Understanding Second Order Consequences

It is Toussaint Gilbert


(est. 2 min read).

Deep Dive

So every action has a consequence (whether it’s good or bad) and each consequence has another consequence.

Most people only think about the first order effects.

For example, 

Many people think “I’m going to go buy a 50 inch flat screen TV”

The first thing they think about is, this is going to cost me money up front

And they think this is the main consequence, the monetary cost.

But in reality the real consequence is that you’re now going to use this TV and it’s going to take away time from other things you could’ve been doing that would make you more money.

So you lose money by buying it, then you lose money by using it.

Major L.

This is second order consequences.

In business we have to think about these as well.

But we want to think of actions that yield us positive consequences.

A great example of this is hiring A-player talent.

The initial consequence is that they will be quite expensive and want to be paid what they are worth.

But the consequences of having an A player on your team are incomparable

You now have:

  • A great mind that can think on their own

  • Improved company standards & culture

  • Someone who will add value for months & years to come

  • The ability to attract even more great talent

These are the kind of decisions we want to make in our business

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- If it makes sense for you and you want to partner together, let’s get started by building out the foundational infrastructure of your company.

Hope you enjoyed this one,

-Toussaint

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