Think disruptive innovation – Business Daily

Business, innovation & leadership concept. FILE PHOTO | NMG

To move forward or create disruptive innovations requires going back to the first principles.

“To understand is to know what to do,” said the mathematician and philosopher Ludwig Wittgenstein. For Wittgenstein, the world we see is defined and given meaning by the words we choose. Simply: You create your world in your speaking.

Innovation is a word on everyone’s lips. But how can you innovate? How can a company, NGO, or donor programme create a disruptive innovation that is a genuine game-changer? What can we learn from the genius of [Africa born] Elon Musk?

Guru of innovation, Clayton Christensen, talked about three types of innovation: Sustaining, efficiency and disruptive. Sustaining and efficiency innovations are more incremental, fine-tuning, polishing what exists. Doing the necessary, that every business needs to do to just stay afloat, and remain competitive.

At the age of 46, Elon Musk had innovated and created three multi-billion dollar companies in different industries: PayPal in financial services, Tesla Motors in automotive, and SpaceX in aerospace. Yes, his work ethic of working 100 hours a week, now cutting back to 85 hours helps.

But clues of Musk’s success are more about how he thinks about wicked business problems. His approach has deep roots going back to Aristotle, Euclid, Thomas Edison and Nikola Tesla, all of whom identified the missing link to accelerated learning, and just plain thinking [very] differently.

Most of the businesses’ thinking relies on working by analogy, building on what we know, doing some minor tinkering, and building on what has been done.

A prime example of this is the products and services offered by the many Kenyan banks and insurance companies, based on sustaining innovations, all quite similar, often just targeted at a different market segment. Nothing wrong with this ‘cut and paste’ approach.

But to create disruptive innovation, a distinct way of thinking, based on reasoning by first principles is required. Take the case of the cook and the chef, while they sound quite similar, there is an important distinction. The cook follows a recipe, working by analogy, if that recipe is lost they are in trouble.

In contrast, the creative chef understands ingredients, flavours and combinations. She doesn’t follow a recipe, creates from the basics, based on knowledge, rather than know-how.

So, it’s not about what you think, but how you do about the problem. To be such a disruptive innovating thinker, Musk relied on his training in physics.

“Well, I do think there’s a good framework for thinking. It is physics. You know, the sort of first principles reasoning. Boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy. Through most of our life, we get through life by reasoning by analogy, which essentially means copying what other people do with slight variations,” explains Musk.

Deconstruct

First principles thinking relies on deconstructing a problem, questioning the fundamental assumptions that you believe you ‘know’ about a business challenge or scenario. Then when you are down to the very essence, the first principles, creating new knowledge, a distinct solution from scratch. In contrast, thinking by analogy is what the majority in business community follow.

First principles thinking takes some time and effort, but when mastered allows a manager to have the potential to innovate in a disruptive way, and in the process solve tricky problems, enroute to greater prosperity.

So to start, spend some time in a quiet space — with pen and paper — thinking about the business problem. “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions” was Albert Einstein’s suggestion.

Elon Musk suggests three simple steps on the path to first principles thinking:

Step One – Identify your current assumptions

Don’t be shy, get it all out. Write down everything you assume to be case about the business problem being addressed. If you are in a group, everyone can in confidence write their assumptions on index cards, and then put them on the wall and cluster them by theme. That way you will be able to visualize, see what all the managers assume to be ‘what is so’.

Step Two — Breakdown the problem to first principles

“It is important to view knowledge as a sort of semantic tree. Make sure you understand the fundamental principles, i.e. the trunk and big branches before you get into the leaves/details, or there is nothing for them to hang on to” says Musk.

First principles are the fundamentals, the basic truths, or elements. They are called ‘first’ because they can’t be broken down any further. Best way to get at the first principles is to ask deep down insightful questions to uncover the ground zero. An example of first principles would be the laws of physics, or mathematics.

[For instance, first law of thermodynamics states that energy can neither be created nor destroyed.] Prime example is taken from the belief that batteries are expensive, here is how Musk sees it:

“Somebody could say, “Battery packs are really expensive and that’s just the way they will always be… Historically, it has cost $ 600 per kilowatt hour. It’s not going to be much better than that in the future.

With first principles, you say, ‘What are the material constituents of the batteries? What is the stock market value of the material constituents?’ It’s got cobalt, nickel, aluminium, carbon, some polymers for separation and a seal can. Break that down on a material basis and say, ‘If we bought that on the London Metal Exchange what would each of those things cost?’

It’s like $80 per kilowatt hour. So clearly you just need to think of clever ways to take those materials and combine them into the shape of a battery cell and you can have batteries that are much, much cheaper than anyone realizes” explains the disruptive inventor.

The key here is to challenge accepted beliefs, stereotypes, by asking questions challenging conventional wisdom.

Step three – Create new solutions from scratch

Once you have deconstructed, broken down the problem and assumptions to their basic truths, come up with new solutions from scratch. Usually, when we are faced with tricky problems our default mode is to approach like everyone else, after all it just plain easier. Applying first principle thinking allows managers to break out of a ‘herd mentality, get outside the box, and create disruptive products and services to age-old problems.

“Good ideas are always crazy until they’re not” Musk reminds us.