Welcome back to this week’s Sunday Story, the second in our Disruption series. On the heels of our first White Paper, where we give leaders an overview of how Artificial Intelligence (and other factors!) will disrupt your context and force you to reconsider how your leadership shows up every day, this week’s Sunday story is all about a fateful trip to Australia by a budding ornithologist who finds himself confused by the colour of birds, how a mayor considered a bit kooky saved a Japanese town from a tsunami, how we evaluate airline safety data, and what all this has to do with disruption in our world. Yes, all of these things are related - read on to find out how!
The allegorical ornithologist I’m talking about is the basis of an excellent book by Nicholas Nassim Taleb called “The Black Swan”, and it’s titular metaphor requires expansion to understand what this has to do with disruption and leadership. As Taleb writes in his book, imagine being a young naturalist in the mid- to late- 1700s, born and raised in Scotland. You’ve spent your early years exploring the ponds, waterways, highland lochs, and natural beauty of the Caledonian countryside and as a scientist, your goal is to catalog that which you have discovered and infer some important facts about them. In particular, you notice the majestic and beautiful white Swans that live in the ponds and streams near your birthplace; you make assertive statements about their size, the shape of their neck, and their colour - all swans are white. Indeed, you have seen thousands of swans all over Scotland, and every single one of them is white, so your assertion about the truth of “all swans are white” is accurate based on the evidence.
Alas, adventure calls, and so you join Captain James Cook on his voyages and, after many months of hardship, scurvy, and other nautical challenges, you land in what would become known as Australia. While engaging in your naturalist pursuits, you find a large bird that looks exactly like the Swans back home - its size, shape, neck, and everything is identical. Except this swan - this single swan you’ve found on your first day - is actually black. Suddenly, your prior statement which you rightly made with such confidence based on your evidence (that all swans are white) is actually not at all accurate. Despite seeing thousands of white swans, it only takes the appearance of a single black swan to completely change what you believe to be true.
The challenge is, as Taleb writes, this “Black Swan” phenomenon is a very accurate reflection of our reality, but the Black Swans are almost always discounted and ignored because of the way we look at data. If you were to take your naturalist’s data and plot it based on how white it was - some more grey, some more yellow, but all generally white - you’d find you’d have a standard deviation. Mostly all data organizes itself into this classic “Bell Curve” shape. Your black swan - that single data point that proves your underlying assertion is wrong - doesn’t fit into that bell curve at all. It’s an outlier. And what happens in statistical analysis with outliers?
Often, they are eliminated from the sample. This is appropriate for some analysis, but it fails miserably (and dangerously) when it comes to social disruption. Society doesn’t get disrupted by what’s expected - the data points on the standard deviation - it gets disrupted by what isn’t expected. We’ll share some real-world examples of this that illustrate what Taleb means.
The first example, drawn from his book, related to 9/11. It’s hard to argue against the massive social changes that happened in the western world (and elsewhere) following the terrorist attacks of September 11th 2001. An unprecedented invasion of two different countries by many NATO powers, legislation around privacy and security like the Patriot act that ushered in an “open secret” era of governments spying on their own people, and the simple act of boarding an airplane hasn’t been the same since (and never will be). The hope and optimism of the post-Cold War 1990s was replaced by the “With us or Against Us” War on Terror, and our world changed.
But if you look at the data of air travel, safety, and social impact, you’ll see that the overwhelming majority of flights have absolutely zero impact on society. If you were crunching the numbers on September 10th, 2001, you would be 100% correct in coming to the conclusion that “Air Travel is safe, and when it isn’t safe it does not cause massive losses of life that transforms society”. That would have been your “All Swans are White” moment, and that’s fine - except we often rely on those assessments for predictions about the future. Rarely is the analysis only historical - the utility of such analysis is often seen as trying to get a sense of what’s next. That means that the assessment on September 10th is more likely to be: “Air Travel is safe, and when it isn’t safe it does not cause massive losses of life that transform society, and therefore we shouldn’t expect any major incidents that would have this impact in the future” - which means leaders using that intelligence to plan their future are by definition caught flat footed and are forced to react from their heels instead of proactively plan with shoulders down to meet the force of disruption ahead.
Another great example of this is the internet. New technology had been coming out for decades - the popularization of fax machines, personal computers, long-distance telephony, and even cellular phones all preceded the internet , and the Fax Machine certainly didn’t change the world - we still went to Sears for our clothing, appliances, and tools, and stopped off at the Blockbuster on the way home to grab a DVD to watch with the family on our weekend’s movie night. While faxing sped up some business processes its impact was one of convenience, not transformation. A tech analyst in the mid-1990s would be regarded as correct in assuming the Internet would be more of the same - a tool that speeds up certain functions, but probably not transformative to society (indeed, there were many with this attitude early on, expecting the internet to be a fad). Some people saw the transformative power of the internet, and leaned into their disruptiveness; they are the founders of places like Amazon and Netflix, and I bet the folks in charge of Sears and Blockbuster wish they had a do-over on how they approached the Black Swan of the internet, instead of assuming “all swans are white” and not preparing for the disruptive potential of that technology.
A final example with a historical twist: The town of Fudai in Japan lies on its northeastern coast. In the 1960s and 1970s, the mayor of that town embarked on what was regarded as a comical effort: He set out to build what was considered to be a ridiculously large sea-wall and flood gates to protect Fudai in the event of a tsunami. Tsunamis are a known hazard - the word itself coming from the Japanese language (a combination of words meaning “Harbour” and “Wave”) - but they are rare. The Mayor, Kotaku Wamaru got his way and eventually construction on this incredibly massive, and incredibly expensive, seawall and flood gates completed in the mid-1970s.
And there it sat for 40 years - a monument to government waste and a leader’s folly to some - until March 11th 2011 when a 9.0 earthquake struck off the coast of Japan. The tsunami killed 18,000 people, caused the Fukushima power plant disaster, and destroyed billions of dollars worth of homes and livelihoods in every single village along the coast.
That is to say - every single village except Fudai. The village was completely protected from the wave; only one resident died when against advice he went to check on his boat after the quake. Mayor Wamaru, after 40 years, was vindicated. He was a leader that understood the power of that Black Swan wave - the highly improbably, but highly impactful. He had first-hand seen the loss of life from a prior tsunami when he was a young boy, which left an indelible impression on him and a life-long goal to prevent that loss of life in the future. His seawall is no longer mocked, and while he did not live to see his effort bear fruit, residents of Fudai regularly visit his grave to pay respects to the black swan mayor who saved their town with his crazy plan from the 60s.
The key takeaway here is that it’s often the outliers that have the biggest social impact - which makes sense; we don’t plan to address the unexpected because by definition we do not expect it to happen so why would we prepare?. But, we don't need to prepare for a specific black swan event - an impossible task, truly - if we prepare for Black Swans being a reality, and lead accordingly. Our values-based leadership model is one of the ways to do that, and we believe leaders need this now more than ever.
Our species has been fairly resilient to Black Swans thus far, but that resilience was a result of our disconnection - 500 years ago, a tsunami in Japan would have almost no impact on Europe. 150 years ago, an earthquake in South America wouldn’t even make the news in North America unless it was especially significant. The 20th century has seen a significant and rapid shift towards interconnection, and the benefits have been impressive, but that interconnection means shared benefits result in shared tragedy; in modernity, when a ship crashes into the wall of the Suez Canal, it shuts down the global economy for days and weeks, some firms miss quarterly targets, and people get laid off. And remember - that incident happened in the context of other black swans flapping their wings at the same time - we had multiple global lockdowns, an election in the most powerful democracy on earth that was contested with violence, and the very early days of modifying gene expression in living creatures, the birth of artificial intelligence and the advent of quantum computing were all going on while the Evergiven was blocking traffic. That's our reality in 2024 - disruption is the norm, not the exception.
We’re not living in an era where we have to spot the single Black Swan and prepare. We’re living in an era where there’s a whole flock of swans flying around, some black some white and some grey - and we don’t really know which ones are going to land or what the impact will be when they do. Our research and analysis has given us a pretty good idea on what we think the big disruptors are going to be in the near term, but even if it's a totally unrelated disruption, the purpose of this series and our research is to prepare leaders to do the important work now so that as disruption increases and continues, leaders are able to lead through it effectively. Relying on clearly articulated, consistent values in our leadership is the key. When we lead consistently from values, we can create psychological safety for the people we lead. When we create psychological safety, we can thrive even in times of great disruption - and we're going to need leadership like that in the months and years ahead.
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