Two ways to think of your business:

1. Tool Thinking
2. Problem Thinking

Tool Thinking is dangerous and backwards. Short term. Doesn’t endure.

Ex: “I want to start a paid newsletter”

Thread

Tool thinking is when you start with the solution / product before deeply considering the problem you want to solve.

Startup: “I want to start a paid newsletter” (Substacker)

Business owner: “I sell an SEO course” (SEO trainer)

Big business: “We make film for cameras” (Kodak)

Why is tool thinking bad?

It fools you into solving a superficial, short term and inferior version of a problem.

This makes it:
1. Nearly impossible to innovate
2. Commodization comes quicker
3. Word of mouth harder
4. Less impact and less profit
5. You get bored

Example:

1. Kodak used tool thinking. They thought they made film. They were great at making film. Amazing profit from it. World class.

How they thought of their business:

2. If you were to ask Kodak in 1995 what they did they’d say “we make film!

Humans use millions of rolls of film a day. We simply fill that need, We make the best film ever created!”

4. But the critical bug that Tool Thinking introduces is thinking you are solving the right problem.

5. Turns out two things were true about Kodak’s business:

a) No one cared about film
b) Everyone bought film

See, people wanted to preserve their memories and share them with people. Film just happened to be the best way to solve that problem at the time.

7. As soon as digital cameras were popularized Kodak went bankrupt.

Kodak started with a tool: “We make film!” and were overcommitted to it.

If they had become over committed to “preserving memories and sharing them” they’d invented the digital camera & Instagram.

6. Tool Thinking has 3 fatal flaws:

a) Never gain clarity on the problem you are solving due to premature focus on a particular solution.

b) Over commit to primsry product

c) An avoidance of regularly asking the question: “What is the best possbile way to solve this problem?”

Alternatively:

Problem Thinking arises from...

a) Strong belief about how things are or should be

b) Selecting one primary problem to solve that would make that a reality.

Why is Problem Thinking better?

It guides you to creating a unique and innovative product that endures longer, works better and is more profitable.

Benefits:
1. Forces innovation
2. Better profit and impact
2. Solves the problem better than its ever been solved

Example:

1. SpaceX uses Problem Thinking.

2. Their primary domestic competitor ULA doesn’t.

3. Ask ULA what they do, “We make rockets to fly government stuff to space” (aka: Tool Thinking)

4. Which means we can predict what will eventually happen to ULA (and any company that thinks like this).

a) Over commitment to core product
b) Entrenchment
c) Doubling down on legacy
d) Overrun by competition
e) Will go bankrupt

5. SpaceX on the other hand has

a) a core belief about what should be
b) identified a key problem preventing it from being
c) created the best solution that’s ever existed for solving that problem

What are those things for SpaceX

Belief: Humans should live on multiple planets

Problem: it’s too expensive to get to other planets

Solution: Make it cheaper with reuseable rockets

Thinking like SpaceX (Problem Thinking) naturally innovates and creates magic.

Thinking like ULA (Tool Thinking) and Kodak naturally doesn’t.

Note: Some refer to this as First Principles thinking. But I think that concept misidentifies the magic.

“First Problem Thinking” might be more accurate.

Takeaway:

1. Start with a core belief
2. Identify one problem preventing
3. Make best thing that’s ever existed to solve that problem
4. Hold solution with an open hand
5. Non-stop ask “What best possible way to solve this problem?”

Here is how we've applied this concept at our company, Growth Tools; https://www.loom.com/share/3d654bf2be1d48be92ca6ee8ccbb65ba