How Elon Musk Is Applying First Principles Thinking To All The Different Processes In His Company

Elon Musk is known as a first principles thinker when it comes to inventing new things, but he has recently started applying this type of thinking across all the different processes in his company.

In a letter to his employees he outlined how he will reform the spending practices in the company.

“Going forward, we will be far more rigorous about expenditures. I have asked the Tesla finance team to comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification.”

“All capital or other expenditures above a million dollars, or where a set of related expenses may accumulate to a million dollars over the next 12 months, should be considered on hold until explicitly approved by me. If you are the manager responsible, please make sure you have a detailed, first principles understanding of the supplier quote, including every line item of parts & labor, before we meet.”

So basically he wants to have his managers apply first principles thinking to all the things they do, including how they source different components from suppliers.

In an analysis of how subcontracting works in his company, Musk found out that it is a complicated system that creates a lot of overhead.

“I have been disappointed to discover how many contractor companies are interwoven throughout Tesla. Often, it is like a Russian nesting doll of contractor, subcontractor, sub-subcontractor, etc. before you finally find someone doing actual work. This means a lot of middle-managers adding cost but not doing anything obviously useful. Also, many contracts are essentially open time & materials, not fixed price and duration, which creates an incentive to turn molehills into mountains, as they never want to end the money train.”

What this means is that all his employees, especially the ones in management positions, need to be first principles thinkers, no matter whether they sit in the lab and create new inventions, or sit in front of the computer looking at Excel tables all day.

Should you be a first principles thinker 100% of the time?
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Spotting Opportunities When They Are Right In Front Of You – Or What You Can Learn From Red Bull

At the moment I am in Thailand on my third Muay Thai training trip. Something that I came out of a “fuck it” moment for me has now turned into an annual trip focused on improving my martial arts skills and also my body.

If you browse the shelves of local stores (many of the small ones like 7 Eleven or Family Mart are open 24/7), you will see that there are small glass bottles of an energy drink with a very familiar logo. The two red bulls clashing has become one of the most recognizable brands in the world today. Its popularity has virtually exploded overnight.

Red Bull is known as one of the biggest Austrian companies, one with a global reach. Its products have become quite popular with people who want to get extra energy for studying, daily activities, or parties (vodka redbull anyone?). So what is this local product on Thai shelves which looks almost exactly like this global brand?

At first thought, you might probably think that it is a cheap local imitation due to lax copyright laws. The cheap price (10 baht!) seems to infer it, especially since cans of Red Bull are usually quite expensive elsewhere.

You will be surprised at the real story though. It’s not the Austrian Red Bull which is the first Red Bull. In fact, it is the Thai one!

How did this come about? The story of Red Bull is about spotting opportunities when they are right in front of you.

Dietrich Mateschitz was a toothpaste marketer who had a quite unremarkable career. It took him 10 years to graduate from university and he worked for a string of companies until a business trip in 1982 brought him to Thailand.

There he met Chaleo Yoovidhya, who owned a pharmaceutical company, but had also invented an energy drink which was quite popular among Thai day laborers. Dietrich tried this drink and found that it cured his jet lag.

Then a brilliant idea struck him. If this drink is popular in Thailand and has these energy giving effects, maybe it could become popular in his own country too? So at 40 years old, this guy with an unremarkable career up until now decided to have his own “fuck it” moment. He quit his job and started his own company.

Together with Chaleo, they founded Red Bull GmbH. Each of these guys put up US$ 500 000 in order to create the company. The company was not an overnight success and the things that Dietrich had to do in order to bring it to the global success that it is are also quite remarkable, but they are for another story.

The key lesson here is to spot opportunities when they present themselves to you. Dietrich saw a low-cost product in a far away country and realized that it had potential to be a high-cost product in his own.

Many successful business stories are just that, spotting and then grabbing opportunities when they present themselves to you.
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Your Moral Character Is All You Have – Your Actions Define You

In 458 B.C., Rome was at the edge of defeat. A Roman force led by Consul Mincius had been sent out to crush the Aequians, a nearby tribe, once and for all, but had become stuck after being surrounded by their enemies on Mt. Algidus. This left the field open for the Sabines, another tribe which had beef with the Romans, who could now march towards Rome unopposed.

In this time of dire peril, the Roman Senate decided a swift course of action needed to be done. Otherwise Rome would be wiped off the map. They agreed that only one man could do the job, Cincinnatus.

They gathered at his farm and found him working the fields. After being told of the situation, Cincinnatus reluctantly took power as Dictator and raised an army to march against the Aequians. He defeated them and successfully relieved the trapped Roman Army.

However, this is not the point of the story. What is remarkable is what he did after all this. As a Dictator, he was in a position of absolute power. Yet, after the two weeks that it took to get the job done, he relinquished all this power, and returned to his farm.

Here was a man who was in a position that other men scheme their entire lives to get, yet he gave it all up to go back to a simple life. For him, it was the duty that was important. He did what he had to do. His duty was to command the army and save Rome.

Once that was accomplished, his duty was done. Through the ages, Cincinnatus was given as a moral example of a man of character, of modesty and selflessness. His devotion to others and the greater good became legendary. The Ancient Romans were supposed to take example of him and behave in a similar way.

The moral of the entire story is that your actions define you. The ancient philosophers believed that it was not enough to do good deeds, but you needed to do them for the right reasons. It was not just the outcome that counted, but also the way it was achieved.

In our lives, we are often confronted with moral dilemmas. Do I go the selfish route or do I take the moral high route. Often, the moral route is the tough one.

Unfortunately, often it does not yield results and is not appreciated by others. Humans, by nature are selfish creatures and will try to grab things for themselves at the expense of other people. If you use the moral compass to guide you, then you will have to be swimming against this current.

This is hard to do. Often, other people will try to drown you while you are swimming. Sometimes, you might fall prey to temptation and succumb to your human nature and decide to try the selfish route, and instead of swimming against the current, decide to take the easy route and let the current carry you downstream.

Yet, then you will be reminded of your moral duty, and once again start swimming against the current.

You will have to live with the fact that this will usually not be appreciated by others. Unfortunately, we live in a world where people just look out for Number One, and don’t care about others.

Your good deeds towards them will soon be forgotten. The fact that you went out of your way to help them, will not be appreciated. You might even end up being portrayed as the bad guy.

This should not faze you. What should comfort you, is knowing internally that you did the right thing.

I already wrote about the plight of Boethius, one of the last few of the learned Romans, who in the 6th century had been wrongly accused and ended up rotting in jail. That’s where he penned his reflection on why good men suffer, while bad men often prosper.

His conclusion was that people often focus on the wrong things. They mistake the means towards the end with the end itself. They focus on money, fame or other such things, when instead they should be focusing on virtue.

What defines a person is how they behave towards others, how they do the right things for the right reasons, and how they appreciate the few people who are good to them. This last point is often lost on people.

Many times, people focus on pleasing all the assholes that surround them, and forget to be thankful for the people that have stood by them in good and bad.

These people can be your family, the few true friends that you have, or sometimes even a person who you never knew before, but who went out of their way to be good to you in your hour of need.

Unfortunately, it is these people that very frequently, you behave the worst towards. Instead what you should do is to keep them close by your side and be thankful every day that you have them. If you wronged them, try to make up for it.

Often, your pride will get in the way of acknowledging when you did wrong, but in cases like this, you really do need to set it aside and be humble. If you want to be a hardass, be a hardass towards the assholes, not towards the people who were in your corner.
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Two Questions Everyone Asks Themselves: Who Am I And What Am I Capable Of?

When Socrates was put on trial in Ancient Athens for corrupting the youth of the city, he allegedly uttered this famous phrase:

“The unexamined life is not worth living.”

This was derived from one of one of the most important of the Delphic Maxims:

“Know thyself.”

Whenever a visitor passed through the gates at the Temple of Delphi, they would see a set of maxims inscribed high above. These wise sayings were meant to guide their life and to show them the key elements that they should focus on.

In order to live a fulfilled life, the ancient philosophers believed that you need to constantly be examining your life and finding out about yourself. According to them, this was one of the most important tasks, ranking higher than most other things.

It is not only the philosophers that engage in this type of activity. It is a natural tendency of all humans to question their place in this world and to try to maximize their potential.

Who am I and where am I going? People’s life is a quest to find the answers to these questions.

They want to know who they are deep down and what they are capable of.

The most important parts of hero’s journeys are the ones where the hero seeks and finds answers to these questions.

The descent of the hero into the innermost cave marks their realization of who they really are, both in the positive and negative sense and is the turning point in finding out what they are capable of doing. This forms the basis of some of the most heroic actions that they do later on.

It is not only heroes that test themselves, but ordinary humans do it too, in the process sometimes becoming heroes. Especially in the modern age, when technological and societal progress has removed some of the life and death challenges that tested the humans of long ago, this push to test yourself is something that drives many.
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Applying The Thoughts Of Marcus Aurelius: A Day In The Life

What does the typical day of someone who applies the thoughts of Marcus Aurelius actually look like? Let’s imagine you put all those suggestions into practice. How would this help you to get through the day?

You are lying in your bed when the alarm clock suddenly rings. Rise and shine, you need to start your day.

You hesitate a bit, after all you still feel sleepy and the bed just feels so comfortable. You ponder staying in bed for longer, but then you remind yourself that waking up is what you are meant to do. By lying in bed all day, you don’t do any good to yourself or anyone else.

So you spring up and start your morning routine. You brush your teeth and do all the other necessary hygiene stuff, then a little stretching, followed up by a hearty breakfast.

After finishing up your breakfast you take 15 minutes to plan out your day. You sit down and think about the answers to these three questions:

1) What have I done yesterday and how did it go?

2) What do I plan to do today?

3) Are there any potential problems that I will face today?

You reflect on the things you did yesterday and what went right and what went wrong. Then you move onto the things that you want to do today.

You do a little mental visualization and then take out your little kanban board and a pack of Post-Its and start writing out your goals for the day.

You put all your chores (all the boring stuff like paying bills or answering emails) on red Post-Its, and all the goals (interesting stuff that will help you in your quest for self-improvement) on green Post-Its.

Then you put all the Post-Its into the first section of your kanban board, the To Do part. Throughout the day, as you work on these chores and goals, you will move the Post-Its from the To Do section, to the Doing section, and then finally to the Done section.

Lastly, as the final point of your short reflection session, you think about the potential problems and obstacles you will likely face today and come up with a few mitigation strategies.

After doing all this, you get dressed and head out to work.

You get to the bus stop and wait. You wait and wait and wait. You realize that the bus is very late.

At first, you start getting really anxious. You will be late for work!

Then you remember to go back to thinking about this particular situation itself. What can you control here? The fact that the bus is late is beyond your control. So stop getting anxious. It will not help the situation one bit.

You start thinking about the consequences of being late to work. You think of the worst case scenario. You could get fired!

You think of how likely this actually is. Not very likely. The most you will get is a few stares. Who cares, right? You have long ago stopped caring about what others think of you.

The bus finally comes and you get on it. After arriving at work you sit at your desk and start going through emails. Unfortunately this is a ritual that you have to do every time you get to work. You accept it.

Then suddenly a colleague barges into your space and starts shouting at you. This stokes your emotions and you are at the verge of shouting back.
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Get A New Job: The Ultimate Career Changer’s Guide

As the world turns, and AI starts taking over, many jobs will disappear. This means you might have to start looking for a new one. Or maybe you are sick of your current job and would like a change.

No matter the reason, there are many people out there that after years of working in one type of career want to change and switch career paths completely.

Recently, I was helping out a friend to totally reorient her life career paths. She was a flight attendant who was sick of her job. She started this job thinking it was going to be a jet-setting life style (after previously working customer-facing jobs in banks), but it turned out not to be what she expected.

Her goal is to get into project management, a completely different job role, and one unfortunately that she doesn’t have experience for.

Me to the rescue! I spent long hours trying to figure what she should do.

One of the reasons I was spending so much time helping her is because I really liked her. I spent long hours talking to her and I thought she was amazing.

To cut the story short, she left me heart-broken. I am always amazed at the type of men women choose, but I guess I can’t do much about it. It is beyond my control.

I did not get much appreciation for all my effort, however I am a generous person and thought that all this stuff should not go to waste and many other people looking for a career change could benefit from this.

If you want to change your career, these tips will hopefully help you to get a good start on the entire process.

General Mindset

1) The first thing that you need to do is to examine your situation and think of the worst case scenario. If you think about it, the worst case scenario usually isn’t that bad.

When trying to switch careers, you might be agitated about the entire process. You must have been fed up with your initial situation and decided that you need to try something else. The process will be hard and at times frustrating. It might even get depressing and you might feel really bad at times.

However the key here is to always look at the bright side. What is the worst case scenario here? You will just be unemployed for a little longer. You won’t die of hunger. You will also be supported by people who love you, so you won’t end up on the street. That’s actually not that bad.

2) Examine the situation and determine which factors are under your control and which aren’t. You can control the effort you put in, but you cannot control the result. That is why you need to focus on the effort and don’t let the result bother you too much.

The key to having a positive mindset in this entire process is to keep in mind what is under your control and what isn’t. What is under your control is the effort you put in. If you work hard on improving your skills, reading, learning, and also looking for jobs and applying for them, then you have done your job.

The effort you put in is under your control, the result often isn’t. So don’t let an initial lack of good results put you down. Just keep on working hard and things will figure themselves out eventually. You need to keep a positive mindset and keep working hard throughout.

Skills Improvement

3) What do you want to do? What can you realistically do now (as in jobs)?
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Get The Skills For A Robot-Proof Career In The Workplace Of The Future

The robots are coming and you better be prepared. They might not wipe out humanity, but they will certainly be gunning for your job.

In a world where artificial intelligence and robots will be able to carry out many of the tasks currently done by humans, a special set of skills will allow a certain set of people to thrive.

Yeah you guessed it. These skills are Renaissance Man skills. The time of the expert-generalist has come.

The importance of being able to take in lots of information from various sources and then apply it in different ways will only rise. The people who are able to do this effectively will be rewarded.

With the world changing at the speed of light and becoming more and more unpredictable, the ability to work in a multi-disciplinary and agile way will make a person anti-fragile. Their value will skyrocket.

The key will be to make sense of things quickly, and then embark on a course of action. You will have to take in information, determine what it means, and then make a decision based on this information.

What skills and abilities are necessary for this?

Take in information stage: curiosity, know how to deal with information (especially in an era of information overload and fake news).

Determine what it means stage: creativity, abstract thinking skills, critical thinking, logical reasoning.

Make a decision: problem solving skills, emotional intelligence (not fall for biases).

Joseph Aoun, educator and author of the book “Robot-Proof: Higher Education in the Age of Artificial Intelligence” believes that the way to be able to do all this is to change the way you learn.

He proposed a new curriculum which is based on life-long learning and called it “humanics”. This involves an integration of technical and non-technical skills. A set of technical literacies (like working with data, and other technical skills), should be complemented with a set of human literacies (like creativity and psychology).

“When I talk to business leaders, they tell me that they are seeking people with strong technical skills. But most of them quickly add that they also would give their right arm for more systems thinkers—“quarterbacks” who can lead diverse teams by seeing across disciplines to analyze them in an integrated way. And every student should be culturally agile, able to communicate across boundaries, and think ethically.”

The way you will get ahead is if you construct a learning curriculum for yourself, which will combine different skills, abilities and knowledge areas.

All these things are very relevant for each other. Knowledge is a set of facts and theories that serve as the fundamental inputs for skills.

If you want to apply skills in order to do a certain activity, then you need to have a certain amount of knowledge in order to do that.

Skills can be subdivided into generic cross-functional skills, and technical skills.

Generic skills consist of two types: cognitive (to do with information-processing and problem-solving), and non-cognitive skills (social skills like giving presentations and behavioral skills like perseverance). These can be easily transferred from one job to another.

Technical skills on the other hand, usually consist of job-specific skills and cannot be transferred so easily.

Abilities are the capabilities (physical or mental) that are needed in order to perform a job.

Which knowledge areas, skills and abilities do you need for future work and how do you get them? We will use the O*NET groupings of skills (and their definitions) in order to examine this further.

The first thing that you need is to know how to learn. This came up as a highly important skill among the various surveys, but is also fundamental if you want to be able to improve your skills and knowledge.
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Robot-Proof Your Career: How To Thrive At Your Job In An Era Ruled By Robots

The era of specialization is over. The future world of work will require the same type of skills that made the Renaissance Men of old so successful.

According to a report recently published by the McKinsey Consulting Group, about half of all the activities done at work could potentially be automated with current levels of technology. And the trend is accelerating.

Robots are becoming more mainstream, machine learning is creating more and more powerful algorithms, and cars are starting to drive themselves. It will still take some time before these technologies mature, but the trend has been set.

This means that you will have to adapt.

The jobs that are at risk are not just lowly menial jobs, but also more high-level jobs like lawyers, bankers, or even journalists.

There are bots that are scanning documents and drafting contracts, algorithms that trade stocks, and even articles in newspapers generated by computer programs.

People don’t really agree on what this trend will mean for the world of work. Some are predicting massive unemployment due to technology, while others are saying that the jobs will just be shifted into other types of jobs and new ways of working will be required to get ahead.

However one thing stays constant. Since the world of work will change, you will need to adapt to it. What do you need to do in order to thrive in this brave new world?

The answer is quite simple. You just have to look back in history in order to get it.

Different skills will be needed to tackle the challenges arising from a world where artificial intelligence and robots will take over many of the things that are done by humans today. The skills and attributes that humans need for this type of world are exactly the same ones that the Renaissance Men of ancient times had.

The expert-generalist is making a comeback. There will still be a place for specialists (and some of them will be quite key), however many specialist jobs will disappear to be replaced by automation. Machines are much better at crunching big data, and doing it fast. They are also much better at routine, repetitive tasks.

People holding these types of jobs will need to look elsewhere.

What do you need to do?

In order to analyze what you need to do, let’s try to use your higher level thinking skills and one technique (going back to first principles) that you have in your mental toolset.

Going back to first principles implies starting from basic assumptions and then reasoning up from there.

One basic assumption that is made about the world of the future is that change will be rapid, new trends and ways of doing things will come and go. What does this imply?

It will no longer suffice to learn one thing and then rely on it for the rest of your life. In order to thrive in this type of world, you will need to be adaptable and constantly be learning new things.

Technology will change and that one skill could become obsolete. This will require you to be constantly educating yourself and updating your skills and knowledge.

Another basic assumption being made is that the menial, repetitive work will be automated. Many of the specialist positions will disappear. What does this imply?

This means that the type of skills that you should have are ones that add value and are inter-disciplinary.

What will rise in importance is adaptability, higher level thinking skills, making connections between disparate fields, and human skills. Systems thinkers will thrive in this type of environment.
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Implementing The System Of Marcus Aurelius: The Discipline Of Assent

Discipline of Assent

What really matters is not the event itself, but instead how you think about the event. Your mind is your most powerful tool, but often it is also the reason of your troubles.

The discipline of action is all about thinking the right thoughts and using reason to guide you.

Your mind can fail you at many important points. Let’s illustrate this with a few examples.

Imagine that you are riding a bike and a car drives dangerously close to you, almost hitting you.

Your instincts take over and you swerve hard in order to avoid a collision. What often happens in an incident like this is that you will start cussing out the driver, making rude gestures and lose your cool.

There are emotions at play here at different points. First, your emotions alerted you to danger and you reacted quick in order to avoid it.

This is the correct use of emotions. However what happened next right after you managed to avoid the accident is that other emotions took over and made you angry.

This is the incorrect use of emotions. Think about it. What is the use of being angry at this point?

The danger to your life is passed. The only thing that you are doing is venting your frustration, which not only serves no purpose, but could even be counterproductive as it makes you more agitated and more prone to an accident.

Instead what you should have done is assented to the first emotion that saved your life, but not assented to the second one.

Imagine another common situation. You are having an argument. Your opponent hits you with some facts which destroy your argument. His position is correct. Yours isn’t.

However instead of reconsidering your position based on these new facts, you just start repeating your illogical talking points louder and louder.

What is happening here is that you have fallen for a cognitive bias. Your ego is at stake and instead of acknowledging the validity of the other side’s arguments, you fear a loss of status on your side and instead buckle down and start wailing about incessantly.

Thinking according to Nature

For the Stoics, the biggest part of living according to Nature was using your head. You need to be able to rise above your imperfections and instead use your ability to reason.

According to current research, there are two ways of thinking that humans engage in. Daniel Kahnemann, psychologist and the winner of the Nobel Prize in Economics, calls this System 1 and System 2.

System 1 is fast and intuitive. It is based on your emotions. System 2 is slow and deliberate. It is based on reason.

Both have their place. System 1 is good for situations which require an immediate action, such as in dangerous situations as given in the first example.

However, this type of thinking is often hijacked and can lead to cognitive biases.

What you should do instead is to take a step back and engage in System 2 thinking. Thinking out things rationally and critically. This can often lead to much better solutions and actions.

Take control of your emotions

However how do you do that? This is often very hard, since emotions have a way of creeping up on you.

When you feel your emotions are starting to get the best of you, you need to have a couple of techniques under your belt in order to regain control.

One of these is distancing.

There are two kinds of distancing: physical and mental.

For me, the best way to diffuse an emotionally charged situation is to just walk away. If you feel like you are getting into a heated argument, just walk out the door.

I have done that a few times, and immediately your head cools down and the emotions start fading.

However sometimes physical distancing is not feasible, so you will have to use some mental distancing techniques. This means stop and count to 10. Or stop and recite the alphabet in your head!

Be aware of your value judgments

A value judgment is your opinion of a particular situation. Usually people judge situations as being “good” or “bad” or any other type of adjectives.

Let’s go back to the bike situation above. Why did you get mad at the driver of that car that almost hit you?

Since you judged that situation as “bad”.

However is there really any advantage to making this judgment? No. This type of judgment is really irrelevant to the situation.

You cannot change the fact that a car almost hit you. That is a done thing. It happened. Get over it.
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