Save to My Latticework unsave

Second-Order Thinking
Second-Order Thinking
Second-Order Thinking
save0 saved view12.5K views
Share this with your network
Share this with your network
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 ...

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Si id dicis, vicimus. Quid, de quo nulla dissensio est? Quid ei reliquisti, nisi te, quoquo modo loqueretur, intellegere, quid diceret? Tum ille timide vel potius verecunde: Facio, inquit. Quicquid enim a sapientia proficiscitur, id continuo debet expletum esse omnibus suis partibus; An nisi populari fama? Huius, Lyco, oratione locuples, rebus ipsis ielunior. Tum, Quintus et Pomponius cum idem se velle dixissent, Piso exorsus est. Duo Reges: constructio interrete. Si enim ad populum me vocas, eum.

Ne amores quidem sanctos a sapiente alienos esse arbitrantur.

De quibus cupio scire quid sentias. Verum hoc loco sumo verbis his eandem certe vim voluptatis Epicurum nosse quam ceteros. Urgent tamen et nihil remittunt. Hoc etsi multimodis reprehendi potest, tamen accipio, quod dant. Dolere malum est: in crucem qui agitur, beatus esse non potest. Deinde qui fit, ut ego nesciam, sciant omnes, quicumque Epicurei esse voluerunt?

Share this model with your network to be smarter, faster, together!
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 quorum et cognitionem et usum iam corroborati natura ipsa praeeunte deducimur. Quodsi ipsam honestatem undique pertectam atque absolutam. Ergo ita: non posse honeste vivi, nisi honeste vivatur? Cum id fugiunt, re eadem defendunt, quae Peripatetici, verba. Duo Reges: constructio interrete.

Et ille ridens: Video, inquit, quid agas; Hoc est non modo cor non habere, sed ne palatum quidem. Quae cum dixisset paulumque institisset, Quid est? Quid dubitas igitur mutare principia naturae? Quid est, quod ab ea absolvi et perfici debeat? Roges enim Aristonem, bonane ei videantur haec: vacuitas doloris, divitiae, valitudo; Verba tu fingas et ea dicas, quae non sentias? Quis non odit sordidos, vanos, leves, futtiles? Semper enim ex eo, quod maximas partes continet latissimeque funditur, tota res appellatur.

Tu autem negas fortem esse quemquam posse, qui dolorem malum putet. Neque enim disputari sine reprehensione nec cum iracundia aut pertinacia recte disputari potest. Piso, familiaris noster, et alia multa et hoc loco Stoicos irridebat: Quid enim? Qui potest igitur habitare in beata vita summi mali metus? Atqui reperies, inquit, in hoc quidem pertinacem; Conclusum est enim contra Cyrenaicos satis acute, nihil ad Epicurum. Hoc est dicere: Non reprehenderem asotos, si non essent asoti.

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

Already a ModelThinkers member? Please log in here.

Oops, That’s Members’ Only!

Fortunately, it only costs US$5/month to Join ModelThinkers and access everything so that you can rapidly discover, learn, and apply the world’s most powerful ideas.

ModelThinkers membership at a glance:

Small mark
UNLOCK EVERYTHING
Access all mental models and premium content.
Small mark
BUILD YOUR LATTICEWORK
Save models to your personal list.
Small mark
QUICKLY MEMORISE MODELS
Use our Learn function to embed models to memory
Small mark
PERSONALISE MODELS
Add your own notes and reminders.
Small mark
BUILD YOUR ‘EXTERNAL BRAIN’
Discover a new idea? Capture it by adding a new model.
Small mark
JOIN THE MT COMMUNITY
Rate models, comment and access exclusive events.

“Yeah, we hate pop ups too. But we wanted to let you know that, with ModelThinkers, we’re making it easier for you to adapt, innovate and create value. We hope you’ll join us and the growing community of ModelThinkers today.”

Arun Pradhan & Shai Desai
CoFounders, ModelThinkers.

You Might Also Like:

- Actionable summaries of the world's most powerful ideas.