AIM Archives - Tag: second-order effect

Be a “chess master” business leader: Think 5 moves ahead.

290-Chess-Moves

Do you want to think only about your next move, or think five moves ahead? Here’s a 5th order plan to maximize shareholder wealth: 1st Order: Develop superior customer insight capabilities. 2nd Order: Understand market needs better than competitors. 3rd Order: Develop high-value products focused only on these needs. 4th Order: Sustain superior growth from these products. 5th Order: Impress shareholders with your proven growth track.

More in article, Stop Stifling B2B Organic Growth with 2nd Order Effects

Consider rat tails and the danger of ignoring second-order effects.

286-Rat-Tails

In the early 1900’s the French colonial government tried to decrease the Hanoi rat population by rewarding bounties on each rat tail turned in. The second-order effects were 1) lots of tail-less rats roaming the streets, and 2) rat-breeding farms for tail harvesting. When your business leaders slash R&D spending, invoke travel bans, cut marketing staff, and delay hiring… what second-order effects will come as a result? Perhaps slower future growth? Rats.

More in article, Stop Stifling B2B Organic Growth with 2nd Order Effects

Beware 8 first-order actions that can stymie your future growth.

280-Second-Order-Effects

A good business leader understands that every decision will have second-order effects after the initial “intended consequence.” Slower future growth is the second-order effect that often follows these decisions: 1) severe spending cuts, 2) rapid re-organizations, 3) hiring freezes, 4) travel bans, 5) R&D staffing cuts, 6) marketing staffing cuts, 7) new initiatives that distract, and 8) excessive M&A activities. Some such decisions may be needed… but consider the second-order impact on your growth.

More in article, Stop Stifling B2B Organic Growth with 2nd Order Effects

Here’s what you’ll never hear blamed for slow business growth (but should).

271-We-did-this-to-ourselves

How often have you heard this at a financial review meeting, “Well, one reason our revenue is lagging today is that crazy spending freeze we put in place last year”? If you’ve never heard this, it’s because leadership was fixated on last year’s first-order action (making the quarterly numbers), not the second-order effect (slower growth later). And they probably remain so today. If so, what does this tell us about a) our ability to learn from our mistakes, and b) our future growth prospects?

More in article, Stop Stifling B2B Organic Growth with 2nd Order Effects

In business there are no dominoes you can tip without causing others to tip

265-Tipped-Dominos

Tipping the first domino is a first-order action, the second tipped domino is the second-order effect, and so on. Strangely, if the first order action feels satisfying all by itself, you’re probably headed for trouble with subsequent effects. So it might feel good to slash spending to hit this quarter’s numbers… but your future growth will be stymied. In fact, your slow growth today is probably the culmination of many first-order actions you’ve long since forgotten.

More in article, Stop Stifling B2B Organic Growth with 2nd Order Effects