Black Swan Gazing: Futures Thinking for Resilience

Transformation

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March 23, 2016

Futures studies (aka strategic foresight) is a practice and a field of study about the future. Futures studies can do many things but one of the things it does not do is make predictions. Instead, it helps explore various possible futures and their implications and helps identify unique insights that enable organizations to become more resilient, anticipate change and make better strategic decisions. There are many definitions of futures studies. One of the most comprehensive ones is offered by Dr. Robert Chia, who is a professor of management at the University of Glasgow:

“Futures is a refined sensitivity for detecting and disclosing invisible, inarticulate or unconscious societal motives, aspirations, and preferences and of articulating them in such a way as to create novel opportunities previously unthought and hence unavailable to a society or organization.”

This is a very useful description of both why futures is useful and why it can be a challenging task. Futures work deals with ambiguous and inarticulate data points, which are usually referred to as weak signals. These are not yet trends or full-blown changes, but seemingly small phenomena and events to which little attention is paid by the mainstream views. Because we are dealing with ambiguous data, we never get to a single answer (hence no prediction in futures) but rather a range of possibilities which may or may not have significant implications and call for contingencies.

One way to think about futures is in terms of resilience. Nassim Taleb, a scholar on risk management and finance, introduced the concept of Black Swans as a useful model to think about futures. Black Swans are events that are perceived to be rare and unlikely but whose impact is often transformational or devastating. They could be natural disasters, new market entrants or scientific discoveries.

For example, in the mobile communications industry, we may think of the iPhone as a Black Swan event. It completely changed the market and drove some major players like Nokia and Motorola to the brink of extinction. The financial crisis of 2008 is another example of a Black Swan event that had transformational consequences across the globe. Taleb distinguishes three attributes of a Black Swan event:

  1. It is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.
  2. It carries an extreme ‘impact’.
  3. In spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

A common misconception about how to deal with Black Swans is that we need to better predict them. But that is a fruitless effort because by definition, Black Swans are events that are perceived to be unlikely or even impossible. What we need to do is to create systems (organizational, civic, cultural, etc.) that make us more resilient against such events. Futures can help organizations imagine and articulate plausible scenarios for which decision makers need to become more resilient so they can take immediate action to address or prepare for when a Black Swan event does occur.

For a more detailed perspective on how to use futures, check out our Brief Introduction to Futures.

Photo from flickr.com

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