black swan south africa 2018

The Black Swan

A black swan is a high-impact, hard-to-predict and rare event that is beyond the realm of normal expectations in history, science, finance, and technology.

White swans are the norm - Black swans are an opportunity

When unexpected events cause economies and capital markets to tumble, politicians, economists, and asset managers like to speak of a “black swan.” These animals are scarce and, therefore, also stand for improbable events in economic theory, which throw the familiar out of balance. I took the picture of the two black swans on the picture in Knysna, South Africa 2017, a beautiful place with amazing animals.  

New York Professor Nassim Taleb once used the term in his book “The Black Swan. The power of highly improbable events”.  Taleb uses the Thanksgiving Turkey to describe why expectations built on historical events can fail dramatically

“Consider a turkey that is fed every day. Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests,’ as a politician would say. “On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.” The black swan event has killed the turkey - or in business context, it can stop your  competitors´ ability to execute strategy.

Nassim Nicholas Taleb

Is the corona crisis a black swan?

The worldwide corona crisis shows us how vulnerable our complex globalized social and economic system with its interdependencies is. Suddenly we realize that global supply chains are suddenly disrupted, and we painfully note that in the just-in-time logic there are no capacity reserves and redundancies in the system.

Corona crisis in a vulnerable world

The lockdown in China is directly impacting global supply chains. Pure software companies are less exposed to supply chain disruptions, but remain at risk due to cascading economic effects.

Many companies have banned all “non-essential” travel and some have banned all international travel. While travel companies are directly impacted, all companies that depend on in-person meetings are being affected.

The mid term impact of the corona crisis

The corona crisis will keep the world busy for a long time, the exact effects cannot yet be estimated, but for the time after the crisis we should already now make up our minds not to simply go back to business as usual. Some companies have seen their growth rates drop sharply.

This corona crisis was a foreseeable event.

In a guest article for the “Neue Zürcher Zeitung” (NZZ), he and his co-author Mark Spitznagel explain why the corona crisis should by no means be considered a Black Swan event, “for which being unprepared is excusable. On the contrary: attentive readers of his book should know that a global pandemic is described as a white swan – “an event that will undoubtedly occur in the future.

A global pandemic will undoubtedly occur in the future. The government of Singapore, which called on us as consultants at the time, had already been preparing for a pandemic since 2010 with a detailed plan.

Nassim Nicholas Taleb, NZZ 2020

The foreseeable market opportunity

With change comes opportunity, because certain events will damage your competitor's ability to execute strategy. The challenge is to look out for when these events will occur.

The black swan event has killed the turkey – and it can stop your  competitors´ ability to execute strategy. There are always significant risks in the business plan, and at the same time, a massive business opportunity for digital businesses prepared to shift their value proposition rapidly. 

Cyber Security - the next battlefield

We must pay more attention to issues such as Cyber Defence. If you really need some inspiration watch “The Wolf” with Hollywood actor Christian Slater.

What does it need?

The opportunity lies in defining these scenarios and execution models before they occur. Search listening and social listening helps us understand when the time is right – and what we have to do. When the new event arrives, you can attack the market.

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