Dominoes fall in predictable patterns. Understanding these patterns transforms chaotic collapses into mappable sequences with identifiable opportunity zones.
First-Order Effects: The Obvious Impact
When disruption hits, everyone sees first-order effects. Lockdowns mean closed businesses. Supply chain breaks mean product shortages. These obvious impacts create initial panic but limited opportunity—everyone's competing for the same obvious solutions.
Rachel initially focused on first-order effects when schools closed. Like thousands of others, she rushed to create online tutoring services. The market immediately saturated with similar offerings, creating a race to the bottom on prices and a struggle for differentiation.
Second-Order Effects: The Ripple Zone
Second-order effects emerge as first-order impacts propagate. Closed schools don't just need online teaching—parents need childcare solutions, kids need social interaction, and educational assessments need restructuring.
When Rachel mapped second-order effects, she discovered the real opportunity wasn't in teaching but in creating "learning pods"—small groups of families sharing educational resources and supervision. This second-order solution commanded premium prices while basic tutoring became commoditized.
Third-Order Effects: The Transformation Territory
Third-order effects represent fundamental system changes. The dominoes have fallen so far that original structures can't be rebuilt—entirely new systems must emerge.
By month six, Rachel recognized third-order effects transforming education permanently. She pivoted from emergency solutions to building infrastructure for a fundamentally different educational model—hybrid learning systems that would outlast any crisis. These third-order positions created lasting value while first and second-order players struggled with temporary fixes.