Second Order Thinking

 Angela Anderson

What is Second Order Thinking?

Second order thinking can be summarised as going beyond the obvious and avoiding unintended consequences.

  • It is about thinking in terms of interactions and time, and considering the consequences of a potential decision or action.
  • It is about seeing things that other people don't or can't see.
  • It is more deliberate thinking.
  • It takes longer and is harder work than first order thinking.
  • It leads to extraordinary performance.

The key question to ask is: "And then what..?"




First Order Thinking

First-order thinking is usually quick and easy and addresses the immediately presenting symptoms.

  • It uses short cuts, also referred to as heuristics, reasoning by analogy and rule of thumb.
  • It is very similar to everyone else's thinking and reaches the same conclusions.
  • It looks for a quick and simple solution that only solves the immediate presenting problem
  • It doesn't consider the consequences.
  • It addresses symptoms and not underlying causes.


“Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases.

Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored.” [Ray Dalio]




Practising Second Order Thinking

Here are 4 guiding principles you can use to put second order thinking into practice:

  • Question everything. Don't make assumptions, and when exploring possible solutions, always ask "what happens then," to understand longer-term impacts.
  • Involve others. Speak with colleagues to get alternative perspectives. Undertake a thorough stakeholder analysis.
  • Think long term. Consider how the decision will play out at different time points, for example, a week, month or year from now, and whether circumstances might change.
  • Don't discount options too quickly. Keep all options on the table until you're sure they aren't the right choice.

"It’s not supposed to be easy. Anyone who finds it easy is stupid." [Charlie Munger]

                



The EEMap Process

This is a process that I developed in my business career and used successfully with many corporate clients.

I called it EEmap because the application of second order thinking requires you to systematically think through the Exposures [i.e. issues with consequences] that will have to be identified and addressed at each step of the Evolution of the solution.

This is the discipline of considering impacts before rushing into action.

This simple diagnostic process causes you to:

  • Test the impact of any step at any stage in the decision making process. 
  • Identify the issues that will arise.  
  • Identify those people most affected by it.
  • Understand the impacts and how, where and why failure may occur.  
  • Establish exactly what has got to be done to make it a success.

The diagram below shows the usual, typical first order thinking approach, namely: working out the steps, allocating the tasks and expecting a result – but without assessing the impacts and issues!

The diagram below shows the EEMap approach moving step by step from task to task via recognition and resolution of all the dependent issues:

  • The line of progress from A to B [the line of Evolution] from task to task and step to step is not a straight line.
  • There are always dependent issues [or Exposures] that accompany each task and step and that have to be resolved before a successful transition takes place to the next step.
  • Once a task [or set of set of tasks] has been identified, then you need to think carefully about all of the impacts and exposures that will arise and have to be resolved before you can successfully progress to the next task.
  • This process can and should involve as many people [as is possible] who may be affected by your decisions. The more functional and departmental involvement in this process the better – as the analysis will be more comprehensive.
  • You need to analyse, categorise and prioritise [across all functional areas] the issues that are associated with each step. It is important to pay particular attention to the people impacts, and to identify risks and issues for each.
  • This process was designed for a business setting, but it can easily be adapted and applied as a diagnostic decision making approach in any other context.




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