If you are interested in a very good (but not necessarily easy) read, try Nassim Taleb’s "The Black Swan." The book takes you on a journey crossing history, perceptions and logic. The idea behind "The Black Swan" is that events that have low or no predictability do regularly occur and can have very large, game-changing impacts.
One of his examples is 9/11; few of us would ever have thought such an attack possible. But after the fact, connect-the-dot analysis shows that it was visible in hindsight. Couple that notion of improbable yet highly impactful events with the idea that we are wired so that dealing with the unlikely is just something people don’t do well. We like order and predictability. “Like” may not be strong enough; we almost require predictability. We want the world to fit our view.
You may have seen or heard of the “Invisible Gorilla.” With only a mild expectation set, people can miss what is right in front of them—in this case, a guy in a gorilla suit whom you would think impossible to miss. Because it is not in their realm of possibility of the situation, most folks do not see it.
You and your team face this head-on nearly every day. Your ability to see what is going on and be open to identifying black swans has a direct effect on your success. Looking for the unknowns and what project management calls “the unknown unknowns” is a basic part of managing risk. But to do it, you have to identify those threats and opportunities that would be high-impact and not filter them out because they don’t fit your expectation of what should be happening.
“New Coke” was launched in 1985. Market research supported the popularity of the new formula, however the competitive force of Pepsi called for action, and a few days after the launch, a forceful backlash developed. It was a movement, a reaction management never considered possible. For Coke, it was a Black Swan event.
Improving “vision” starts with identifying the assumptions and beliefs that underlie perceptions of the situation. Once you can get a hold of those, you can improve your ability to manage the risks and opportunities you face.
Clay Ricord is a senior consultant for the Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.Readers are encouraged to respond to Clay using the “Add Your Comments” box below. He can also be reached at Clay_Ricord@renolan.com
This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
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