How to Improve Your Second-Order Thinking Skills
From The Innovators Studio with Phil McKinney by Phil McKinney
June 10, 2026 · 15 min · Season 21 · Episode 9
About this episode
The episode discusses the importance of second-order thinking in business decisions and the consequences of failing to consider long-term impacts.
In 2000, Toys R Us paid Amazon $50 million a year to sell their toys online. It looked like a great deal. The company that defined toy retail for two generations was solving the internet problem in one move. Four years later they were suing each other. Seventeen years later Toys R Us was gone. Every store closed. Every job lost. And every step of what happened was visible from the day the deal was signed. Nobody at Toys R Us saw it. What Is Second-Order Thinking? First-order thinking asks what happens next. Second-order thinking asks what happens to the people who see what happened next. The skill isn't caution. It's the willingness to keep looking after the room has stopped. Inside HP, 2006 In 2005, HP launched Halo, a premium telepresence system co-developed with DreamWorks. For a brief period it reported into my organization. The next year, Cisco launched TelePresence and went straight at us. I called the HP team closest to Cisco and asked what they made of it. The answer was reassuring: Cisco is aiming down-market, we're fine. We were premium; they were chasing volume. That answer satisfied the room. It did not satisfy me. The room was asking "will Cisco hurt Halo?" That was…
People in this episode
Host: Phil McKinney
Topics covered
- second-order thinking
- business strategy
- partnership dynamics
- market competition
- decision making
Keywords
- second-order thinking
- Toys R Us
- Amazon
- HP
- Cisco
- business strategy
- decision making
- market competition
Mentioned in this episode
Organizations: Toys R Us, Amazon, HP, Cisco, DreamWorks
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