Higher Order Thinking: Your Ticket to the Cognitive Elite

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Higher Order Thinking Breaking out of HomeostasisIf being manipulated by horoscopes, fortune-telling, cold-reading, conspiracy theories, and comforting beliefs constitute the most primitive aspects of the neocortex’s craving for truth (and are sure-shot symptoms of being a Homeostasis Dweller), what would be the opposite?

Higher order thinking.

Higher order thinking is the most intellectually sophisticated form of using the neocortex’s predictive abilities. Those who wish to become elite thinkers must master it.

The difference between normal thinking and higher order thinking is TREMENDOUS.

It’s like in the movie Batman Begins, when the ninja master Raz Al Ghul tells a young (but clearly talented) Bruce Wayne, “You knew how to fight 6 men, we can teach you how to engage 600.”

Rockefeller the Clairvoyant?

“Rockefeller always sees a little further than the rest of us—and then he sees around the corner.” So said John Archbold, #3 at Standard Oil.

When John D. Rockefeller was brought to court—as a witness in an anti-trust case concerning Standard Oil—he was questioned by Samuel Untermyer, who was one of the best-paid prosecutors at the time.

Untermyer said Rockefeller had the ablest mind he had ever encountered on the witness stand, describing him as a man with a sixth sense for avoiding legal traps:

He could always read my mind and guess what the next six or seven questions were going to be. . . . I would start with questions to lay the foundation for questions far into the future. But I would always see a peculiar light in his eyes, which showed me that he divined my intention. I have never known a witness who equaled [John D. Rockefeller] in this clairvoyant power.

Was John D. Rockefeller a clairvoyant—someone who could see into the future? No, he was just a smart person who had developed a world-class ability for thinking in higher-orders by practicing it for decades.

How to Hone the Predictive Abilities of the Neocortex

We all have this basic predictive ability, but most people don’t spend much time cultivating it. To do so is to engage in higher order thinking.

Someone who’s good at higher order thinking can:

  1. Reduce complex information by using appropriate mental models,
  2. Think backwards and forwards several steps to anticipate outcomes or reverse-engineer other ideas,
  3. Combine different ideas into a synthesis, and
  4. See the big picture and think from a system’s standpoint.

Higher order thinking is the ability to take a combination of related ideas or components (that interact together) and imagine what the result would be if you did X or Y.

Successful People Are Good at Higher Order Thinking

Most people are looking for a silver bullet—some secret trick that always works—and that’s why they’re not successful.

Business guru Bruce Henderson, who founded Boston Consulting Group, used to say that “while most people understand first-order effects, few deal well with second-and third-order effects. Unfortunately, virtually everything interesting in business lies in fourth-order effects and beyond.

The economist John Kenneth Galbraith said something similar: “There is nothing reliable to be learned about making money. If there were, study would be intense and everyone with a positive IQ would be rich.“

Between each level of thinking (1st, 2nd, 3rd, 4th, 5th order) there’s a whole magnitude of difference; like earthquakes on the Richter scale.

Napoleon Higher Order Thinking Strategy

Successful people are generally good at thinking backwards and forwards about complex problems. This leads them down a different line of reasoning compared to the average person, who thinks in a simple and linear manner, only considering the first-order interactions between things. For example:

Envy #1:

  • First-order thinker: Wow, this person’s life is so much better than mine because they did ______. I wish I could be him/her.
  • Higher order thinker: Would I be willing to change places with this person, or is it just this one aspect of their life that appeals to me?

Choosing a book:

  • First-order thinker: This book is probably one of the best. Look, it says “Bestseller”.
  • Higher order thinker: Are the masses likely to be a good judge of quality in this case?

Stock market:

  • First-order thinker: The economy looks great now so I’m gonna put my money in stocks.
  • Higher order thinker: Says who? Based on what criteria? Compared to what?

Entrepreneurship:

  • First-order thinker: I will start a hair and beauty salon because it’s my passion.
  • Higher order thinker: I like these things, but there is low demand and high competition, so I’ll do something else where my chances are better.

Career:

  • First-order thinker: I like the product/service of this company so I’m gonna get a job there.
  • Higher order thinker: This is a top-3 company inside a fast-growing and future-proof industry that I’m interested in, and it will also give me an opportunity to develop a set of transferable skills, so I’m gonna get a job there.

Management:

  • First-order thinker: It’s important we treat everybody the same so that no one feels bad.
  • Higher order thinker: Will we remain in business if we reward our salespeople the same as our janitors?

Envy #2:

  • First-order thinker: Wow, this person has so much money and is famous. I want that too!
  • Higher order thinker: At what cost?

Think Different—and Better!

When Napoleon arrived in Italy to take command of the Italian Army, he found it in terrible condition.

He wrote that “distress has led to insubordination, and without discipline, victory is out of the question.” To whip them back in shape, do you know what the first thing he did was? He got them shoes. Then he got them paid. Only after he had done that, did he start drilling them. Then they conquered Italy.

napoleon higher order thinkingWhile most other basketball coaches started their new players off with generic activities like shooting hoops or getting straight into practice, John Wooden would start by teaching his players how to put on socks and tie their shoes properly. First he was laughed at, then he was imitated.

Why the socks first? Because if they didn’t get that right, it would lead to unnecessary foot sores and injuries, which would result in the players being benched for no good reason, which would give the team worse morale, and low morale would lead to fewer victories.

In case you’re not familiar with Wooden, his team won 7 straight NCAA national championships—and 88 consecutive games.

Many times in business, it’s the culture of a company that gives it its sustainable competitive advantage (especially for technology companies). But, what makes for a good company culture? Most people think it’s generic attributes like “humility”, “frugality”, “togetherness”, “simplicity”, or “greed and ruthlessness” if you work on Wall Street.

Successful business people know that it’s different in every industry and that it’s the primary job of the entrepreneur to grow the culture from within; starting with the screening of candidates, to the workplace environment, to the incentive systems inside the company, and so on.

Why Many People Believe That Rich People Are Evil

Let’s say there’s a debate about “how to stop poverty”.

Then most people will opt for a simple answer based on their own prejudices, such as: higher taxes, lower taxes, gender equality, forced donations or over-promotion of specific demographic groups.1

The higher order thinker asks, “If we do this, then what will happen? And then what?” trying to trace the cascade effect or feedback loop it creates. Or he goes at it in reverse: “What got us this problem in the first place?  ABCD. What generates ABCD and how can we solve it at the root?”

This type of reasoning generally winds up with an answer that’s VERY different from what you get from a shallow assessment, and often it might be a politically incorrect answer that risks offending a large group of the population.

Since the media has a financial incentive to sell the juiciest story with the widest popular appeal, they will pick out that one little part of the rich and successful person’s answer which could be interpreted as provocative, and then they will make that the headline.

Then HORDES of Homeostasis Dwellers will eat it up for one or many reasons—like boredom and the need for drama, ideological commitment bias based on political opinion, or the comforting belief that all people who make lots of money are exploiting others—all of which satisfy their homeostasis.

Few of them will delay the act of passing immediate judgment and think for themselves one or multiple steps further, trying to get a sense of the bigger picture of what’s going on. Because that requires mental effort.

The cognitive elite are rational and pragmatic. The majority of people are naive, living in a cushy, feel-good consensus reality held together by comforting beliefs.

The cognitive elite are passionate about finding the truth, unveiling the underlying realities of the situation, and having a constructive discussion based on correct premises. The majority of people think this is boring, and prefer entertaining sound-bites and dramatic spectacles.

Be Like Buffett: Think At Least One Step Further

Warren Buffett acquired the Washington Post in the 70s. Then he attended meetings together with management on strategy and financial decisions.

In one of these meetings, Jeffrey Epstein, a young MBA who had been hired to find lucrative fields of investments, reported his findings on consumption spending for the media and entertainment industry. His figures for home entertainment was $5 billion.

“That $5 billion is a pretty interesting number,” said Buffett.“That means if there are 20 million teenagers in the United States they are spending $20 every month on video.”

Epstein hadn’t thought of that. He had just gotten his numbers from an industry survey, or perhaps on the Internet, without thinking ahead or questioning the validity of those numbers, and what they were based on.2

Notice with which ease Buffett was able to conceptualize a big financial number into concrete terms. Then take into account that he did that split-second calculation in his head.

I can’t do that. That means I need to come up with thought exercises and practice them diligently until it becomes natural.

2 Hidden Benefits of Higher Order Thinking

When you become better at thinking ahead and using metaphors and models to analyze things, it gives you two distinct advantages over most people:

  1. Your modus operandi is harder to figure out (like in negotiations).
  2. And it becomes harder for others to copy what you’re doing.

This is because most people only ever read into your immediate actions and their results, whereas the underlying analysis is much harder to figure out.

This makes the methods of your success a secret to most of the world.

EIE throne


This was a chapter from Breaking out of Homeostasis.

The writing part of the book is done.

The release will happen soon. Stay posted.


Bonus: Thought Exercises for Higher Order Thinking

Ask yourself: “Is this really necessary?”, ”What makes me think that?” and “What assumptions do I base this on?”.

Think backwards. “What should I not do this week?” or “If I wanted to sabotage myself, what would I do?” then don’t do those things. Always do this after having a good idea or setting a goal. Ex 1: “What is this stock not worth?” Ex 2: “What salary do I not deserve?”

Which possible outcomes exist? 3 scenarios: The likely, the nightmare, everything goes as expected or better.

Quantify: Put estimated numbers on things and do back-of-the-envelope calculations, just to get a better idea or guesstimate something.

Note: Guessing is always important. Guessing has inherent value–it motivates extra mental effort.

Consider consequences: What might happen if _____?  Or When ____? How will other people react? Is it worth it?

Change the frame: Try occasionally to see things from someone else’s values and goals. Try not to judge people of the past based on today’s cultural standards. And vice versa: Try judging people today based on past societies’ standards. E.g: How decadent and cowardly would the Romans find us on a scale from 1-10?

–Probably quite high.

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  1. Like putting more women on boards, even if there are no good candidates. Or giving jobs and better migration opportunities to people if they’re of a certain race, despite their lack of of education and job qualifications.

  2. [The figure was based on shipment to stores, which vastly over represented the actual purchases being made. Atari was one of the biggest companies in media shipping at the time, made they the same mistake as Epstein; looking at the most easily available information. This made them lose many millions of dollars from malinvestment.] Needless to say, the Washington Post did not make any investments into media entertainment.

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Comments

  1. Maybe it just me its just me watching several interviews lately but I was thinking you are going to mention Elon Musk.

    He mentions first principle thinking quite a lot, but I guess he is not one of the people you study.

    https://www.youtube.com/watch?v=NV3sBlRgzTI

    “I think it’s important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. [With analogy] we are doing this because it’s like something else that was done, or it is like what other people are doing. [With first principles] you boil things down to the most fundamental truths…and then reason up from there.”

    As always, nice article, enjoyed reading

    I liked the bonus at the end, I am going to write down some of that to my commonplace

    BTW, I wanted to ask, are you planning to ever write about making money, or what you do for a living and why?

  2. Abgrund says:

    I would say that what Ludvig calls “higher order thinking” is what I would just call “thinking”. Anything less is just operant conditioning and emotion. A dog understands “if I let another dog take my bone, I won’t have it anymore” just as well as a person understands “if I give my money to a tramp, I won’t have it anymore.” Sadly, a lot of people never even think to the point of “if I spend my money on X product or Y investment, how might I not get what the seller says I will get?” They are satisfied with “something like it worked once before” or “the guy seems honest” or even “everyone else believes it”.

    Academics, faced with the fact that very little of the content of university education is useful in real life, sometimes pretend that the value of said education is that teaches young people to think. It does nothing of the kind, at least at the undergraduate level. The idea of thinking to solve problems, as opposed to being spoon-fed procedures, is so foreign to most students that any attempt to actually require them to think would provoke a riot. You could get a better education by trying to solve the problems in the books without guidance.

    On Buffet being able to do calculations in his head: This is easier than it sounds. For many things in real life, a rough approximation is good enough. To get a preliminary estimate, keep track of only one digit at a time – two digits if the first digit is a one or if the first digit is a two and you will be going through several stages of manipulation. Even if you use two digits, the second one doesn’t have to be right, just close. The important thing is to keep track of the magnitude of the numbers, i.e. tens, thousands, tens of thousands, billions, etc. In American English, a million is six zeroes, a billion is nine, a trillion is twelve zeroes, and that’s about all you’re likely to encounter.

    Say you want to know the per capita income in the U.S. Wikipedia says our GDP is 18.46 trillion dollars with a population of 325 million and change. Twenty trillion is a “two” and thirteen zeroes. 300 million is a “three” and eight zeroes. The answer is two divided by three, times five zeroes, i.e. two-thirds of a hundred thousand which can be rounded to 60 or 70 thousand dollars. The exact answer is somewhat less than 60 thousand. This method is not recommended for balancing your accounts or designing machine parts, but it works for a quick “reality check”.

    On what “the Romans” might have thought of “us”: It isn’t all about different cultural standards, it depends on which Romans and which us. The student of antiquity will likely think of widely respected men like Seneca, Marcus Aurelius, Agrippa, Juvenal, or Pliny, and their putative opinion of lowest-common-denominator Western mass culture. Of course they would despise it, but they also despised many of their contemporaries, and they would probably expect just as much degeneracy if the mass of Roman slaves had enough money to set cultural standards. Likewise, modern admirers of the best Romans might find little to glorify in the conduct of the average Roman. In every age, the majority of people have scant merit by any standard.

  3. Mbplayboy says:

    Another excercise which you actually recommend in journaling: asking yourself why until you get to the core components/causes.

    Developing thinking is highly overlooked but it basically replicates into EVERYTHING. How bout dat

  4. Matias Page says:

    HIGH ORDER ARTICLE!

    I have been using the principles from the original BOOH for a few years, but I will buy the new version, no doubt about it!

    Your book and Wall Street Playboy’s ‘Efficiency’ will be my applicable books for the rest of this year.

    Thanks for all your writing Ludvig.

    • Cool – thanks Matias :)
      I’m sure their book is also great.

      • Quite a few good insights in “Efficency”

        My biggest takeaway:

        1. Start an online business – pour all your spare time into this business till making $50k,

        2. Do not attempt to reinvent the wheel with your business ideas.

        Regarding higher-order thinking came across it skimming PCA.

        I’ve noticed its one area i’m poor with(even though i’m Intj) – however, I noticed self-reflection(working out the problem on paper) helps with this.

        What also helps is asking what resource is lacking from my efforts: time, energy(research, thinking, etc) or money.

        Seems to do the trick.

        Looking forward to the book Ludvig, second book. High up on my list apart from efficency.

        Any more books planned in the immidiate future after this? What next after the new BOOH?

      • Axel: No, I don’t think I’ll write another book anytime soon. I have some ideas, but it takes too much time.

        Marek: I took the old BOOH book away because I didn’t feel I explained the idea well enough. This is a different book, but some of it is similar. Homeostasis–and how to break out of it–is still the big idea.

    • there was a BOOH book already? as far as I remember it was announced for several years, even before the Commonplace System, but it didn’t get out yet, or is this second version?

  5. Federica Nargi says:

    How decadent and cowardly would the Romans find us on a scale from 1-10?

    To those who’ve been to the moon, have a population approaching 7.5 billion, have harnessed more energy than they ever imagined? Lifted billions out of poverty? Endured two world wars that killed significant parts of the population, not to mention numerous plagues (including Spanish flu that killed 100m+)? Invented and used nuclear weapons? Brought the Internet to the masses?

    We live a completely different world to the Romans. I doubt they’d see us as cowardly. The grainy imagery of Leningrad and Stalingrad should attest to that.

    What I do believe is they would see us as somewhat directionless. What counted for glory and prestige in the ancient world has been supplanted with pandering to mediocrity. It’s much easier to “get by” now and as such, they’d probably chastise the West for its laxity. Not to say the Occident is decadent, just that it doesn’t take itself as seriously anymore.

    I think the Romans would likely see the EU & US as overly feminized and somewhat comatose. However. Would I rather live back then, where they didn’t have toilet paper or electric lighting… or today where the women are gorgeous, some people can make money sitting at home and the world is the most safe and healthy it’s ever been? Gimme back my iPhone.

    I don’t think they could rate us on a scale of 1-10. And if they did, we’d just nuke them back to the stone age.

  6. High IQ doesnt mean success. YouRE an idiot.

  7. This is one of those important thing not taught in the school curriculum.

  8. Belisaurus says:

    Quite low = 3 I think, based on what their life was like. You should have a picture of that.

    What do you think about the current situation with so many people taking selfies?

    • You spelled the name wrong. It’s Belisarius. Otherwise, I agree with you.

      • Marcus A says:

        I am curious, have you read Liddell Hart’s Strategy?

        I gave up reading Strategy in the middle after realizing that Hart’s definition of ‘indirect approach’ was too broad to be useful.

        How about Robert Greene? Have you read his books, and how do you find them?

      • No I have not read the book, but I’ve read about it. I read Clausewitz On War though, it’s good.
        I have not read Robert Greene’s books, but I have “Mastery” + “48 Laws of Power” on my long-term non-urgent reading list.

    • Adolf Hitler says:

      The selfie thing is exactly what Ludvig has been saying. Normies think taking a “selfie” means you have friends… actually it means you have none.

  9. Individual says:

    Atlas shrugged – dropped earth – and here we are.

  10. Looking forward to this. It has been a long but worthy wait I suspect.

  11. Very interesting, need mord of this today I think. Thanks for dispensensing a lot of wisdom and look forward to the book.

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