“For example: The invention of cars => led to roads being paved =>this later led to the creation of highways => the creation of highways then led to the creation of national hotels and restaurant chains.”
Second-Order Effects is the idea that every action has a consequence, and each consequence has a subsequent consequence. The more we consider second-order effects, the more successful you become because you can anticipate future opportunities and capitalize on them.
For example: The invention of cars => led to roads being paved =>this later led to the creation of highways => the creation of highways then led to the creation of national hotels and restaurant chains because businesses found it easier to replicate an existing business in many locations cross-country with the use of the highway system. Looking back, no one would have anticipated that the invention of cars will lead to the popularity of restaurant chains.
A group of minds as part of the Mental Model Club came together and developed a Second Order Effects report related to the COVD-19 pandemic. The report illustrates downstream consequences of COVID-19 and examples of business opportunities that will arise as a result. I read through the report and decided to share some important takeaways in this week’s newsletter. With the anticipation of a second wave, the COVID-19 pandemic might last a longer period than we initially anticipated. Below are some takeaways from the Second Order Effects report; I added a few concepts in the summary to make the information more actionable. See the full report for your reference.
Takeaways
- COVID-19=> Loss of jobs and business=> Less money=> Increased bankruptcy filings=> Start at bankruptcy filing or bankruptcy recovery services company (credit counseling)
- COVID-19=> Companies transition from full-time workers to contractors=> Start a temp agency for low-tech jobs that re-trains workers and places them in new companies as contractors
- COVID-19=> People who already live alone feel more lonely=> Increase in depression=> Look into starting a personal development online workshop
- COVID-19=>Low income students with no internet can’t do remote learning=> Potential for community hubs for students to access learning infrastructure=> Work with cities for contracts to equip libraries with technology for student remote learning
- COVID-19=> People eat out less and cook more=> Start online cooking classes (e.g. IG live), where signing up comes with delivery of supplies and ingredients
- COVID-19=> Less commute to work so fewer fashion purchases=> Fashion is evolving from premium style to comfort=> If you are a designer, focus on clothing that provides comfort over style
- COVID-19=>Delay in receiving products from offshore manufacturers=> Rise in cost of imported goods=> Identify the most popular items on Amazon, buy bulk from Alibaba and warehouse locally, create an e-commerce site to sell products
- COVID-19=> Layoffs at work=> Poverty increases=> Opportunity in Pawn shop business, people might need to sell personal belongings (kinda sad)
- COVID-19=> Couples spend more time with each other=> More sex=> Increase in baby clothing demand in 9 months=> Look into selling baby clothing online
- COVID-19=> Companies conserve cash=> limited dividends and stock buy backs=>Lower stock valuation=> Consider getting into gold and cryptocurrency
- COVID-19=> Older people disproportionately impacted=>Senior positions in companies open up=> Start a consulting firm helping companies capture institutional knowledge/process flow charting so new hires can easily takeover with minimal interruption
- COVID-19=> Weight gain=> Innovation in home exercise=> Business opportunity in Zoom with personal trainer, illustrating how to incorporate working out with no machines into 9 to 5 schedule
- COVID-19=>Virus spreads faster in cities (high density)=> City becomes less popular because you can work anywhere remotely=> Purchase real estate in suburb/rural areas because of potential increase in demand down the road
- COVID-19=>We have more time on our hands=> We spend more time on our hobbies=> Number of side hustles will increase=> Develop an app similar to LinkedIn focused on side hustles
- COVID-19=>Work from home increases=> Creating/Improving home offices=> Going from open concept houses to closed rooms=> Designing and construction of home offices
