black swan south africa 2018

The Black Swan as a foreseeable market opportunity

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. Preparing for the unexpected turns a Black Swan into a foreseeable market opportunity

White swans are the norm 🦢- Black swans are a foreseeable market 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. As we know, these beautiful animals are rare, but the exist – and as we could find out while travelling in South Africa, sometime you meet more than one of them.  

New York Professor Nassim Taleb used the term in his book “The Black Swan to outline the meaning of this in Innovation, and Crisis Management. The power of highly improbable events”. Nassim 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 Covid19 crisis a black swan event?

The worldwide Covid19 crisis shows us in 2020 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.

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. This will create a foreseeable market opportunity in multiple areas. 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.

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.

This corona crisis was a foreseeable event. 💥

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 Covid19 crisis 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. Each shift in spending creates a foreseeable market opportunity for the ones who are prepared.

As it may be too late for preparing for Covid19 as a trigger event  – the more question is: How to find out about the next battlefield, how to understand it´s impact and and how to prepare for it. Taleb writes, that Singapore took action and already started projects in 2010. 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 event arrives, you should be ready. Threats like CyberSecurity breaches will not give you additional 10 years.  

Cyber Security - the next battlefield ?

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