MAY 2014 / NO. 2
TAGS: BLACK SWANS, GREY SWANS, DUTCH NATIONAL MARKETING INSIGHTS EVENT, COMPANY RADAR ROOM, NASSIM TALEB, EUROPE, MIDDLE EAST, CHINA, US-BONDS, MI7, CURRENCY WAR, ECB

Black Swans and Grey Swans

“The more threatening externalities become for a company, the more there is a need to have strategic intelligence in place. Every company faces a continuous flow of threatening externalities”
This statement is clear to everybody. But to foresee those threatening externalities, companies need to be able to monitor them in a timely fashion. A couple of years ago, I gave presentations about the “Management of Insights” and the “Management of Foresight” at the Dutch National Marketing Insights Event. The audience consisted of around 200 professionals in marketing, research, strategy, and analysis. I asked the audience: which of your organizations have some kind of radar or monitoring system looking at the outside world? The answer: none! You should, however, have the Black Swans, the Grey Swans and your potential strategic crisis on your radar screen ready for action.

Black and Grey Swans!

Nassim Nicholas Taleb’s book “The Black Swan” is an impressive read. In 2018, it is still highly-applicable to everyone active in business. Black swans are “the random events that underlie our lives, from bestsellers to disasters. Their impact is huge, they are nearly impossible to predict, yet after they happen we always try to rationalize them. A rallying cry to ignore the experts”. How does this relate to strategic intelligence? Strategic intelligence is information that cannot be ignored! “If intelligence is not driven externally, then one is not doing intelligence.”

What about the Grey Swans?

Grey Swans are known, while Black Swans are not. Grey Swans are already on our Company Radar Screens. Correct? We should have insights and foresight on upcoming Grey Swans: the eurozone crisis, instability in the Middle East, the fiscal cliff and the moment that China will sell its US-bonds. Do you have company scenarios prepared regarding these Grey Swans? In our MI7 Radar Room we plotted other Grey Swans, including the Global Currency War, the demographic time-bomb in Japan, the game-changer in oil and gas, Iran, the Federal Reserve and ECB on quantitative easing, the fall of China, the Straits of Hurmuz, 3D-Printing, and artificial intelligence. Have you plotted possible scenarios and do you know what to decide in the event that they occur?

Can you foresee your strategic crisis?

Companies facing a strategic crisis have lost their competitive edge. The problem is that in most cases senior management is unable to foresee this in time. Think of GM, Opel, Nokia, Motorola, Blackberry, TomTom, HP, Panasonic, Sharp, Sony, KPN, most European telecom operators, Dutch banks ING, ABNAmro, SNS Reaal, Philips and many more. The key reason why this is the case is that senior management does not accept objections because of success in the past, arrogance and complacency.
The key solution towards overcoming this phenomenon is to have the company’s strategic intelligence capability on a par with other functions that report directly to the Board by creating a culture of “enabling truth to speak to power”.
“The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man”, George Bernard Shaw
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