With the dual pressures of the pandemic and the economic crisis, many executives are challenged dealing with the constant increase in new challenges that appear every day. Many leaders claim that with all this going on they have no time for strategy and planning, often using the excuse that this is a ‘Black Swan event’.
The concept of a Black Swan event (a term coined by Wall Street trade Nassim Nicholas Taleb in his 2001 book ‘Fooled by Randomness‘) is an event that is unpredictable, has severe and widespread consequences, and after the event people will rationalise as being predictable (hindsight bias). Previous events that have been broadly defined as Black Swan include:
- The 1997 Asian Financial Crisis
- The “Dotcom” Crash
- 9/11 Attacks
- The 2008 Global Financial Crisis
- Brexit
Author Michele Wucker describes the current situation not as a Black Swan but rather as “Grey Rhino”. The Rhino phenomenon is described as something really big, really dangerous and something you don’t want to see.
The idea of a global pandemic has been widely studied and warned about, in 2012 the German government modelled a possible pandemic caused by a ‘virus Modi-SARS’ in the scenario they considered how six million Germans falling ill at a peak of the crisis would be handled.
In 2015 Bill Gates gave a TED talk explaining that the greatest threat mankind faced was a virus epidemic.
In 2019 the US government agencies ran a full scale simulation of how they would deal with a pandemic with frightening resemblance to the corona virus.
It is clear that this is not a Black Swan event, rather it is Grey Rhino – it has always been there in plain sight.
A lesson for leaders from the pandemic is that they need to change dramatically to face upto and prepare for these challenges in the future. As the economic, social and political consequences of the pandemic become more obvious, it is also clear the priority that needs to be put on consideration for these events into the future.
“Rhinoceros will trample not only the careless leader, but also many people entrusted to their care. Companies will go under and entire sectors of the economy collapse. This is how systemic risks arise from management and decision-making crises: so no more excuses – look the future straight in the face.”
Miriam Meckel
Synopsis of an article from Drucker Forum Forget the Black Swan: focus on the Rhino By Miriam Meckel https://www.druckerforum.org/blog/forget-the-black-swan-focus-on-the-rhino-by-miriam-meckel/