Hi, I’m James. Thanks for checking out Building Momentum: a newsletter to help startup founders and marketers accelerate SaaS growth through product marketing.
As a product marketer, I think we have an innate skill that many other teams don’t.
It’s our ability to connect the dots between all of the different inputs we deal with, and predict outcomes in our GTM systems.
Every day, we’re exposed to customers and their feedback, competitors, market trends, product features, product vision, processes, executional issues, business directives, and much more.
We subconsciously use these inputs to make multiple decisions every day, from the language we use in messaging, to the pricing strategies we recommend. Even more subconsciously is our use of second-order thinking.
In this post:
What is second-order thinking?
To explain second-order thinking, we need to understand first-order thinking.
First-order thinking is simplistic; it’s the immediate impact and consequences of a decision. A problem exists, and a resolution is made. Let’s imagine that prospect feedback suggests pricing is too expensive; first-order thinking would be to make this cheaper.
Second-order — and even third-order — thinking requires ‘and then what?’ consideration. Your actions have consequences and implications.
Are those implications positive, or negative? Do they cause net harm?
In our expensive pricing example, first-order thinking is to reduce the price. Second-order thinking would be to examine the impact that a lower price might have on the business and it’s operations. Those effects might include:
A reduction in perceived brand quality, which in turn reduces new business sales and increases churn
Acquiring the wrong type of customers, which changes product vision
Building a low-margin business, which will have knock-on effects across every team
Second-order thinking in action
Positioning is a great example of how we use second-order thinking every day, unaware.
When we review customer insights, identify customer value, and build messaging maps, we consider what the impact the values and language we use mean to our customers and our business.
First-order thinking might position a business as ‘something for everyone’ to maximize sales – and if you’re a regular reader, you’ll know that’s a fallacy and something to avoid.
Second-order thinking would look at how messaging should disqualify certain types of customers, and only appeal to the target segment. This has positive impacts on sales and marketing efficiencies, brand perception, and focuses the business on a specific ideal customer profile.
Proactively communicate second-order impacts
Whilst PMMs may use strategic thinking like this every day, many other teams are so focused in their executional work that they don’t have the cognitive space to think forward.
That means that all good-intentioned, smart work can quickly become a point of contention because the tradeoffs and positive impacts aren’t communicated effectively.
In our expensive pricing example, it’s likely that sales teams will advocate for lower pricing in response to customer feedback. If the decision was made to stick with current pricing, or even increase, the backlash would be visceral. But communicating the impact that price reductions would have, and what the impact of same/higher pricing will be, will help assuage concerns and manage expectations.
It’s important to apply second-order thinking to the second-order work you’re doing. What is the implication of this work for our teams, how will they respond? How can we create enough mutual understanding of the ‘decisionscape’ and help people see why decisions were made a certain way?
Aside: ‘decisionscape’ feels like a cool concept that I’m surprised doesn’t exist yet.
The decisionscape is the landscape of the decision – the inputs used, the process followed, the implications that arise, and the outcomes that are actioned. Ideally teams should see the clear path that was followed, the forks in the road mapped out, and how the decision leads to an optimal destination.
We do this by communicating the implications, being transparent, acknowledging the inputs and gaps, being clear on the asks, and creating a plan with our teams to build confidence in the strategy and execution.
Because focus — clarity, on the decisions we are making and why — and confidence equals momentum.
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