Black swans, shapeshifters and flexibility

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  • Black swans, shapeshifters and flexibility

    1. 1. Black Swans, Shapeshiftersand Flexibility Geary W. Sikich Principal Logical Management Systems, Corp. www.logicalmanagement.com +1 (219) 922-7718 Copyright 2012, Logical Management Systems, Corp., allall rights reserved Copyright 2012, Logical Management Systems, Corp., rights reserved
    2. 2. Black Swans “Black Swan” highly improbable event with three principal 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, than it was. Taleb the problem – “Lack of knowledge when it comes to rare events with serious consequences.”Nassim Taleb, “The Black Swan: The Impact of the Highly Improbable” Copyright 2012, Logical Management Systems, Corp., all rights reserved
    3. 3. Black SwansIf you don’t know what youdon’t know, how can youprepare for it?Conventional practices leaveus vulnerable torandom, potentiallycatastrophic events, thatcannot be predicted based onsimple extrapolations from thepast or projections of thefuture. Copyright 2012, Logical Management Systems, Corp., all rights reserved
    4. 4. Relevance Non-predictability of events is not relevant with regard to the consequences of events. Effective decision making does not mean “perfect” – all decisions are flawed. Copyright 2012, Logical Management Systems, Corp., all rights reserved
    5. 5. Black Swans, Shapeshifters and FlexibilityThe problem –  “Black Swan” is a subjective term – Your “Black Swan” may be my “White” or “Gray” Swan.  “Black Swan” events labeled after the fact (unpredictable).  “Black Swan” events are selective in their consequences for those who experience them (but you will not know until after the event has been labeled or mislabeled).  “Black Swan” events sudden discontinuities of great consequence that reshape the government and business environments, bringing both dangers and opportunities. Copyright 2012, Logical Management Systems, Corp., all rights reserved
    6. 6. Black Swans, Shapeshifters and Flexibility More than 85% of all business information exists as unstructured data. Can you imagine any important decision that has been made leveraging on 15% of the real information potential? Copyright 2012, Logical Management Systems, Corp., all rights reserved
    7. 7. Black Swans? Wishful Thinking? Misinterpretation?Since 1956 there havebeen over 200+ incidents– from sunk rigs toblowouts, collapse, spills,damage… Copyright 2012, Logical Management Systems, Corp., all rights reserved
    8. 8. Black Swans? Wishful Thinking? Misinterpretation? Volcanic States? Idaho 10 volcanoes New Hampshire 2 volcanoes Copyright 2012, Logical Management Systems, Corp., all rights reserved
    9. 9. Black Swans, Shapeshifters and FlexibilityTrigger PointsUnpredictability is the new normalRigid forecasts, leave the organization inflexible; thereforeLeadership, strategists and planners are better served to practice“Active Analysis” and ensure the ability of the organization toexecute with the capabilities and capacities on hand at any giventime.Unpredictability can be positive or negativeThe increased rate of knowledge creates increased unpredictability Copyright 2012, Logical Management Systems, Corp., all rights reserved
    10. 10. Summary of Key Points  Clearly defined rules for the world do not exist, therefore computing future “Black Swans” can only be accomplished if one knows future uncertainty.  Incompleteness of predictive models (as the “Black Swan” is unpredictable, can you really model it?).  Incorrectly specified parameters/scope (Measurement tools are inadequate).  Overly complex (It’s not easy to detect paradigm shifts; it’s best to claim to detect as many as possible and quietly bury your failures). Copyright 2012, Logical Management Systems, Corp., all rights reserved
    11. 11. Summary of Key Points  Scenarios may no longer be appropriate (Unpredictability, evolving nature of the event over time means that the event seldom ends in the form that it started - shapeshifter).  Obsolescence of models (Unpredictability and evolution make models obsolete).  High cost to develop, operate and maintain (Skill set requires vast amounts of experience; limited by time and the nature of rare events).  Rare events require a high degree of interpretational skill (knowledge, experience, background – human capital). Copyright 2012, Logical Management Systems, Corp., all rights reserved
    12. 12. Black, Blank, UnfinishedThere will be anothercrisis, another recession andanother panic. And all will havesomething in common: They willbe caused, at least in part, byfactors and events that no one istalking about today.Wars, earthquakes, oilspills, assassinations... no onepredicts these things because theycant be predicted. But they canhave a huge impact. Copyright 2012, Logical Management Systems, Corp., all rights reserved

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