Thinking Second-order Effects

ūüí° I was going to write a longer piece on this topic, but found this article to be helpful.

One of the key elements of being better in leadership, strategy, and organizational changes is being able to think and anticipate second-order effects.

When you want to roll out programs, systematic changes, (re)budgeting, headcount planning, introducing new processes, thinking beyond the first intended first-order, being able to navigate second-order effects will be critical in how successful those initiatives will be. Most outcomes will be lagging and have lasting/trickling effect throughout the organization, so the quality of the decision and the thoughtfulness matters a lot to save a lot of people’s time, effort, and pain.

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Scaling Leadership through Two Management Frameworks

As an organization reaches certain scale, it is inevitable, at least due to the current limitation set by human interaction mechanisms (e.g. verbal communication, synchronous meetings, groups, hierarchies, physically independent) that there is a certain level of structure that needs to be put in place to manage the organization.

There is a few frameworks that can be useful when scaling the leadership. It’s local applications of the general management frameworks, so let’s explore how they can be relevant to scaling leadership.

1. Convergence <> Divergence framework

This framework demonstrates how to navigate within the horizontal layer (x-axis) of management.

As your organization scales, one thing you constantly run into is the overall increase in diversity within the organization. The proportion of diversity may increase or decrease, but the absolute number of diverse entity (in this case, employees) will simply increase as your headcount grows.

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Order and Chaos in a Company Culture

The society today upholds diversity as an absolute virtue. Diversity across educational backgrounds, race, ethnic group, gender, age is something we all pursue vigorously. It seems almost trivial to choose diversity over conformity or homogeneity in any discussion.

However, to put things into perspective, nature having evolved through millions, if not billions of years, may provide¬†a slightly different¬†view¬†to this pro-diversity¬†world. The balance and the timing of¬†convergence and divergence play important roles in reaching the global optimum in any search space. The selection pressure from the environment acting as a converging force, offset by mutation from perturbation balancing as a diverging force are¬†what make¬†organisms so durable¬†and adaptable to the ever-changing world we’re living in.

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