Second-order thinking is one of the greatest skills an entrepreneur can develop

it's the skill of asking "and then what?" and imagining the outcome instead of just hoping for the best or considering the immediate consequence.

Unfortunately it's not taught in schools. It doens't occur to most poeple to ask 'and then what?"

this is a function a mentor can serve really well, because we're objective. We can ask, 'and then what'? without trying to unconsciously project what we WANT to happen.

This means we're often pouring a bit of cold water on a mentee's fire...but that's why they hired us, to temper their unbridled enthusiasm. They don't have the context or experience or maybe the maturity to see the future - but we can teach them the skill.

For example, a gym nearby is closing. What if I give their members a discount to join?

Well, more of them will sign up! If you don't think past that point, this seems like a great move.

But second order thikning means you ask, "and then what?"

what if a bunch of members from a failed gym join at a discount?

how will that affect my current members?

how will that affect my current coaches?

how will that affect my bottom line?

What will happen to the new members when the discount is up?

how will THAT affect my current members, coaches, and bottom line?

The gym owner might really want us to confirm their idea: "yeah, go ahead and offer a discount!" but deep down they know there's a potential problem...but they just don't have the context or discipline to imagine different outcomes than what they want to happen.

A great book on this is The Most Important Thing, by Howards Marks

Shane Parrish has an excellent blog on it and talks about it in his book, Clear Thinking. Parrish's advice is:

Here are some ways to put second-order thinking into practice today.

Always ask yourself, “And then what?”

Think across time — What do the consequences look like in 10 minutes? 10 months? 10 Years?

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.

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.