Save to My Latticework unsave

Second-Order Thinking
Second-Order Thinking
Second-Order Thinking
save0 saved view9.9K 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. Habes, inquam, Cato, formam eorum, de quibus loquor, philosophorum. Non potes, nisi retexueris illa. Ab his oratores, ab his imperatores ac rerum publicarum principes extiterunt. Atqui haec patefactio quasi rerum opertarum, cum quid quidque sit aperitur, definitio est.

Qui ita affectus, beatum esse numquam probabis; Duo Reges: constructio interrete. Tollenda est atque extrahenda radicitus. Deinde qui fit, ut ego nesciam, sciant omnes, quicumque Epicurei esse voluerunt? Primum in nostrane potestate est, quid meminerimus? Dicimus aliquem hilare vivere; Neque solum ea communia, verum etiam paria esse dixerunt.

Sed non alienum est, quo facilius vis verbi intellegatur, rationem huius verbi faciendi Zenonis exponere. Negat enim summo bono afferre incrementum diem. Scio enim esse quosdam, qui quavis lingua philosophari possint; Ampulla enim sit necne sit, quis non iure optimo irrideatur, si laboret? Aliis esse maiora, illud dubium, ad id, quod summum bonum dicitis, ecquaenam possit fieri accessio. Intellegi quidem, ut propter aliam quampiam rem, verbi gratia propter voluptatem, nos amemus;

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. Si de re disceptari oportet, nulla mihi tecum, Cato, potest esse dissensio. Solum praeterea formosum, solum liberum, solum civem, stultost; Ego quoque, inquit, didicerim libentius si quid attuleris, quam te reprehenderim. Audax negotium, dicerem impudens, nisi hoc institutum postea translatum ad philosophos nostros esset. Sin tantum modo ad indicia veteris memoriae cognoscenda, curiosorum. Uterque enim summo bono fruitur, id est voluptate. Duo Reges: constructio interrete. Quid autem habent admirationis, cum prope accesseris? Murenam te accusante defenderem. At coluit ipse amicitias.

Quem Tiberina descensio festo illo die tanto gaudio affecit, quanto L. Quis enim redargueret? Quid enim mihi potest esse optatius quam cum Catone, omnium virtutum auctore, de virtutibus disputare? Isto modo ne improbos quidem, si essent boni viri. Graecis hoc modicum est: Leonidas, Epaminondas, tres aliqui aut quattuor; Nos quidem Virtutes sic natae sumus, ut tibi serviremus, aliud negotii nihil habemus. Hic quoque suus est de summoque bono dissentiens dici vere Peripateticus non potest. Hoc dictum in una re latissime patet, ut in omnibus factis re, non teste moveamur.

Hos contra singulos dici est melius. Pauca mutat vel plura sane; Nam aliquando posse recte fieri dicunt nulla expectata nec quaesita voluptate. Si mala non sunt, iacet omnis ratio Peripateticorum. Mihi quidem Antiochum, quem audis, satis belle videris attendere. Deprehensus omnem poenam contemnet. Scisse enim te quis coarguere possit? Somnum denique nobis, nisi requietem corporibus et is medicinam quandam laboris afferret, contra naturam putaremus datum;

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.