Same issue on the table: shipping delays. Same proposed solutions: more real-time tracking, more staff, more vendor penalties.

He looked frustrated.
“You know what’s crazy?” he said. “We keep asking, How do we optimise the system we’ve got? Not once have we asked, Why does it exist this way to begin with?”

That’s when we introduced First Principles Thinking to the discussion.

Why This Mindset Matters in Modern Leadership

In a business world overloaded with best practices, First Principles Thinking invites a deeper question: what are the fundamental truths about the problem we’re facing? And what are just legacy assumptions we’ve absorbed?

This distinction isn’t philosophical - it’s operational.

As Elon Musk puts it:

“It’s important to reason from first principles rather than by analogy. With analogy, you're doing things because they’re like something else. With first principles, you boil things down to the most fundamental truths and then reason up from there.”

Why does this matter now? Because the shelf life of business models is shrinking. Leaders need sharper tools to reframe problems, not just react to symptoms.

Let’s explore six real-world examples of First Principles Thinking in action - from tech to HR to operations - and what they unlock.

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The Model: Break, Examine, Rebuild

Think of First Principles Thinking as a 3-part discipline:

1. Break It Down – What are we assuming? What can be reduced to a core truth?
   
   
2. Examine the Core – Are these truths actually true, or inherited beliefs?
   
   
3. Rebuild Intelligently – Now that we’ve cleared the noise, what solutions emerge?
   
   

Let’s see this in action.

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1. SpaceX: Rockets Don’t Have to Cost $60 Million

Most aerospace companies operated under an inherited assumption: rockets are expensive, disposable assets.

Musk broke the problem down:

• What are the actual materials in a rocket?
  
  
• Could they be reused, like airplanes?
  
  
• What would it cost to build from scratch?
  
  

By rebuilding from physics and manufacturing basics - not industry norms - SpaceX achieved dramatic cost savings and reusability breakthroughs.

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Reflection Prompt:
Where in your business have you inherited the industry's pricing assumptions? What would the cost structure look like from raw components or base inputs?

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2. Netflix: Why Must TV Follow Schedules?

TV used to mean fixed time slots. You watched when the broadcaster said so.

Netflix questioned that.
The first principle: people want stories on demand, not bound to a clock.

This led to not just streaming, but binge-worthy content drops, algorithmic recommendations, and personalised queues.

High-leverage action:
List your customer’s core desires. Then ask, Which ones are unmet purely because of how things have always worked?

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3. Remote Work: Is Office Presence a Productivity Signal or a Proxy?

Before 2020, most companies viewed physical presence as a proxy for productivity.

Covid-19 forced a reframe: what if that’s not a first principle at all?

What if:

• Productivity = outcomes, not hours at a desk
  
  
• Trust = autonomy + clarity, not surveillance
  
  
• Belonging = shared purpose, not shared walls

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This shift birthed hybrid policies, async rituals, and output-based metrics.

Reflection Prompt:
Which parts of your operating model are proxies for value, rather than value itself?

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4. Talent Retention: Are People Leaving for Money, or Meaning?

A fintech client was haemorrhaging engineering talent and blamed it on compensation.

But once we applied first principles:

• People want to grow, be challenged, and feel their work matters.
  
  
• Money is hygiene, not always the hook.
  
  
• Clarity on career paths, peer learning, and mission alignment mattered more.
  
  

They rebuilt their retention strategy not around counter-offers, but culture offers.

Micro-action:
Schedule one career clarity conversation this week with a high performer.

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5. Supply Chains: Must “Just-in-Time” Mean “Just One Supplier”?

When global supply chains fractured, companies who'd leaned too hard on efficiency found themselves vulnerable.

One industrial COO we worked with reframed:

• What’s the principle behind JIT? Lower inventory costs.
  
  
• But the cost of a disruption? Much higher.
  
  
• So can we have multi-source JIT? Or regional micro-hubs?
  
  

First Principles reframing led to redesigned logistics with dual suppliers and predictive analytics.

Pro Tip:
Resilience isn’t inefficiency. It’s long-term efficiency.

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6. Performance Reviews: Do We Need an Annual Ritual or Real-Time Feedback?

A professional services firm we advised had 47% of staff saying they dreaded annual reviews.

They’d long assumed:

• Reviews must be formal
  
  
• They must happen yearly
  
  
• Ratings are mandatory
  
  

But what’s the first principle?
Feedback should help people grow.

They piloted micro-feedback loops, peer shoutouts, and project-based reviews. Within a quarter, 3 out of 4 staff reported higher psychological safety and clearer growth goals.

Micro-action:
Ask one direct report: “What’s something I can do differently as your manager this month?”

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How to Start Applying This at Scale

Here’s how we help clients begin using First Principles Thinking across their teams:

1. Run “Assumption Audits” in Team Strategy Sessions
   
   
   
   • Ask: What do we believe to be true about our customer, market, or process?
     
     
   • Then: Which of those beliefs are outdated, untested, or inherited?
     
     
2. Use First Principles in Innovation Briefs
   
   
   
   • Replace “How might we improve X?” with “What’s the core problem we’re solving, stripped of current constraints?”
     
     
3. Create a Culture of Constructive Rebuilding
   
   
   
   • Celebrate challenges to status quo thinking, even if ideas fail.
     
     
   • Add “What are the first principles here?” as a standing meeting prompt.
     
     

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Common Misfires to Watch Out For

These are the traps we've seen senior teams fall into:

• Mistaking complexity for sophistication
  Simple core truths feel obvious - but that’s the point. Don’t dress them up.
  
  
• Swapping old dogma for new jargon
  Rebuilding from first principles doesn’t mean chasing the latest trend. It means staying grounded.
  
  
• Applying it only to products, not systems
  You can use this lens on hiring, meetings, org design - not just product strategy.
  
  
• Doing it alone
  The best reframing comes from cross-functional, diverse perspectives. Invite challenge.
  
  

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Executive Reflection Corner

When was the last time you asked “Why are we doing it this way?” - and really meant it?
Where could you run a 30-minute team session next week to identify one legacy process to rethink?

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Tangible Gains From First Principles Work

Leaders who commit to this way of thinking report:

• Faster, more original solutions
  
  
• More aligned teams (because core truths are shared)
  
  
• Lower waste from untested assumptions
  
  
• Greater resilience in the face of industry shifts
  
  

In other words, you move from “What’s everyone else doing?” to “What actually makes sense for us?”

Your Next Strategic Move

Choose one ongoing project this week and ask your team:
“If we started from scratch, what would we keep - and what would we question?”

You may be surprised at how quickly clarity surfaces.

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Team SHIFT

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