Black Swans are major events, good or bad, that are highly unlikely but happen anyway. Using the term Black Swan is a metaphor for an event that is simply strange or inexplicable in advance using logic. However, the Black Swans are explainable after the fact. Most are rare events that have an extreme impact on the business. (Taleb, Nassim Nicholas. The Black Swan. New York: Random House, 2007.)
white swans
Taleb claims that most people do not believe that black swans exist, simply because they have seen only white swans.
“We put a label on an event and use that knowledge to reason about the future. We use stereotypes and labels to fill an unknown mental void. This creates a blindness that can prevent us from recognizing a Black Swan even if it is right in front of us.”
I think Black Swans could be considered the boldest definition of crisis.
When you’ve seen only white swans in your life, you think “all swans are white.” But it may be that you haven’t recognized a Black Swan yet. Remember, Taleb defines a “Black Swan” as a highly unlikely event, but with enormous impact when it occurs. But, in my opinion, that does not mean that they cannot be recognized or even predicted.
Recession
So is the current recession a “black swan”? I do not think so. Whereas, the 9/11 terrorist attack is believed to be a Black Swan. Was September 11 predictable? Most say no, however, looking back, the signs were there. We just didn’t recognize them or coordinate our communications well enough to prevent it from happening. Today’s recession may not be a Black Swan, but the way this country reacts to this crisis combined with the challenges of the global economy, nuclear proliferation, and dealing with the rogue nations of the world could create a Black Swan.
Black swans are the “epitome of crisis”
Some scholars have defined crisis management as reactive leadership. This stems from the belief that the crisis is both unpredictable and unexpected; But this is simply not true. A crisis often helps develop an organization’s core principles, beliefs, culture, and values. Without this clarity, the behavior becomes incongruous with its internal environment. A leader who is “in tune” and can recognize the potential of a Black Swan leading to an impending crisis and understands how to harness the urgency brought about by the situation, can minimize potential dangers and maximize efforts to seize opportunities. created by the Black Swan himself.
Although the “Black Swan” is suggested to be a rare occurrence, the crisis is a universal reality. Simply put, it is an unavoidable part of doing business.
Thomas Kuhn (An American Intellectual Science) stated that the crisis begins when “existing organizations have stopped adequately addressing the problems posed by an environment that [in part] have created … the sense of malfunction that can lead to crisis … “
Not paying attention to the initial signs and recognizing that the relationship with the environment is changing can cause a crisis. However, this does not terrify good leaders because they understand that crisis is necessary for growth and development. It provides the urgency, attention and opportunity to adapt the business to the impending challenge that may not have been recognized in the past.
Black Swans (Crisis) demand adaptation to Change
Understanding why leaders are sometimes ineffective in adapting to change is crucial to understanding crisis. The ability of an organization to grow and get out of its comfort zone without the urgency of crisis is extremely difficult. Change often threatens stable relationships, power balances, processes and procedures, or the current distribution of resources and influence. The change magnifies differences of opinion between individual beliefs and perspectives. But, these differences under the right leadership can become the heart of progress and change.
The most effective way to deal with the crisis is to recognize, prioritize and mobilize awareness for the necessary change. Understanding and focusing on the core purpose of the organization is necessary to understand how an organization’s principles relate to impending change. Unfortunately, selfish biases and a tendency to dismiss the future often prevent leaders from listening to those around them. Ineffective leaders often do not understand the signs due to an inherent state of denial.
Successful growing organizations have been through the experience of change. In fact, these organizations recognized the need to manage change. That’s what leadership is really about; the ability to manage change and cope with the crisis.