advertisement
advertisement
The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

How to tame market chaos with first-principles thinking

First-principles thinking empowers agility and innovation, but only when people know you appreciate the lessons as much as the triumphs. And with each challenge presented and each answer revealed, you’re taking steps toward truly harnessing the potential of the chaos around you.

How to tame market chaos with first-principles thinking
[A. Solano/AdobeStock]

Imagine a massive sports field complex. Tens of thousands of people—athletes, coaches, parents, fans—scurry about over the course of a three-day tournament. Cars and vans cycle in and out with spare uniforms, equipment, food, and spectator gear. There’s an undeniable energy of excitement, nervousness, and expectation, all at differing levels across—and even within—different groups.

advertisement
advertisement

It is, in essence, chaos.

But it’s important to note that I don’t view chaos as some people do. I see it as the source of incredible raw power and endless potential. There are patterns to be found in chaos. In this case, each athlete had a jersey with a name or number. Each jersey had a logo on the front. But I also knew there were other patterns to be identified, addressed, or improved.

For me, that field represented a marketplace of opportunity. And the best way to leverage that opportunity was through first-principles thinking—a discovery process that helps you get to the underlying facts that build up into a larger economic equation.

advertisement

WHY ASK WHY?

I didn’t know I was practicing first-principles thinking until I heard about it on a podcast. I have a natural inclination to deconstruct in order to reconstruct or recreate better. Thinking back to that tournament, to all of those individuals with their individual patterns and needs (including myself as a parent of one of the athletes), I wanted to dive more deeply into how well those needs were being served.

There were two avenues of exploration for me. As a third-generation textile scientist, I could think at a granular level about the production process for uniforms, picnic blankets, sweatshirts, hats, etc. What methods were being used? Was there a faster way that still delivered quality? Was there a way that had less environmental impact? Was there an economical way that allowed individual changes to an order and/or eliminated order minimums?

advertisement

The second avenue was distribution (this was before Shopify and any ideas of an interactive stand-up e-commerce experience). Was there a way to simplify the ordering process for administrators as well as players and their parents? Was there a way to ease the burden of the traditional gear fulfillment process? Was there a way to deliver orders more quickly?

There are multiple analogies you could apply—solving puzzles with pieces missing, peeling an onion, etc. But with first-principles thinking, it always comes back to the “why.” Each “why” you answer leads to more data that may lead to more questions, but with each round, you get closer to the fundamentals. Once you have those, you can address the chaos and start to reshape the way things are done.

180 DEGREES TO INNOVATION

advertisement

My love of redefining the way things work put me on a career path as a serial entrepreneur. I credit that mindful creative energy—that strategic disruption—in part to the concept of 180-degree thinking. It’s something I learned from Tom Monahan and it lends itself well to a first-principles approach to problem-solving.

It works by starting with the opposite view of your goal and working back from there. For example, I founded a company with the goal of making the cleanest bed possible. I used 180-degree thinking to imagine the most uncomfortable bed scenario. There was a shower nozzle above the bed spraying ice-cold water. There was cat litter strewn all over the bed. Not clean, not comfortable, and not a consumer-friendly concept at all.

So the first step was to turn it around. Instead of a cold, wet experience, I explored temperature and moisture control. Instead of a smelly and uneven surface, I explored maximum comfort. When applying first-principles thinking, I started uncovering layers of data around the thermal, wicking, and softness properties of fabric. Then I looked at the economics and the alternatives to get where I wanted to go with something that met everyone’s needs.

advertisement

With my current company, that thinking was about improving the end-to-end experience. As I mentioned earlier, that includes the production and the distribution. It may seem counterintuitive, but we’re taming the chaos to create disruption. Because once you break it all down to basics, you can apply technology to new ideas that bring you to the future of the way things work.

CREATING A CHANGE-FRIENDLY CULTURE

In business, we’re trying to do big things with lots of small activities and actions. Traditionally, leadership focused on effective management of those tiny tasks so they rolled up to bigger goals. These days, an effective leader is considered to be one who focuses on supporting the people performing those tasks.

advertisement

That’s emotional intelligence, and it’s about activating the people you’re working with. First-principles thinking is about activating the solution to the puzzle using your own resources, like creativity, inspiration, and deduction. Together, emotional intelligence and first-principles thinking can enable significant productivity and innovation—in the right environment.

Years ago I developed a leadership model centered on integrity, discipline, respect, and empathy. Those ideas have provided structure for me to create a fair and transparent work atmosphere. When things are going right, it’s a safe space of respect, creativity, and growth. When we’re trying to do complex things with a high risk that things might go wrong, we have a known landing place from which to rebuild after a fall.

To do this, it’s important to understand the building blocks of what’s happening in your world. Even with that understanding, however, success shouldn’t mean you’ve settled. Create a culture that values testing and learning. Ask why, answer, repeat. Demonstrate it. Encourage it.

advertisement

First-principles thinking empowers agility and innovation, but only when people know you appreciate the lessons as much as the triumphs. And with each challenge presented and each answer revealed, you’re taking steps toward truly harnessing the potential of the chaos around you.


Founder & CEO of SquadLocker, a provider of innovative online tools to ease athletic apparel purchasing for leagues, teams, and schools. 

advertisement
advertisement