According to entrepreneur Sahil Bloom, the world needs thinkers who can envision second order effects – the implications of events, weak signals and trends – like never before. The more unpredictable the future becomes, the more they’re needed.
What exactly is a second-order effect? Josh Kaufman, author of The Personal MBA, explains:
“Every action has a consequence, and those consequences have consequences, which are called second-order effects. Think of a line of dominoes—a single push causes a chain of events to occur. Once the chain starts, it’s difficult (if not impossible) to stop or reverse the cascade of cause-and-effect.”
According to Kaufman, studying second-order effects can be especially helpful in helping us anticipate unintended effects of our actions.
He shares the example of rent control in New York City, implemented by the city at the end of World War II. It capped the rent that landlords could charge for apartments in the city. It’s intent was to provide affordable housing to soldiers returning from the war, but it had the opposite effect.
Over time, rising maintenance costs made it impossible for landlords to be profitable renting their buildings at rent-controlled prices. So they let the buildings deteriorate. This had the effect of reducing the inventory of livable apartments available in the city, which drove up rent prices – the opposite of what the city intended.
The incredible value of second-order thinkers
Most people are first-order thinkers. We see what’s happening around us and jump to obvious conclusions, often reinforced by confirmation bias (based on what we already think we know). First-order thinkers tend to think alike.
Second order thinkers ask themselves the question, “And then what?” This shift in mindset enables them to envision trends and implications that others can’t even see. That makes them incredibly valuable in today’s uncertain world.
Why visualize second-order effects?
Diagramming second-order effects makes them easier to visualize. Tools like mind maps leverage the brain’s associative capabilities, making it easier for us to envision chains of effects and implications. They also help us to see patterns and connections that may not otherwise be visible to us.
How to mind map second-order effects
A mind map can help you visualize these implications.It leverages your brain’s associative capabilities, making it easy to brainstorm and capture potential chains of effects.
Simply place the event in the center of the map and then start brainstorming the impacts it is likely to cause. To help focus your thinking, I recommend that you create first-level topics the represent different spheres of influence that are important to you, such as demographics, economics, societal values, competitive situation, customer needs and so forth. Use them as triggers to get you thinking.
- What are the potential implications of this event, decision or trend?
- How could it impact people, businesses, the environment or other aspects of the world around me?
- How can I create a scenario that imagines how a chain of effects could potentially play out?
- What if the future is significantly better in some fundamental way than the present, caused in part by this event or decision?
- What if this event causes the future to be fundamentally worse, more uncertain or unpredictable in some way?
By engaging in this type of thinking, you’re constructing scenarios that imagine how the future may play out, so you can make better decisions in the present and see emerging opportunities and threats better..
How to add meaning and context to your second-order effects map
Once you have finished brainstorming and capturing potential second order effects in your mind map, consider using the topic enhancements of your mind mapping tool to add priority, meaning and context to the “ripples“ you have discerned. Here are some ways to embellish your mind map:
Priority icons: Use them to indicate the level of likelihood that these impacts may happen. One equals highly likely, two equals somewhat likely and three represents not very likely.
Topic notes: If you have detailed thoughts about the impacts you envision, capture them in topic notes.
Links: As you conduct research about the event and its potential impacts, chances are you’ll uncover authoritative articles or reports that are important. Consider adding URL or file links to them. It’s a convenient way to keep them one click away!
Topic colors: Use them to draw attention to the biggest or most important potential impacts you have uncovered.
Topic boundary: If there is a grouping of second-order effects that you think are especially important, you can add emphasis to them by grouping them within a colored boundary.
Have fun exploring the second-order effects in your world!