Second-Order Effects and Your Results

The Gist:

• It’s important to make decisions in pursuit of your goals and desired outcomes.
• Making good decisions means considering second-order effects.
• Before you make a decision, look both at the immediate consequences and the domino effect that may ensue.

The actions you take have consequences. Whether positive or negative, the consequences of a single action can cascade, creating an upward or downward spiral of unintended consequences and outcomes. We often make decisions without considering what are called “second-order effects.” Without looking at those effects, you can’t imagine the third-, fourth-, and fifth-order effects.

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My Favorite Negative Example of Second-Order Effects

At the end of every year, as we head into the holiday season, it’s easy to spend a couple weeks trying to close every deal you can, but then start to wind down, giving up any attempt to prospect and gain new meetings. You might start by complaining no one is at work, an exaggeration and a generalization that allows you to rationalize coasting through the last few weeks of the year.

When January finds you back at work, you tend to avoid prospecting because “people just got back to work and aren’t ready to take a meeting.” All those people who told you in December to “call back after New Year’s” were just being polite, after all, so there’s no good reason to do something crazy like actually calling them back. Just like your December goals fell prey to anecdotal evidence about “nobody” being at work, you let January slip away by convincing yourself that you don’t really need to try to gain new meetings. Human beings are incredibly gifted at rationalizing away their responsibilities.

Math, however, doesn’t care about your anecdotes. Say you needed to create $100,000 in new opportunities in January to net out your $50,000 in new revenue, putting you on pace to reach your goals. But because you didn’t prospect in December, you had no meetings going into January. Then you gave up most of January. Now it’s February and you need another $100,000 in new opportunities so you can net out $50,000. But because you lost January, you now have to create $200,000 in new opportunities to net $100,000 in February.

In February you struggled a bit, only creating $50,000 in new opportunities, but at least you won both deals. March greets you with a demand for another $100,000 in opportunities and another $50,000 in won business. In thirty-one short days, you need the $100,000 from February plus the $100,000 for March.

The decision not to do the work of creating opportunities caused the second-order effect of falling behind, which caused the third-order effect of being desperate for deals. In turn, that led to the fourth-order effect on calling on unlikely deals, finally creating the fifth-order effect of not meeting your goals.

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My Favorite Positive Example of Second-Order Effects

Your dream client has been working with your competitor for years. You’ve never been able get a meeting with the contacts who decide which partner to use for the outcome you sell. But you have decided to professionally and persistently pursue them using a modern sales approach, one that is built on insights and value creation.

You build a prospecting sequence that is designed to compel them to change and to take the first step of their buyer’s journey, one you intend to facilitate. You start with the telephone because the ability to gain a meeting will allow you to deliver your insights in person. And besides, your contacts are going to love you. But even if that call fails, you have a number of insights that will capture your contact’s attention, and you intend to use them to gain a meeting.

Many weeks go by with no word from the contacts you are pursuing. Without you knowing it, though, your contacts have kept up with the insights you have been providing them. Even though their existing partner has been taking care of them for a long time, they are now unhappy with their results. Because you continue to call, you eventually catch a contact at their desk, and they take your call and schedule a meeting. A full month later, you acquire your dream client’s business, displacing your competitor.

The decision to professionally pursue your dream client caused the second-order result of taking a particular set of actions, including making phone calls and sharing insights, that proved you could potentially help your client with better results. Those actions created the third-order effect of shaping your client’s thinking and recognizing that you might be worth a meeting. Because you handled the meeting well, you positioned yourself as the right partner, a fourth-order effect. Winning your dream client’s business was a fifth-order effect.

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Your Results Are Mostly Second-Order Effects

The results you produce in sales tend to be second-order effects or some effect beyond the second order. We tend to make decisions without considering the causal chain of effects we are creating, especially the potential downward spirals that end with serious negative consequences. From the outside, the downward spiral can look like self-sabotage when the root cause is not thinking past the first order.

Success tends to breed more success. From the outside, it can look like an individual has good luck or some talent that allows them to produce certain results. More often than not, however, their success comes from understanding the second-, third-, and fourth-order effects. What you might attribute to luck is really making good decisions around the first-order effects, showing the self-discipline to do what is necessary, without fail, to consistently produce the effects that they are pursuing.

The reason that success creates future success is that doing the work creates competency and competency leads to increasingly better results. When you are competent and produce better results, opportunities find you, leading you to more and greater opportunities.

Do Good Work:

• What decisions have you made that didn’t end the way you believed they would?
• Look at a recent decision and review the second-order effects that might still be in your future.
• Consider a decision you need to make now and work out the second-, third-, and fourth-order effects.

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