Second-order consistency
Growth vs longevity
Our economy, our companies, our wallets: They’re all about growth. But consistent growth in any context is a hard goal. Even if you were to grow a trash collection (potentially the easiest thing to grow) you would have to quickly engineer ways to protect yourself from toxic fumes and eventually, you would run out of space in your home making the collection harder and more expensive to grow (if your neighbors haven’t sued you at this stage, forcibly shrinking the collection).
Consistent growth is hard in any context. Shouldn’t we aim for longevity in our projects instead? If my business produces enough to feed me and provides a stable income for its workers, I could argue that longevity is more important than growth. The amount of food I consume and the rent I pay doesn’t need to 10x in the next five years, but I know I will still need to eat and (likely) pay rent five years from now. I’d rather make sure my business keeps producing rather than push it (and leverage it) to the limit just to squeeze more growth out of it.
Longevity: The ultimate growth hack
Well, we might not eat 10x more in five years, but wouldn’t it be nice to splurge a little on buying a house and still have money left in the bank?
The good news is that in business longevity is likely to drive growth, too. Just like with stocks, the upside in a company you own is theoretically unlimited, while the downside is losing the company to bankruptcy (“going to zero” for a stock, i.e. limited to 100% of the investment). Hence, as long as a company can comfortably carry its costs and simply survive, the randomness it is exposed to will lastingly affect the upside.
Take a taco stand at a street corner operated by its owner: Arguably one of the least scalable business models out there. Let’s say the owner is concerned with long-term survival of the stand and bases the operation around that: He makes sure the most popular dishes are standardized so that customers get a consistent taste from them and that the water used is clean so that the stand’s reputation is not hit by causing bouts of severe stomach issues.
The owner protects the stand from downward spikes and leaves himself exposed to upward spikes of randomness which are inherently much bigger on average as long as the stand’s survival is given. It’ll take patience but that taco stand might end up with a Michelin star 50 years later.
Second order consistency
Once long-term survival is ensured as far as possible, we may want to reap more of the market that we are in. We could again resort to burning the midnight oil, over-hiring to make more tacos, or anything else that increases complexity or drives up leverage and therefore goes against our longevity strategy. An alternative is to expose ourselves to more randomness now. If survival is given, randomness is more likely to help us than to hurt us on average.
To increase our exposure to randomness we need second-order inputs to our work. Second-order inputs should involve a one-time effort and limited investment yet aim to have a lasting, repeating effect on our project or business. A small example is creating a web form for potential clients: Now if someone visits your website and is interested in your offering, she might fill out a form answering some lead qualification questions right away. Another example would be training an employee on a task, which is then performed regularly without further input from you. To get back to the taco stand: The owner might close a contract with his trusted meat supplier to have stable prices for a year. It’s one intense negotiation that provides a year of simplified purchasing.
Some of these second-order inputs will work and make a positive difference, while a few will backfire and have a negative impact. Most will seem not to matter at all. That’s ok: Observe, and if something works build on that with other second-order inputs. The key is frequency.
Try to go micro
The truth is that finding second-order inputs is hard: It requires some imagination and creativity. It’s more about thinking than doing, as the doing should be kept to a minimum.
But that’s ok! If you trim your projects for longevity you have time to figure good second-order inputs out and then it’s about trying to increase their frequency. One trick for this is to make them small - as small as possible. Putting a joke in your automated out-of-office email is a second-order input, choosing a cool background filter for your video calls is a second-order input (or using the “touch up my appearance” option on Zoom, which I once turned on and have since forgotten to turn off leading to occasional eye contact with my prettified self during video calls). Going even more micro: Setting a reminder to think about second-order inputs on your phone may be a powerful second-order input in itself.
Amp up the frequency
You might have a stroke of genius every now and then and figure out a second-order input that is massive: Put AI in the tacos! Or something like that. But overall, second-order inputs will be small and the game is to keep them frequent.
How you do that is up to you: I’m still trying to figure it out for myself. My only advice would be to work with your human nature. The book Atomic Habits says something like “do one push-up per day and then you might end up doing more over time as a habit forms”. Sure, but many people, including myself, have a strong self-sabotage gene and we need to learn to work with it: I’ll stop doing even half a push-up after 3 days because I want to tell that old version of me who made me do these to fuck himself. It’ll feel great to do zero push-ups when killing that habit.
A potentially powerful trick is to treat the self-sabotage as a second-order input in itself: You are just a lazy, rebellious worker on your own production line and you have just as little control over this worker as over others. If this worker (your meat and bones) is starting to slack, think about how to use it to your advantage. Then tell your slacking biological self to sabotage that and give him the finger.
Now that you realize that everything is a second-order input, and even your unwillingness to look for second-order inputs is a second-order input, it turns out that to amp up the frequency you just have to sharpen your awareness of second-order inputs. Me lying in bed right now, typing this out on my phone is a second-order input: Once I publish, this text will float around on the web indefinitely and will most likely be neutral, but add a small source of randomness to my life that may or may not carry a benefit.