Black swans, disruption and dealing with the unexpected: lessons from the 17th century
"rara avis in terris nigroque simillima cygno”
("a rare bird in the lands and very much like a black swan”)
- Juvenal, Roman satirist, 2nd century AD
“No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion."
- John Stuart Mill
“The inability to predict outliers implies the inability to predict the course of history”
- Nassim Nicholas Taleb, 2007
“Everyone seems to get the world devastatingly wrong.”
- Hans Rosling, 2018
Could your company or organisation deal with a ‘black swan event’?
In 1697, Dutch explorers on the west coast of New Holland led by Willem de Vlamingh sailed up a river and turned centuries of European received wisdom on its head.
They discovered that black swans exist, something at odds with 1,500 years of Western understanding up to that point.
That discovery, in what is now the Swan River in Perth, Western Australia, ended an analogy used for centuries by Europeans debating the theory of science, evidence and what the world was like.
Prior to 1697, based on all the scientific evidence available to them, Europeans had just understood and assumed that all swans were white.
It became an example used to describe the use of evidence to prove or disprove a proposition or to describe something that was impossible.
Juvenal, a 2nd century Roman satirist and poet, used the concept of a black swan to describe a rare or impossible thing.
In 16th century London, as Renaissance scientific discovery was gathering pace, Juvenal’s statement was used to describe something that was impossible.
For 1,500 years the black swan was a European euphemism for something that could never happen.
One can only imagine the impact on Western Renaissance thinking when news that black swans were real reached Europe.
The subsequent discovery of black swans has been used by the likes of John Stuart Mill, Karl Popper and Thomas Khun to examine concepts such as scientific method, evidence-based decision making and how humans use their own frames of reference to view the world in ways that sometimes limit their ability to understand the real world.
The late Hans Rosling’s new book, Factfulness, has a fantastic and devastating demonstration that humans consistently misinterpret the world even when the evidence of what is happening is readily available.
Read his hilarious discussion of how a random group of chimpanzees can correctly report current global trends better than most educated people on earth.
Professor Nassim Nicholas Taleb, from New York University and a former Wall Street trader, developed the ‘black swan theory’.
This theory addresses topics including the economics of financial markets, the impact of unexpected random events that shatter accepted thinking, and the impact of unexpected events or leaps in technological progress such as the internet, the personal computer, the internal combustion engine, World War I or the collapse of the Soviet Union.
A ‘black swan event’ is essentially an event that is unexpected and an ‘outlier’’ outside the normal frame of expectations or understanding developed from past events.
It is an event that also has a major effect or impact.
Finally, people subsequently rationalise it in hindsight and afterwards say it should have been expected.
There is even a branch of management theory that discusses ‘black swan events’ in organisational planning and risk management, including discussion of how organisations can use strategic planning to break outside their mindsets to prepare for such events.
In today’s world of rapid technological advancement, the sense that major frameworks in business, politics and society are being disrupted at an increasingly rapid pace, how prepared is your organisation to deal with potential black swan events?
Just as it is interesting to speculate how humanity might react to the collapse of the eco-system due to climate change or the discovery of intelligent life on other planets, in company strategy sessions it might be worth spending some time thinking about what your company might do if the world was turned on its head.
What if the event revealed that your future strategy or goals were based on an understanding of the world that was fundamentally wrong?
Could your organisation be forward looking and open minded enough to possibly anticipate such challenges and opportunities that were previously dismissed as ‘impossible’?
In today’s world of ‘fake news’ and debates about how ‘different’ people are, the black swan story reminds us about the importance of understanding different perspectives.
This is just as relevant today in discussions of company strategy, climate change, vaccination, immigration, emerging economies and globalisation as it was in 17th century Renaissance Europe.
For the West, the discovery that black swans did, indeed, exist meant they had to reassess what they understood about the world.
Everything they had assumed about swans, at least, for 1,500 years – and to some extent their philosophy of scientific discovery – was wrong.
It’s worth remembering that for the people who had lived in Australia for over 60,000 years, their frame of reference was probably that black swans were the norm and that white swans didn’t exist.
Sadly, one of the most significant ‘black swan moments’ in Australian aboriginal history – including for those living along the Swan River in 1697 – was probably the arrival of Europeans in the 17th and 18th centuries, given the subsequent impact of European settlement on their 60,000-year-old culture.
What is and what is not real in the world is sometimes as much about how different people perceive the world based on their frame of reference and experience.
It just goes to show that often things aren’t always as black and white as they seem.