When I know that I don’t know something, it’s a really easy situation, I can study and research to remove the ignorance factor and eventually I will know that thing I didn’t know. This is called first order ignorance, I know what I don’t know.
The second order of ignorance is a bit more tricky, in fact it can be described with “I don’t know what I don’t know”. For example you are estimating a piece of work and what can happen is that your estimates cannot cater for what you don’t know that you don’t know. Being a bit moire specific, say you are estimating writing a new feature that allows your customers to buy tickets for the cinema. You probably know that you need customers, you need a movie, you need a movie theater and a date. What you might not know is that for instance some of the movie theaters are roofless and attendance might depend on whether the sky is full of stars or there is a full blown storm over the screen. Not knowing this you won’t initially estimate the work required for reimbursing the customers that stayed at home during the storm. You will more than likely find out about this either while you are working on the software thanks to an occasional “WTF? moment” or if you are unlucky when you get people knocking at your door because they want their money back. There are quite a lot of things that we can do to try to limit the negative impact of second order ignorance, like doing risk assessment, or breaking down the complexity in many small stories. This won’t guarantee you remove it but will help in many cases. One thing that we always need to keep in mind is that “we don’t know what we don’t know” so deep inside we know that estimates are only there as a placeholder for people that are obsessed with dates, but deep inside we know that they have no real value.
Then there is a third order of ignorance, and I would describe it as “I don’t know that I don’t know what I don’t know”, basically “false confidence”. This can be extremely dangerous because third level ignorant people make a lot of confident statements because they have no clue that there might be something they don’t know, but when it hits, like Homer once said “Forget it Marge, It’s Chinatown!”
If you want to see the original work on the 5 levels of ignorance see http://c2.com/cgi/wiki?OrdersOfIgnorance