The Black Swan

Have you ever seen a Black Swan? I had to go out and Google it to see if they really exist. They do. All the other swans that I have seen were white. When someone mentions swans I think of white ones. It was a common expression in the early U.K. as a statement that describes an impossibility, from the old world presumption that “all swans must be white”, because all historical records of swans reported that they had white feathers. The Idea of a Black swan was outside my initial perception set. I guess it shouldn’t have been. If we can have white (albino) tigers, why can’t we have Black Swans?


 


So what?


 


A gentleman by the name of Nassim Nicholas Taleb wrote a book in 2007, by the name of The Black Swan. Taleb asserted, “What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability.” He goes further to state “A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.”


 


I think we need to apply this theory to business. In looking at the various corporate cultures and methods of business conduct that I have been associated with, I see many, many white swans. When I look back at the various roles I have had throughout my career, I find that I was my most successful when I decided to operate outside what was then the expected norm and go my own new/different way. I had my highest impact on the organization, and I was my most successful.


 

In today’s unpredictable business market it may seem risky to operate outside of the expected norm. After all, the Chinese proverb is “The nail that sticks its head up gets pounded down.” On the other hand, as businesses today strive for cost reduction and profitability improvement they are finding that they don’t need as many white swans in the labor flock. In this day and age I think I would rather be regarded as “High – Impact” and “Rare” than be regarded as just another member of a flock that is being reduced.

One thought on “The Black Swan”

  1. Has my brain been poisoned by too much Bell Curve probability theory? Probably. And I appreciate your fresh ideas. I’m curious too, about your feelings regarding a business philosopher who is almost a sort of Taleb-alter-ego, Jeremy Grantham. In a positive way, he both advocates yet contradicts him, and maybe attracted me since Nassim just overheats my brain so much. For example, this latest crash, JG says, wasn’t a Black Swan surprise, since actually the housing bubble (30% above previous trend lines) was clear, and Trend Lines Never Lie. It could be just my personal wishful thinking, but when Taleb says we lack information about Outliers and the future, I feel vulnerable, and when Jeremy suggests that we really should just focus on what we can predict, I get warmer and fuzzier. For example, today’s P-to-E ratios are back below historic levels, and generally profits are back to pre-bubble days again. Good signs for some of us insecure job-seekers. Hmmm … as I read back thru this note, maybe my “safer” attitude the lesson point you making.

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