Imagine that you are a restaurant owner. To boost flagging sales, you set your team an ambitious target to create three new main course menus in the next six months. Inspired by this stretch goal, your chefs end up creating five new main course menus – a great result! Or is it?
Once the menu tasting and celebrations of creating something new die down, you realize things are starting to untangle. You discover that the hosting staff isn’t equipped to handle questions about the new dishes and that’s creating confusion. Not only that, but an expected decrease in people visiting the restaurant means sales are dropping. Your seemingly good idea ended up costing your restaurant more money.
Your initial decision may have appeared to be reasonable on the surface with a good outcome at first, but you didn’t foresee the possible wider impact – and that’s what “second-level thinking” is all about.
It was Howard Marks, author, and co-founder of asset management firm Oaktree Capital Management, who wrote about the first and second level thinking in his book, “The Most Important Thing.“
First-level thinking is simplistic and peripheral, and just about anyone can do it. But, most decisions need a deeper level of exploration, and this is the crux of second-level thinking. Looking beyond the immediate and obvious, helps you make better decisions that will give you much more chance of a positive outcome in the long term.
Our minds are programmed to seek the easiest solution, so many of us find it hard to look beyond our initial conclusion. This is especially true if we are pressed for time, inexperienced in our role or field, or overly confident in our abilities, experiencing strong emotions, or isolated from other points of view. Our thinking is also affected by our psychological biases, so, while the concept is straightforward, second-level thinking is a skill that we need to work hard to develop.
How do we, at Spoonshot, apply second-level thinking?
We don’t stop once we reach our first solution or conclusion, or even our second. We keep questioning ourselves, and ask, “what happens then?” We continue to do so until we have a clear view of potential outcomes. We also understand that it’s essential to establish the credibility of the information we use when making a decision – what is the evidence and who’s the source?
It is easy to get caught up in first-level thinking because you simply don’t know what other outcomes are possible. But what we do to tackle this is bring in others into the decision-making process, to get new perspectives and solutions. We leverage expertise and knowledge (food scientists, chefs, data scientists, industry experts, etc.) at every level to ensure that we get a 360-degree point of view. Our AI-powered platform, Spoonshot, that has been designed to be the creative spark for early-stage product inspiration, exploration and ideation for food and beverage businesses, is the result of incorporating this expert knowledge.
We understand that the benefit of second-level thinking helps you look past immediate results and consider the long-term impact. Spoonshot is built on this crux – helping businesses get future-forward results today, ensuring time and money is saved.
Second-order thinking in application
Take, for example, the auto industry. There is a fundamental technology change happening at the moment with the adoption of electric vehicles. This is largely a consequence of protecting the environment and going green. Applying second-order thinking here means that with electric vehicles there comes a reduction in the number of moving parts in a car by a huge magnitude.
Roughly half of the US spending on car maintenance goes on things that can be directly attributed to the internal combustion engine, and much of that spending will just disappear with electric vehicles. In the longer term, this change might affect the lifespan of a vehicle, with fewer mechanical breakages (and fewer or no accidents).
Sales of tobacco might drop or completely disappear, as over half of US tobacco sales happen at gas stations. Cigarettes are often an instinctive purchase and removing accessibility, removes the likelihood of smoking. Therefore, the second-order thinking of moving to electric cars means much more than replacing the gas tank with a battery.
Another example, where second-order thinking could have done wonders is – Kodak.
Once known as the pioneer in cameras, reminds us today of a lost opportunity. Even though it was one of Kodak’s engineers who created the first prototype of the digital camera in 1975, they missed out on creating an impact during the digital disruption because they failed to invest in the technology they themselves created.
Had they applied second-order thinking, they would not only have invested heavily in the technology but also embraced the shift from just printing pictures to understanding how they could help users post pictures on social media and cell phone apps.
At Spoonshot, we are constantly applying this second-order thinking in order to achieve the extraordinary for our customers. As second-order thinkers, we think differently, perform differently and hence, get different and unforeseen results. We understand that for predicting future trends, we need to look beyond sales, panel and survey data. Though the unexpected results could be below average as well, can there be any gain without taking risks?
We believe that it is only when we think differently and apply something beyond first-order thinking that we can achieve results that are diverse, helping us become beyond ordinary, setting the path to a future that no one has invented yet.
Tell us what you think about this model? And how would you apply it to your company?
Photo by Octavian Rosca
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I’m the CEO & Co-Founder at Spoonshot. Our platform leverages food science and AI to predict consumer needs, F&B trends, and innovation opportunities. We help CPG/FMCG and foodservice companies adopt a data-led, agile, and forward-looking approach to product and menu development.