What is the Pyramid Principle?
Start with the main point, organize logically, and communicate complex ideas with clarity and impact.
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To increase innovation in a company, you have a few levers to pull. We can break down the question into these components:
Very often, it’s the second part that is the bottleneck, not the first. If you know anything about human nature, you might have noticed that new ideas aren’t always welcomed by the establishment. In the words of Arthur Schopenhauer, they’re first ridiculed, then violently opposed, then accepted as self-evident.
In my opinion, there’s no shortage of creative people and good ideas, it’s companies that make the second part difficult. They get entrenched, conservative, and lazy.
I’ll talk about some ideas I’ve cooked up on both components. How to come up with more innovative ideas, and how to set up a work process where the best ideas win.
Innovative ideas have to be counterintuitive and non-obvious, because all the obvious ideas have been thought of and acted upon. So, one way of generating innovative ideas is having a conviction that few people share. That is, believing that one thing is true, when everyone else thinks something different.
While Steve Jobs believed the personal computer would be a beautiful, general-purpose tool for the masses, everyone else thought it would be an expensive, ugly tool for the office. Elon Musk believed that electric cars could compete with gasoline cars on range, speed, and design. Everyone else thought electric cars would always be like golf carts.
In both of these cases you had the consensus being one thing, and one individual’s conviction being something different, and in that delta was their opportunity. Most people’s default mode most of the time is to just follow conventional wisdom. To have an innovative idea, you first have to have some moment of insight to break you out of that spell and to think deeply for yourself about something, and then second, you have to reason well to a correct conclusion. It doesn’t help to just have a unique perspective - it also has to be correct.
The best ideas may come from moments of inspiration like Archimedes’ famous “Eureka” moment in the bathtub. Like lightning from a clear sky, perhaps from the gods or “muses” above. Or perhaps from a combination of ideas and some help from the subconscious mind.
But you may also come up with good ideas with a systematic exploration of the problem/solution space with an issue tree.
Below is an example of an issue tree that shows the underlying logic and rationale for the Boring Company, Elon Musk’s tunnel-building company to solve the traffic problem in Los Angeles by funnelling traffic underground. Musk famously uses first-principles thinking to question assumptions and come up with unique business solutions. The logic seems simple in retrospect, but it’s easy to overlook the best solution without a systematic search of the whole solution space.
The key breakdown that leads to this discovery, is the breakdown of “Increase road capacity for cars” into on-ground capacity, above-ground capacity, and below-ground capacity. Most people thinking about this problem would take it for granted that traffic has to be on the ground, because that’s the way traffic always has been. But, this split indeed makes sense in the context of an issue tree, and is a textbook example of the MECE principle (mutually exclusive, collectively exhaustive). Above, below, and on ground traffic are non-overlapping solutions (mutually exclusive) and cover the whole solution space (collectively exhaustive) - there is nowhere else traffic can go other than those three places. Even a crazy solution that Elon might cook up in the future, like rockets going from say London, into space, and landing in New York, fits in one of those buckets. (Read this blog post for more information on logic trees and the MECE principle).
Philosophy is about discovering the truth, particularly truths that require difficult and precise reasoning to arrive at, so we can learn from philosophy. René Descartes and other rationalist philosophers were skeptical of book-learning and conventional wisdom (”there is no opinion so bizarre and incredible that has not been uttered by some philosopher or other”), and believed that any individual who could govern their thoughts well and reason from certain foundations (”first principles”) would be better equipped to discover the truth than the hive mind.
Descartes’ “methodic doubt” or “first principles thinking”, popularized by Elon Musk, is about boiling a problem down to the most basic truths and reasoning up from there, potentially reassembling those component pieces into an original conclusion. In contrast, reasoning by analogy is essentially to accept the conclusions of other people’s reasoning. A good way to think about this distinction, which highlights the innovative act involved in first principles thinking, is to compare the chef and the cook. The chef is the person who invents recipes. He knows the raw ingredients and how to combine them. The cook, who reasons by analogy, uses a recipe. He creates something, perhaps with slight variations, that’s already been created.
A masterclass in first principles thinking, that the rationalist philosophers looked to as an inspiration, was Euclid and the geometers of old. Euclid started with an axiom like “a line is a point from A to B” and added progressively to his knowledge with logical deductions (proofs) leading to complex proofs like the volume of a cone etc. For Elon Musk, the first principles that he used for SpaceX were physical laws, materials science, the spot price of different materials, etc. Euclid took his first principles and built some amazing mathematical proofs. Musk took his first principles and built a business empire.
A logic tree (particularly a hypothesis tree) is a visual representation of the mental process of thinking from first principles. It is a tree of nested logical inferences. At the root is the hypothesis, and the tree contains the minimum rationale to justify that conclusion. Then you investigate whether the premises are true or false.
A logic tree can can aid the thinking process of an individual, but perhaps more importantly, it allows teams to reason well together. Collaboration is hard, and words get lost in translation. With a logic tree, everyone has an overview and a shared understanding of the problem.
In practice, you might not break down the problem to truly “first principles” - that is, nearly indubitable axioms like those contained in the laws of physics or mathematics. That is probably impractical in most cases. Nonetheless, no matter how thoroughly you break down the problem, you get the benefit of a mindset shift. Namely, by stating your problem as a set of assumptions to prove or disprove, you will think more like a scientist. (You can read more about that in this blog post.)
Reasoning from first principles is more time consuming than reasoning by analogy. Coming up with a thesis is easy, but collecting data to establish the truth or falsehood of every premise can take time. The good news is that, firstly, highly aligned teams (with a logic tree you work more aligned) can do this quite quickly, and secondly, if you truly investigate the claim like a scientist with “methodic doubt” and persuade yourself that the claim is true, you will reach certainty and can persuade other people that you’re right.
Recall that having high conviction about a non-obvious, counterintuitive truth is essential for innovation. The truth is the opportunity, and the certainty allows you to execute with confidence.
As previously mentioned, the biggest impediment to innovation is not a lack of good ideas, but the difficulty in getting buy-in from others. Many innovative ideas die in committee or are never implemented because they challenge the status quo and require a leap of faith from decision-makers.
The fact that innovative ideas 1) are by definition unusual and 2) usually come from one person or a small team, places all the more demand for persuasive communication. To get buy-in from others, they have to have a strong conviction (high certainty) and a way of presenting their reasoning.
In the mid-19th century, Ignaz Semmelweis, a Hungarian physician, faced significant resistance when he proposed that hand-washing could drastically reduce mortality rates in hospitals. Despite the compelling data he presented, which showed a dramatic decrease in childbed fever after implementing a hand-washing protocol with chlorine, his ideas were met with skepticism and opposition. At that time, the medical establishment did not yet understand germ theory, making it difficult for them to accept Semmelweis's findings.
Ignaz Semmelweis was one of the many historical figures, like Galileo Galilei and Giordano Bruno, that told the truth and was punished by authority figures. He spent his entire career advocating for his theory with limited success, and was eventually deemed insane and forced into a mental institution, where he was beaten by the guards and died of an infection soon after.
Although Semmelweis had an innovative idea and the truth on his side, he was unable to win over the medical establishment. He was known for his abrasive personality and confrontational style. His manner of presenting his findings alienated many of his colleagues, making it difficult for him to gain supporters.
If he used a logic tree like the one below, perhaps he would have been more successful at persuading the medical establishment.
Miscommunication, pride, and irrationality stood in the way. A logic tree can cut through all of that and be very persuasive. The truth is irrefutable, and if you have the truth on your side you only need Logos on your side to persuade reasonable people. Pathos and Ethos is the weapon of the opponents of truth (e.g. the medical establishment in the Semmelweis case). In one of Plato’s dialogues, Agathon says to Socrates “It is very hard to argue with you”, to which Socrates replies “It is not hard to argue against Socrates, dear Agathon, but against the truth.”
If Semmelweis had presented his reasoning as clearly as this, it would at least force his opponents to engage with his reasoning. To refute him, they could either reject one of his premises, or say that one of the logical inferences was invalid, and explain why.
Many of the best CEOs in the world have endorsed first principles thinking and/or a truth-seeking culture in their companies.
“Boil things down to their fundamental truths and reason up from there. Most of our life, we reason by analogy, copying what other people do with slight variations.”
“Any high-performing organization … has to have mechanisms and a culture that supports truth-telling.”
“You want to set up your culture so that the most junior person can overrule the most senior person, if they have data. There are little things you can do. In every meeting that I attend, I always speak last.”
“This [writing memos instead of presentations] is so much better than having a Powerpoint presentation. That has so many difficulties. But one of the problems is Powerpoint is really designed to persuade, it’s kind of a sales tool, and internally, the last thing you want to do is to sell. You’re truth seeking, you’re trying to find truth. […] That’s the other problem with Powerpoints. It’s often just bulletpoints. And you can hide a lot of sloppy thinking behind bullet points. When you have to write in complete sentences with narrative structure, it’s really hard to hide sloppy thinking. It forces the author to be at their best. So you’re getting somebody’s best thinking. And then you don’t have to spend a lot of time trying to tease that thinking out of the person, you’ve got it from the very beginning, so it really saves you time in the long run.”
“With respect to building a company, as with all problems, you start from first principles”
“It's a gut call in the sense that your intuition says something as a starting thesis, but then you have to reason through it. And the reasoning of it is much, much more important to me than a spreadsheet. I hate spreadsheets because you can make any chart you want out of a spreadsheets - you just gotta type in some numbers. So I don't love spreadsheets for that reason. I love words for that reason. Words are reasoning. Tell me - how did you reason through this? What's our intuition, why do we believe that matters?”
In conclusion, fostering innovation within an organization requires a dual focus on generating innovative ideas and effectively obtaining buy-in to implement those ideas. By encouraging originality, first-principles thinking, and utilizing tools like logic trees, individuals and teams can develop groundbreaking ideas. However, the true challenge often lies in persuading others to embrace these innovations. Learning from historical examples like the Semmelweis case and contemporary practices at several high-performance companies, we see that clear communication, data-driven validation, and a commitment to truth-seeking are essential. By creating an environment that supports these principles, organizations can ensure that the best ideas not only emerge but also come to fruition, driving progress and success.
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