Nassim Nicholas Taleb, The Black Swan (2007)
Taleb (pictured right) is a professor in New York and writer.
This best-seller has been hugely influential in explaining unexpected events like:
- 9/11, the terrorist attack on New York's
World Trade Centre.
- the 2007-8 global banking crisis.
What is a Black Swan?
A Black Swan is an event that
- is an outlier (unpredictable, rare and totally unexpected).
- has an extreme impact (good or bad).
- is consequently made explainable and predictable (by creating
reasons for it).
it called a Black Swan?
Because people thought that all swans were white until black ones were unexpectedly discovered in Australia.
Other examples of Black Swans...
- the 2007-8 global banking crisis.
- the outbreak of the First World War in 1914.
- extreme, unexpected events in our personal lives.
Why are Black Swans becoming more likely?
The future is increasingly unpredictable .
So any organization must have a plan to deal with Black Swans.
Why do we ignore Black Swans?
- ignore the possibility of the random and the extraordinary.
- concentrate on minor details to the exclusion of possibly significant events.
How to identify opportunities from Black Swans
(called positive Black Swans, which we should aim for)
1. Imagining the impossible and totally unpredictable
(for example a revolutionary product like Google that far exceeds customer expectations).
Accept that the past bears no relation to the future.
2. Avoiding simplifying and categorizing things
Accept the world is:
Black Swans make inappropriate...
...ideal and well defined concepts like rules and forecasting models (derived from Plato’s
philosophy, or “Platonicity”).
3. Accepting that what you don’t know is far more important than what you
Before 9/11 the knowledge that New York was
an easy terrorist target didn’t stop it happening.
- why people didn't predict them.
Don’t be surprised when they happen.
4. Thinking about general significant ideas not specific, unimportant
- beware of experts (whose knowledge has no relevance to the future).
- make time for thinking about the unusual and unknown.
- avoid “small talk, focusing on the known, and the repeated”.
5. Challenging conventional wisdom (existing knowledge and
- change your beliefs and assumptions (when contradicted by new
6. Focusing on the rare, volatile and extraordinary, not the normal,
stable and ordinary
Imposing order on volatility (like restricting people’s freedom as in the Middle East) can lead to even
greater volatility and chaos.
Accept the world of unpredictable extremes (Extremistan) not just the
Mediocristan world of:
- normal distribution (the “bell curve”).
Three other tips
1. Don’t think you’re in control when you’re
(the illusion of control).
2. Don’t think that doing something
is always better than doing nothing
(the action bias)
Attempted reforms can have harmful, unintended consequences because of the
imperfections of human nature.
3. Avoid oversimplified story telling
(the narrative fallacy)
This describes the world as:
- less random and more predictable (than it really
Tips for personal and business success
1. Aggressively pursue the opportunities of positive Black
(which often come from luck, so seize your lucky breaks!)
Remember you are a Black Swan, because you are extraordinarily lucky to be alive!
2. Don’t be dictated to by other people and external
- use extreme events as a starting point.
- don’t treat them as exceptions to be ignored.
3. Focus on your aims
Don’t be distracted or misled by:
- experts and forecasters (whose knowledge is obsolete and
wrongly based on a predictable world).
4. Be creative
Key quotes on decision making
Our world is dominated by the extreme, the unknown, and the very improbable.
This is a book about uncertainty; to this author, the rare event equals uncertainty