Mastering Second-Order Thinking for Smarter Life Choices
Wisdom
One piece of wisdom that motivates, encourages and empowers you to grow.
"Second-order thinking separates the proactive from the reactive, the empowered from the victim, the winners from the losers." — N.T. Wright
Insight
One insight that helps you deeply understand a situation, idea, or concept.
What Is Second-Order Thinking?
Second-order thinking is a mental model for making better decisions in life.
It is like looking ahead before making a choice. It's about imagining what might happen next because of what we decide now.
When we use second-order thinking, we don't just think about the obvious outcome. We think about all the different things that might happen as a result of our decision.
It helps us be prepared and not just go for the easy or obvious choice.
In other words:
“First-level thinkers look for simple formulas and easy answers. Second-level thinkers know that success in investing is the antithesis of simple.” -Howard Marks
Understanding Second-Order Thinking
Imagine you're playing a game.
First-order thinking is making a move that seems good right now. Second-order thinking is anticipating how that move will affect the game in the future.
It's like being a chess player, planning not just the next move, but the moves after that, and how they might impact the game's outcome.
How to Use Second-Order Thinking
Spending time upfront to imagine the unintended consequences of your actions can help improve your odds of success.
Here's how you can apply second-order thinking:
Don't Rush Decisions: When you encounter a decision that seems easy on the surface, resist the urge to make a quick choice. Give yourself time to think it through.
Think Ahead: Instead of just considering the immediate consequences of your decision, try to look further into the future. Ask "then what?" several times to anticipate what might happen next. This helps you see the ripple effects of your choice.
Ask Quality Questions: To gain a deeper understanding of the potential outcomes and effects of your decision, use these questions:
What could happen?: Explore all possible scenarios, both positive and negative. This broadens your perspective.
What's likely to happen?: Assess which outcomes are more probable based on your current situation and available information.
How will this affect me socially, financially, emotionally, etc.?: Consider the impact on various aspects of your life, including relationships, finances, and emotional well-being.
How does this fit into my overall goals?: Reflect on whether the decision aligns with your long-term objectives and values.
How will I feel about this in 10 minutes, 10 months, and 10 years?: This "10-10-10 rule" helps you evaluate how you'll feel about the decision shortly after making it and in the long term. It encourages you to consider both immediate and future consequences.
Are there consequences I really want to avoid?: Identify any potential negative outcomes that you absolutely want to prevent or minimize.
Apply to Big Decisions: While you can use second-order thinking for any decision, it's especially valuable for significant life choices such as:
Moving: Consider the long-term implications of relocating, such as the impact on your career, relationships, and overall lifestyle.
Job Offers: Evaluate job offers not just based on immediate salary but also on how they align with your career goals and work-life balance.
Starting a Business: Think beyond the initial excitement and assess how starting a business will affect your finances, time, and personal life.
By following these steps and applying second-order thinking to your important decisions, you'll be better equipped to make choices that align with your goals and values while minimizing unexpected consequences.
Living Legend
One inspiring story of a famous person still living for doing something exceptionally well.
Peter Thiel
Living legend, Peter Thiel, a renowned entrepreneur and early investor in major companies such as PayPal and Facebook, embodies the application of second-order thinking in decision-making.
His strategic and forward-thinking approach sets him apart, emphasizing the importance of questioning conventional wisdom and considering long-term consequences.
For instance, in the early 2000s, when the dot-com bubble had burst, many investors were wary of venturing into the online space. However, Peter saw beyond the immediate aftermath and identified valuable opportunities.
Peter co-founded PayPal, revolutionizing online payments and ultimately selling it to eBay for $1.5 billion in 2002. Peter's second-order thinking enabled him to make a decision that went against the prevailing pessimism, resulting in a highly successful venture.
Peter's approach extends to his investment in Facebook. He believed in the long-term potential of the platform, foreseeing its impact on the future of communication and social interaction.
His investment in the early stages of Facebook was a testament to his ability to see beyond the present and understand the profound influence it could have in the years to come.
Peter's career showcases how applying second-order thinking, challenging conventional norms, and envisioning future outcomes can lead to remarkable successes and shape the course of industries.
Final Thoughts
Questions for you to ponder and think carefully about.
Engaging in second-order thinking involves considering the potential consequences and ripple effects of decisions beyond the immediate or obvious outcomes.
Here are some quality questions to ask yourself to encourage second-order thinking:
How does this decision fit with my long-term goals and values?
Are there potential domino effects or chain reactions that could occur due to this decision?
What can I learn from past experiences or similar situations to make a more informed decision now?
Cheers,
Ben Mumme
Founder and CEO of Living Your Greatness
P.S. Check out the behind-the-scenes for Kaleo’s “Way Down We Go”.
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