Roberto Croci joined Microsoft for Startups team with a wide range of knowledge, having previously worked as the Google Regional head for (EMEA) Emerging Markets (Middle East, Turkey, Israel, Russia, Africa), where he helped businesses by building & mentoring teams that could successfully penetrate new markets and ensure sustainable revenue growth. As the Regional Managing Director at Microsoft for Startups Middle East & Africa, he is leading the long-term strategy for Microsoft to develop a stronger startup ecosystem in the region through key partnerships with government, investors, academia, corporates and ecosystem players and he is leading a team focused on helping startups achieve their goals and build successful and sustainable businesses by promoting their tech solutions through digital and social campaigns, opening up the right opportunities for growth, customizing a market plan to maximize joint marketing with Microsoft and providing a targeted industry co-marketing and account planning.
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. You start by getting to the facts. Once you have a foundation of facts, you can make a plan to improve each little piece. This process naturally leads to exploring widely for better substitutes.
When asked how he started SpaceX, Elon Musk related the story about how he couldn’t believe it was so expensive to launch a rocket. So, he and his team began a bottom-up cost exercise to see exactly how much it would cost if they dated today. The carbon fiber, the titanium, the fuel (the constituent parts of rocket) totaled only 2% of the current per rocket cost. Musk and his team discovered that a fundamental assumption in the world of space was no longer true. It doesn’t cost that much to launch a rocket.
It is a cycle of breaking a situation down into the core pieces and then putting them all back together in a more effective way. Deconstruct then reconstruct.
Another hallmark of first principles thinking is the combination of ideas from seemingly unrelated fields. When we talk about Diversity & Inclusion, we should act more into exposing ourselves into diversity of thinking and spend more time at the crossing of different disciplines. The best solution is not where everyone is already looking.
Some useful questions to start from are “What are you trying to accomplish?”, or “What is the functional outcome you are looking to achieve?”. Identifying market-defining ideas with first principles thinking means that you optimize the function and ignore the form.
One of the primary obstacles to first principles thinking is our tendency to optimize form rather than function.
The story of the suitcase provides a perfect example. In ancient Rome, soldiers used leather messenger bags to carry food while riding across the countryside. At the same time, the Romans had many vehicles with wheels like chariots, carriages, and wagons. And yet, for thousands of years, nobody thought to combine the bag and the wheel. The first rolling suitcase wasn’t invented until 1970 when Bernard Sadow was hauling his luggage through an airport and saw a worker rolling a heavy machine on a wheeled skid.
Throughout the 1800s and 1900s, leather bags were specialized for particular uses —backpacks for school, rucksacks for hiking, suitcases for travel. Despite these improvements, the form of the bag remained largely the same. Innovators spent all of their time making slight iterations on the same theme.
What looks like innovation is often an iteration of previous forms rather than an improvement of the core function.
While everyone else was focused on how to build a better bag (form), Sadow considered how to store and move things more efficiently (function).
First principles approach tells us to ask these essential questions, for example for existing products: why would people move from? what they are currently using to your product? what is the compelling reason? is the product changing their lives significantly? why would they pay for your product? Or for new products: why would people change their current behavior? to using your product? If they didn’t know you would they still use the product?
Just asking these questions is not enough, the next step to go deeper into these question and break down the problem statements behind these questions into smaller, more predictable, solvable chunks.
At the same time, it is a creative process of being aware of the ideas you inherit and expand your thinking and mindset to look at a problem from different angles and understand users in their circumstances.
Our brain is very good at making decisions. When it faces a challenge, it channels all available information in what Edward de Bono called “Rivers of Thinking”. Old conventions and previous forms are often accepted without question and once accepted, they set a boundary around creativity. We have a set way to approach problems and decisions, based on our past experiences. This is mostly good as experience is good but doesn’t always mean we can think creatively.
We have to move away from your “rivers of thinking”, and we should move into another “river” to approach the problem from another angle.
How can we expand our thinking, identify real problems and find creative ideas? There are 3 steps that can help in the journey.
- Creating a positive tension by exposing yourself to diversity of thinking and disciplines. You have to be comfortable not having all the answers to a specific problem and you need to accept that it’s good to be a little nervous about a problem or a situation as this creates the positive energy to achieve. It’s good to be in a safe environment but with uncertainty. So, you have to push yourself out of your comfort zone to get uncomfortable. It acts as a stimulus and then be excited by what it can create.
- Break rules to think creatively. Problems can’t be solved if you come at them from where the problem came from in the first place. What can you adjust about the original environment? Pick a rule and see what happens when you break it.
- Funnel creative thoughts into real decisions. You start by being creative and expansive. In this phase you don’t turn down ideas, you actively listen to other feedbacks and you encourage a “Yes, And” kind of approach. Then you reduce those ideas into decisions that can be actioned. You need both frameworks of thinking, expansion and reduction. Expansion means “Yes, And” more than saying “No”. Reduction means saying “No”. But you cannot start by saying “No”.
And here is the thing. A lot of the startups and corporates jump too quickly to the solution space.
Founders get in love with their idea as they want to implement a prototype, they have been told that they need to hire a CTO, and a CMO, and that they need to get a ready solution as fast as possible. Here’s a great Albert Einstein quote: “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.”
That is also where I see in average a lot of startups coming too fragile on this, only scratching the surface of a problem and focusing on its symptoms rather than spending enough time to identify and solve the real problem.
Finally, you need to approach the world with a growth mindset. You need to lean into uncertainty and be insatiably curious. You have to tell yourself you know nothing about the space you are focusing on or the business problem. Then, you have to become a student again, and learn as if it was the first time. This is how we discover secrets, the startup kind – the ideas you believe that very few others do. Opportunities to disrupt appear when a fundamental assumption about the world changes. Think for a moment about how for decades, data storage and compute were expensive. But today, it’s cheap and hugely scalable. In this and similar cases, entrepreneurs identified and believed that a fundamental assumption in the market had changed. And they seized the opportunity. Identifying these dislocations in market dynamics requires modesty and first principles. When market dislocations happen, the approaches that worked in the past won’t work in the future. Asking the critical questions about the implications of these changes enables us to hypothesize about to address the market in its new state.