the 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.”

A ‘powerful, powerful way of thinking’

Musk has referenced the value of first principles thinking several times. “I think it’s important to view knowledge as sort of semantic tree,” he 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.”

In a 2014 commencement speech at the University of Southern California, he offered a similar piece of advice: “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.”

First principles reasoning can make your life better

First principles thinking isn’t just for building rockets or electric vehicles. It can be used to fix problems in your daily life, whether it’s related to personal relationships, work, finances or anything else.

Too often, we make major life decisions based on outdated or false information. But in a rapidly changing world, historical truths and experience may not always work, which is why it’s sometimes necessary to take a step back and use the first principles approach to create a more customized and creative solution.

Tom Popomaronis is a leadership researcher, commerce expert, cross-industry innovation leader and VP of Innovation at Massive Alliance. His work has been featured in Forbes, Fast Company, Inc. and The Washington Post. In 2014, Tom was named one of the “40 Under 40” by the Baltimore Business Journal. Follow him on LinkedIn and Twitter.

This article was first published on CNBC https://www.cnbc.com/2020/02/28/billionaire-elon-musk-this-is-a-powerful-way-of-thinking-but-hard-to-do-how-it-works.html?forYou=true and is republished with its permission.