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Many businesses feel that the current crisis may not be a black swan event and business leaders could have been better prepared for it. Here are some of the opinions shared.
“We are not dealing here with a Black Swan,” “The potential for, and impact of, a global respiratory disease pandemic … has been recognized for years… The greatest COVID-19 failure was clearly the failure to adapt in time to an emerging threat.”
“I’m calling the COVID-19 pandemic a White Swan: inevitable through global mobility and the absence of safeguards, frighteningly predictable based on extrapolations from past outbreaks … Climate change and its ensuing environmental, economic and social disasters is the next White Swan.”
“In the corporate sector, the continuing effort to brand the COVID-19 pandemic as a Black Swan is a retroactive attempt to protect unprepared boards and CEOs from responsibility so their companies won’t be sued.”
“It is only by sharing … resources globally that we can distribute the burden of fighting the next Black Swan.” The lesson for leaders, he continued, “is the reminder that we are on this small rock together.”
“We also need to give more attention to mitigation, which will be greatly helped by cooperation, resilience, innovation, pragmatism and speed. In a crisis like this, perfection is the enemy of effectiveness.”
“we can prepare to be prepared… we should stimulate the use of less debt and more equity and therefore accept a lower return or otherwise fully accept regular destruction of businesses, unemployment, etc…”
In terms of financial preparedness, there is a simple guideline, that every 10 years or so, expect a major disruption. So you need 6 months cash on hand to weather it.”
“Operational contingency plans are unlikely to be helpful. But financial contingency arrangements can be made and worked into the fabric of normal, ongoing organization financial management… (it) buys time to figure out what is happening and what it means to the organization.”
“Perhaps corporate thinking going forward will shift to emphasize resiliency versus cost optimality… Diversifying geographically, including some home grown production capacity will ensure a much more resilient operation.”
Leaders in this crisis will have learned that it paid to be calm in bearing, decisive and timely, and selfless, avoiding “making yourself comfortable at the expense of others.”
“The leaders and organizations that do the right things by their employees will rise to the top.”
According to Nassim Nicholas Taleb's definition of a "black swan":
1. The event is a surprise (to the observer).
2. The event has a major effect.
3. After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals.
Is it the third point of the definition that some businesses are expressing as lessons to leaders?
True advocates of Black Swan thinking may scoff at the very premise that there may be lessons for leaders in this one. It leads to a syndrome of always preparing for the last Black Swan, a somewhat chimerical chase in search of the non-existent.
Instead, should more time be devoted to thinking about modes of recovery that might support responses to a number of potential Black Swans?
For example, almost every Black Swan will have some kind of extreme effect on demand for nearly all goods and services.
In the face of the unknowable, are there basic contingency plans that can be kept fresh for generic, not specific, demands on various functions of the organization
What are your views and opinion?