How to position your business to thrive in any eventuality
The first edition of Nassim Nicholas Taleb’s book, The Black Swan, was released in 2007, its title referring to a quote originally from Juvenal, the Roman satirist, who characterised the standards set by men for an “ideal wife”, as “a prodigy on this earth as rare as a black swan”. The black swan being a metaphor for that mythical, probably non-existent thing that none of us will ever see.
Taleb’s book gained immediate acclaim, largely because its hypothesis, that it’s the rarest, least predictable events that have the greatest impact on businesses and society, appeared to be validated by the 2008 financial crash almost before the ink had dried. And given the unpredictability of current events, its currency remains unsurprisingly high.
But through the book, Taleb also wrestles with the question as to whether these outlier events are genuinely unpredictable (black swans), or that they’re predictable (white swans) but we simply don’t want to see them coming. The current pandemic, for example, was statistically almost inevitable at some point, but was unconsciously discounted or outright ignored by the majority of people because “it will probably never happen”.
As Taleb notes, Christmas would be a black swan event for a turkey, but not for the butcher. The point being that many of these black swans can become white swans given a conscious shift in perspective and the will to seriously engage. For me, this is the single most important take-away from all of his work.
Regular readers will be aware that I often write about scenario thinking, urging clients, indeed anyone who will listen, to think seriously about radical scenarios, not because we expect them to happen per se, but because the learning from the exercise is incredibly valuable in its own right.
Radical scenarios like: “if half of your business disappeared tomorrow…”; “if Google bought your biggest competitor and poured money in…” or “if an investor offered you five years’ worth of your current profit to invest in your business…” what would you do?
If approached creatively, these scenarios furnish you with a wealth of fresh perspectives and new ideas, and once you’ve looked at several of them, patterns start to emerge: commonalities, building blocks of capability, things you should do anyway – some urgently.
And sometimes, just occasionally, those scenarios do actually turn out. I’ve never suggested a client look at the scenario of a global pandemic, but the equivalent drop in trade has been a regular feature, as has an underprepared, last-minute no-deal Brexit scenario (watch this space).
In March, I advised clients to look at scenarios where the demand for office space in urban centres fell by 70% permanently, not because that’s what I expect (although if recent staff surveys in some of my clients are anything to go by, it could well end up being the case) but because it exposes your risk, draws out your options and makes you think of alternatives long before the reality bites.
The photograph at the top of this note is of a black swan. I took it two years ago on my phone. It wasn’t the first I’d seen, nor will it be the last, as I walk a lot, often by lakes and rivers. Clearly, I’m far more likely to see a literal black swan from the perspective of a riverbank that I am from my office.
And that’s the point. If your exposure to the world around you is predominantly through the lens of your office windows; from the same perspective as your colleagues, your industry, your long-term circle of friends, every swan that’s heading towards you will look black.
It’s only when you step out of that comfort zone and engage with other perspectives, other possibilities, more radical and challenging scenarios and ideas, that those black swans will turn white in front of your eyes. And at times like these, that ability has never been more valuable.