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Second-Order Thinking
Second-Order Thinking
Second-Order Thinking
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Overview

Imagine playing a game of chess where your opponent places their queen directly in the kill zone of your pawn. You'd take it, right? If so, tha ...

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Nunc omni virtuti vitium contrario nomine opponitur. An ea, quae per vinitorem antea consequebatur, per se ipsa curabit? Expressa vero in iis aetatibus, quae iam confirmatae sunt. Duo Reges: constructio interrete. Ne amores quidem sanctos a sapiente alienos esse arbitrantur. Si alia sentit, inquam, alia loquitur, numquam intellegam quid sentiat; Longum est enim ad omnia respondere, quae a te dicta sunt. At ille pellit, qui permulcet sensum voluptate. Sic, et quidem diligentius saepiusque ista loquemur inter nos agemusque communiter.

Habes, inquam, Cato, formam eorum, de quibus loquor, philosophorum. Quod iam a me expectare noli. Atque haec coniunctio confusioque virtutum tamen a philosophis ratione quadam distinguitur. Quorum sine causa fieri nihil putandum est. Suo enim quisque studio maxime ducitur. Ait enim se, si uratur, Quam hoc suave! dicturum.

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Actionable Takeaways
  • Stop and ask ‘and what would happen next?’

Rather than commit to an initial appealing decisi ...

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ad corpus diceres pertinere-, sed ea, quae dixi, ad corpusne refers? Simus igitur contenti his. Scio enim esse quosdam, qui quavis lingua philosophari possint; Duo Reges: constructio interrete. Si enim ad populum me vocas, eum.

Ubi ut eam caperet aut quando? Sed ad illum redeo. Levatio igitur vitiorum magna fit in iis, qui habent ad virtutem progressionis aliquantum. Sic enim censent, oportunitatis esse beate vivere. Aliter enim explicari, quod quaeritur, non potest. Sin tantum modo ad indicia veteris memoriae cognoscenda, curiosorum. Cum autem venissemus in Academiae non sine causa nobilitata spatia, solitudo erat ea, quam volueramus.

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Limitations

Second-Order Thinking is effortful and can ultimately be wildly unreliable. Each step away from the initial direct causal relationship — between a decision and the immediate implication — creates new factors to consider, other players and agents, and general complexity. It is difficult to predict or consider all of these factors in any meaningful way.

In Practice

Automation and the fourth industrial revolution. 

One of the contradictions of capitalism that is still being played out in real time around us, is the impact of automation. There is still some debate about the impact of automation on jobs. While there is general agreement that we are losing many jobs, it’s unclear how many new jobs are being created through a ‘robot driven economy’. 

A first order thinking approach to automation would say ‘we can save on labour costs and be more efficient by automating’. The second order and beyond thinking might raise questions about less people in the workforce and the implications on reducing consumer power — thus costing those businesses. 

Again, this is still being played out with some debate about actual implications (second order thinking is often harder to predict), but has led to growing calls for things such as a universal basic income.

Asimov and the Foundation series. 

I couldn’t resist putting this geeky reference in here. Science fiction writer Asimov coined the concept of psychohistory in the Foundation series. This is the (fictional) combination of history, sociology and maths to make predictions about large groups of people. The idea was that it was hard to predict the behaviour of individuals, but the behaviour of groups of people and civilisations was highly predictable through what could be seen as a type of second order thinking. 

Chess. 

Chess and other strategy games capture this well. It’s often tempting to take a piece in chess, when in reality it is a play by your opponent to draw you into a trap. The immediate gain of taking a piece leads to long term consequences of weakening your position and leading you to lose the game.

Build your latticework
This model will help you to:

Second-Order Thinking is a simple and powerful mental model to prevent reactive decisions and consider long term implications. 

Use the following examples of connected and complementary models to weave Second-Order Thinking into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above. 

Connected models: 

  • Fast and slow thinking: first-order thinking sits within fast thinking. 
  • The domino effect: using second order thinking to gain momentum. 
  • Opportunity cost: considering the cost of the next best option.
  • Compounding: how an initial decision can have a compounded effect. 
  • Butterfly effect: how small decisions can make large impacts over time. 
  • 5 whys and fishbone diagram: to dig deeper beyond initial causes. 

Complementary models: 

  • Feedback loops: generating regular feedback points to inform the accuracy of second order thinking. 
  • Agile methodology: providing an iterative process to test and learn from.
  • Probability thinking: to consider the likelihood of various potential outcomes. 
  • High velocity decisions: particularly considering whether something is reversible. 
  • First principles and ockham's razor: to cut down the assumptions built up over second order thinking. 
  • 5 whys: to consider a retrospective view of cause in contrast to the future-focused nature of second order thinking.
Origins & Resources

The Second-Order Thinking mental model has been developed by Howard Marks, the co-chairman of Oaktree investments, who presented it as second-level thinking in his book The Most Important Thing. As he explained: “First-level thinkers look for simple formulas and easy answers. Second-level thinkers know that success in investing is the antithesis of simple.”

My Notes

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