Black Swans

By Gill Ringland

The book by Nassim Nicholas Taleb “The Black Swan: the impact of the highly improbable” has had rave reviews and critical acclaim.

A Black Swans event is a highly improbable event with three characteristics: it is unpredictable, it carries a massive impact, and after the fact we concoct an explanation that makes it appear less random and more predictable. Examples are 9/11 and the success of Google.

How can we improve our ability to anticipate Black Swans?

Taleb points out that humans are hard wired to find risk estimation difficult, and to simplify and ignore signals which do not agree with the current world view. This is well known to scenario planners. Neurobiologists - Ingvar published his results in 1985 - discovered that the brain is actively rehearsing futures even when asleep. This means that by using scenarios to provide additional futures to explore, the brain can be preparing for potential actions.

As Arie de Geus says, in "The Living Company",
"Every moment of our lives, we instinctually create action plans and programs for the future - anticipating the moment at hand, the next minutes, the emerging hours, the following days, the ongoing weeks, and the anticipated years to come - in one part of our mind.

These plans are sequentially organized, as series of potential actions: "If this happens, I will do that." These are not predictions. They do not pretend to tell what will happen. They are time paths into an anticipated future....

Not only does the brain make those time paths in the prefrontal lobes, it stores them. We visit these futures and remember our visits. We have, in other words, a "memory of the future," continually being formed and optimized in our imaginations and revisited time and time again." This process "apparently helps us sort through the plethora of images and sensations coming into the brain, by assigning relevance to them. We perceive something as meaningful if it fits meaningfully with a memory that we have made of an anticipated future.

The stored time paths serve as templates against which the incoming signals are measured. If the incoming information fits one of the alternative time paths, the input is understood.

We will not perceive a signal from the outside world unless it is relevant to an option for the future that we have already worked out in our imaginations. The more "memories of the future" we develop, the more open and receptive we will be to signals from the outside world.”

This is how scenario planning can prepare people and organisations to recognize Black Swans and reduce the surprise factor.

July 2007