Page 200 - (DK) The Business Book

198 AVOIDING COMPLACENCY

trends. They may also have a team white; unless you traveled to
responsible for risk management, Australia and chanced upon a black
which covers far more than swan. Taleb used the metaphor of
operational risks (such as safety). the black swan to discuss major
In recent times, such teams tend scientific discoveries and historical
It is not the strongest to monitor far-reaching global events. These “black swan events”
of the species that survive, concerns, including weather combine low predictability and high
nor the most intelligent, extremes resulting from climate impact. Examples include the 9/11
but the one most change, political change, and terrorist attacks in the US and the
responsive to change. human-rights issues. stock market crash of 1987. Taleb
Leon C. Megginson Successful negotiation of change states that companies can never
US management professor (1921–2010) relies not just on scanning the predict black swan events, but they
environment, but also making sense do need to build robustness against
of the incoming information. Senior potential negative eventualities,
executives need to be particularly and be ready to exploit positive ones.
wary of understanding events and
making decisions based solely on Listening to the front line
data or past events. In The Black Grove claimed that business data
proactive. In 1974, US company Swan: The Impact of the Highly (like white swans) is relevant only
Barnes & Noble was the first Improbable, Nassim Nicholas Taleb to the company’s past, and cannot
bookseller to advertise on television, explains how individuals, be used to predict the future. He
in 1975 it was the first to discount businesses, and governments place suggests that when searching for
books, and in 1989 it opened a too much weight on the odds that clues about how to deal with the
“book superstore.” Its innovations past events will be repeated. future, executives should look
helped it to hold a large share of the Forecasting the future from the elsewhere, such as scrutinizing
retail market. By 1995 it had 358 past ignores the fact that the future any misalignment between the
book superstores—but by 1996, the holds different possibilities, as yet company’s strategy statements
Internet had changed everything. unseen. For example, if you have and its strategy actions. What is
Amazon—a master at Internet only ever seen white swans, you the difference between what the
selling—suddenly outstripped it in might assume that all swans are company says it is planning to do,
sales and market valuation.

Staying alert
Points of sizable change are hard to
spot, so executives must constantly
scan the horizon, like a ship’s
watchmen looking for an iceberg
that could sink the business.
Companies today use many
different approaches to monitor the
competition and market. Typically,
a large organization employs a
team of people to scrutinize the
company’s sales, compare them to
the competition, and analyze market

Black swans are rare but they do exist,
which comes as something of a surprise
to people who have only seen white
ones. This demonstrates the error of
basing predictions on past experiences.