Black Swan events – or unknown unknowns

Black Swan events – or unknown unknowns

#BlackSwan #Innovation

It was once believed that all swans were white, because until that time the only swans had been seen (northern hemisphere) were white. It was believed that all swans were white and that black (or any other colour) could not exist.

The belief was destroyed when a Black Swan was discovered in Australia. Hence the term “Black Swan” became used for unpredictable or unforeseen events – the unknown unknowns…

As the changes to the economy accelerate so does the language that we use. Increasingly a new piece of jargon is taking hold. That of a Black swan event.

The Black Swan theory refers to a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations. Unlike the philosophical “black swan problem”, the “Black Swan” theory refers only to events of large consequence and their dominant role in history.

Criteria to identify a Black Swan Event

1. Event has appeared by complete surprise

2. Event has a major impact

3. Event, after it has appeared, is ‘explained’ by human hindsight

Many major events (financially, operationally etc) are hard to predict, it was highly improbable, and it changed the world—Black Swans define the future.

Once you see enough white swans, you start assuming all swans are white—until you see a black one.

So if you approach people with an idea and once you get enough numbers, you start assuming every investor will say no—until you get a yes. In this case the yes is the Black Swan and worth seeking – however of course it may not exist! – If you knew it to exist it would not be a Black Swan.

In recent years the term Black Swan has moved from the finance world into that of innovation and business thanks in the main to author Nassim Nicholas Taleb in his best-selling booked titled The Black Swan: The Impact of the Highly Improbable 2007.

Events consider by many to be Black Swan events include:

• Black Monday
• September 11
• World War I
• Peer to peer downloads
• The personal computer (although this was slightly more evolving than a single event)
• The launch of the IPod
• Google being bigger than Yahoo! or Microsoft
• The growth of Twitter
• Antibiotics
• Xrays
• Fall of the soviet block
• Collapse of the Berlin wall
• Collapse of Northern Rock

Much of the content on the web reflects Taleb’s book rather than the historical origins. An interesting read and something for all business strategists and change agents to consider.

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RapidBI is an organizational effectiveness consultancy based in the UK but working internationally.
© RapidBI & Mike Morrison 2011 - this article/ page is free to copy and use on the condition that an active link back and reference is made to this site and page. Thank you for your understanding and co-operation.

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Related posts that may be of interest to you:

1. Five ways leaders impress people
2. Eight Orientations of #Innovation

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