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Thread: Second-Order Thinking: What Smart People Use to Outperform

  1. #1

    Second-Order Thinking: What Smart People Use to Outperform

    https://fs.blog/2016/04/second-order-thinking/

    Things are not always as they appear. Often when we solve one problem, we end up unintentionally creating another one that’s even worse. The best way to examine the long-term consequences of our decisions is to use second-order thinking.

    It’s often easier to identify when people didn’t adequately consider the second and subsequent order impacts. For example, consider a country that, wanting to inspire regime change in another country, funds and provides weapons to a group of “moderate rebels.” Only it turns out that those moderate rebels will become powerful and then go to war with the sponsoring country for decades. Whoops.

    “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

    The ability to think through problems to the second, third, and nth order—or what we will call second-order thinking for short—is a powerful tool that supercharges your thinking.



    Second-Order Thinking
    In his exceptional book, The Most Important Thing, Howard Marks explains the concept of second-order thinking, which he calls second-level thinking.

    First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted.

    First-order thinking is fast and easy. It happens when we look for something that only solves the immediate problem without considering the consequences. For example, you can think of this as I’m hungry so let’s eat a chocolate bar.

    Second-order thinking is more deliberate. It is thinking in terms of interactions and time, understanding that despite our intentions our interventions often cause harm. Second order thinkers ask themselves the question “And then what?” This means thinking about the consequences of repeatedly eating a chocolate bar when you are hungry and using that to inform your decision. If you do this you’re more likely to eat something healthy.

    First-level thinking looks similar. Everyone reaches the same conclusions. This is where things get interesting. The road to out-thinking people can’t come from first-order thinking. It must come from second-order thinking. Extraordinary performance comes from seeing things that other people can’t see.



    Improving Your Ability To Think
    Here are three ways you can use to put second order thinking into practice today.

    1. Always ask yourself “And then what?”
    2. Think through time — What do the consequences look like in 10 minutes? 10 months? 10 Years?
    3. Create templates like the second image above with 1st, 2nd, and 3rd order consequences. Identify your decision and think through and write down the consequences. If you review these regularly you’ll be able to help calibrate your thinking.
    4. (Bonus) If you’re using this to think about business decisions, ask yourself how important parts of the ecosystem are likely to respond. How will employees deal with this? What will my competitors likely do? What about my suppliers? What about the regulators? Often the answer will be little to no impact, but you want to understand the immediate and second-order consequences before you make the decision.



    A lot of extraordinary things in life are the result of things that are first-order negative, second order positive. So just because things look like they have no immediate payoff, doesn’t mean that’s the case. All it means is that you’ll have less competition if the second and third order consequences are positive because everyone who thinks at the first order won’t think things through.

    Second-order thinking takes a lot of work. It’s not easy to think in terms of systems, interactions, and time. However, doing so is a smart way to separate yourself from the masses.



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  3. #2
    It's amazing how many people are simpletons.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  4. #3
    Quote Originally Posted by Swordsmyth View Post
    It's amazing how many people are simpletons.
    Curious? are you saying the concept is simpleton? or that most don't apply it past the first level? lol

  5. #4
    Quote Originally Posted by ATruepatriot View Post
    Curious? are you saying the concept is simpleton? or that most don't apply it past the first level? lol
    I'm saying that those who only use 1st order thinking are simpletons and that there are an astounding number of them.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  6. #5
    Quote Originally Posted by Swordsmyth View Post
    I'm saying that those who only use 1st order thinking are simpletons and that there are an astounding number of them.
    Thank you and I agree. And that is a huge problem. There is always a chain of cause and effect on the way to the true end result. No one ever looks far enough down the road.

  7. #6
    Quote Originally Posted by Swordsmyth View Post
    I'm saying that those who only use 1st order thinking are simpletons and that there are an astounding number of them.
    Most people work for corporations and corporations do not encourage reasoning beyond first level as it breaks the official narrative and actually can get you fired.

  8. #7
    Quote Originally Posted by timosman View Post
    Most people work for corporations and corporations do not encourage reasoning beyond first level as it breaks the official narrative and actually can get you fired.
    That's because most corporations are run by simpletons, the reasons for that are complex.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  9. #8
    Quote Originally Posted by timosman View Post
    Most people work for corporations and corporations do not encourage reasoning beyond first level as it breaks the official narrative and actually can get you fired.
    Yep, military also. You are not being paid to think or question... You are being paid to just do it without thinking or questions.



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  11. #9
    Quote Originally Posted by Swordsmyth View Post
    I'm saying that those who only use 1st order thinking are simpletons and that there are an astounding number of them.
    Hence the popularity of agile. When potential customers indicate they want us to use an agile methodology combine with scrum for planning, I automatically double my quote and tell them so.

  12. #10
    Quote Originally Posted by Swordsmyth View Post
    That's because most corporations are run by simpletons, the reasons for that are complex.
    This is actually not true. They are able to run quite elaborate schemes. Forcing everybody to act at the simpleton level makes their job much easier and at the same time allows them to hide their incompetence.

  13. #11
    Quote Originally Posted by ATruepatriot View Post
    Yep, military also. You are not being paid to think or question... You are being paid to just do it without thinking or questions.
    The best thing is when they put a call to their employees to "think like an owner" - https://www.inc.com/tom-searcy/how-t...ke-owners.html -
    this is usually used to weed out second level thinkers.

  14. #12
    Quote Originally Posted by ATruepatriot View Post
    Thank you and I agree. And that is a huge problem. There is always a chain of cause and effect on the way to the true end result. No one ever looks far enough down the road.
    There are two paths you can go by, but in the long run, there's still time to change the road you're on.
    "It's probably the biggest hoax since Big Foot!" - Mitt Romney 1-16-2012 SC Debate

  15. #13
    Quote Originally Posted by tfurrh View Post
    There are two paths you can go by, but in the long run, there's still time to change the road you're on.

    "Two roads diverged in a wood and I - I took the one less traveled by, and that has made all the difference."
    -Robert Frost-
    There is no spoon.

  16. #14
    Quote Originally Posted by Ender View Post
    "Two roads diverged in a wood and I - I took the one less traveled by, and that has made all the difference."
    -Robert Frost-
    “Enter through the narrow gate. For wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it."
    Liberty is lost through complacency and a subservient mindset. When we accept or even welcome automobile checkpoints, random searches, mandatory identification cards, and paramilitary police in our streets, we have lost a vital part of our American heritage. America was born of protest, revolution, and mistrust of government. Subservient societies neither maintain nor deserve freedom for long.
    Ron Paul 2004

    Registered Ron Paul supporter # 2202
    It's all about Freedom

  17. #15
    Quote Originally Posted by pcosmar View Post
    “Enter through the narrow gate. For wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it."
    "They say, "stay in your lane, boy, lane, boy"
    But we go where we want to
    They think this thing is a highway, highway
    But will they be alive tomorrow?"
    ΟΥ ΓΑΡ ЄCΤΙΝ ЄξΟΥCΙΑ ЄΙ ΜΗ ΥΠΟ ΘЄΟΥ

    "Patriotism should come from loving thy neighbor, not from worshiping graven images" - Ironman77

    "ideas have the potential of being more powerful than any army....The concept of personal sovereignty was pulled screaming from the ether into this reality by the force of men believing in a self evident truth, that men are meant to be free." - The Northbreather

    "Trump is the security blanket of aggrieved white men aged 18-60." - Pinoy

  18. #16
    It’s often easier to identify when people didn’t adequately consider the second and subsequent order impacts. For example, consider a country that, wanting to inspire regime change in another country, funds and provides weapons to a group of “moderate rebels.” Only it turns out that those moderate rebels will become powerful and then go to war with the sponsoring country for decades. Whoops.
    Propaganda for morons.

    Thinking we're smarter than the MIC is easy and fun. Figuring out they don't like wars that actually end, that they have no reason to prefer wars that actually end, is more like work, is more frightening, and makes us examine whether we're complicit in the great evils of the world.

    Most people would rather be in a state of smug denial than go through all that. And the shylls are here to help them do it.

    Quote Originally Posted by Swordsmyth View Post
    I'm saying that those who only use 1st order thinking are simpletons and that there are an astounding number of them.
    Present company is no exception.
    Last edited by acptulsa; 04-07-2019 at 08:06 AM.
    Quote Originally Posted by angelatc View Post
    There's not a liberty lover on the planet who isn't called a liberal by the right, and a con by the left.
    Quote Originally Posted by Swordsmyth View Post
    I don't really care if I happen to be wrong about your positions, you are wrong about mine.



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  20. #17
    "The Patriarch"

    willie with tan lines: enjoy the shots and the woman
    Quote Originally Posted by Schifference View Post
    The man did not think clearly. It was almost as if he had brain cancer of something.
    Quote Originally Posted by Swordsmyth View Post
    LOL

    Voting does not justify being robbed by criminals using government.
    Quote Originally Posted by pcosmar View Post
    Yup,,as inconsistent as he is prolific..

  21. #18
    "The Patriarch"

    willie with tan lines: enjoy the shots and the woman
    Quote Originally Posted by Schifference View Post
    The man did not think clearly. It was almost as if he had brain cancer of something.
    Quote Originally Posted by Swordsmyth View Post
    LOL

    Voting does not justify being robbed by criminals using government.
    Quote Originally Posted by pcosmar View Post
    Yup,,as inconsistent as he is prolific..

  22. #19
    Quote Originally Posted by acptulsa View Post
    Propaganda for morons.

    Thinking we're smarter than the MIC is easy and fun. Figuring out they don't like wars that actually end, that they have no reason to prefer wars that actually end, is more like work, is more frightening, and makes us examine whether we're complicit in the great evils of the world.

    Most people would rather be in a state of smug denial than go through all that. And the shylls are here to help them do it.



    Present company is no exception.
    The MIC are not morons but most of the people who support them are.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  23. #20
    Quote Originally Posted by Swordsmyth View Post
    The MIC are not morons
    No. They are a malevolent.
    Liberty is lost through complacency and a subservient mindset. When we accept or even welcome automobile checkpoints, random searches, mandatory identification cards, and paramilitary police in our streets, we have lost a vital part of our American heritage. America was born of protest, revolution, and mistrust of government. Subservient societies neither maintain nor deserve freedom for long.
    Ron Paul 2004

    Registered Ron Paul supporter # 2202
    It's all about Freedom

  24. #21
    Sometimes at a restaurant if I don't get full with my first order, I begin second order thinking.
    "It's probably the biggest hoax since Big Foot!" - Mitt Romney 1-16-2012 SC Debate

  25. #22
    Together, a Bat and a Ball cost a TOTAL of $1.10. The Bat costs $1 more than the Ball. How much does the Ball cost?

    (this is an example if the difference between what is described as 1st level and 2nd level thinking, and it shows that your initial response is quite often completely wrong)
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  26. #23
    Quote Originally Posted by DamianTV View Post
    Together, a Bat and a Ball cost a TOTAL of $1.10. The Bat costs $1 more than the Ball. How much does the Ball cost?

    (this is an example if the difference between what is described as 1st level and 2nd level thinking, and it shows that your initial response is quite often completely wrong)
    Almost got me. 5 cents
    "It's probably the biggest hoax since Big Foot!" - Mitt Romney 1-16-2012 SC Debate

  27. #24
    Quote Originally Posted by tfurrh View Post
    Almost got me. 5 cents
    Good job! The snap judgement is 10 cents, but the actual answer is 5 cents. Try that exact question on anyone you think needs to start thinking a bit more deeply about anything.
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.



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  29. #25
    What level thinking does it take to master 4D chess?
    I compiled a "brief" history of events since October 2008 that are defining the global currency war and the role that gold is playing:

    Tin Foil Hats, Economic Reality and the Total Perspective Vortex

    Also, have you contacted your Congressional Rep and asked them co-sponsor Ron Paul's Rep. Paul Broun Jr.'s HR 1098 77: Free Competition in Currencies Act?

  30. #26
    Quote Originally Posted by Bern View Post
    What level thinking does it take to master 4D chess?
    That level thinking is so 2016. C'mon man the Trumpsykites are way further down the road than that.
    ClydeCoulter on the Liberty Movement:
    Yeah, they'll argue over roads and religion, but there are certain themes that bind, among those are freedom and the search for truth and justice.

    Loyalists gonna loyal.



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