Black Swans Can Inspire A New Era of Innovation

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the widespread insistence they were obvious in hindsight

Back in November I was listening to a talk from Melissa Sterry, the Design Scientist and Systems Theorist. She was challenging the conventional wisdom that a child born today would live until they were 100. “How can we say this?” she said. She went on to explain the complex system disruption caused by events like climate change and proposed that there was no guarantees about anything – as new diseases would emerge with strains capable of igniting pandemics. 

The nature of our connected world provides the ideal base for new entrants to spread and scale  – as facts, predictions, opinions and lies intermingle across all forms of media, creating viral opportunities to spread fear—and overrun the science that should guide communication as well as action.

My original post on risk probability admittedly downplayed the seriousness of COVID-19, and in the intervening weeks our entire lives have been turned upside down. Arguably we are living through a black swan event that will change the course of our lives.

Black Swan theory was popularized in a 2007 book by author and former options trader Nassim Nicholas Taleb. The book – written a year before the financial crash – focuses on the extreme impact of rare and unpredictable outlier events — and the human tendency to find simplistic explanations for these events, retrospectively.

Why a black swan? Well , for centuries people agreed that swans were – of course – white. That was until black swans were discovered off the coast of Western Australia in 1697 by Dutch explorers. The only reason people were convinced swans were white was because they’d never seen a black one.

Never confuse the absence of evidence with evidence of absence.

Pandemics have been at the top of national risk registers for decades and our culture is full of apocalyptic visions of the future , with zombies rather than viral infections admittedly . Some have argued that the correct metaphor for the crisis is a “gray rhino,” which refers to highly probable but neglected threats that have an enormous impact. It was coined by Michele Wucker,  who recently said “Given what we know about pandemics and their increasing likelihood, outbreaks are highly probable and high impact. I coined the term “gray rhino” for exactly such events: obvious, visible, coming right at you, with large potential impact and highly probable consequences.”

In terms of attempting to predict future disruptions on your business it’s useful to make this distinction:

  • High Impact, Highly Improbable Crises
  • High Impact, Highly Probable Crises. Coming right at you. 

And yet – out of this darkness can come a period of opportunity.

Wars and other crisis events can have beneficial effects on innovation and technological development. For example, wars tend to accelerate technological development to adapt tools for the purpose of solving specific military needs. And later, these military tools may evolve into non-military devices, such as radar or even the internet itself.

Additionally , the fact that we are now living in ways that are highly irregular to us , puts us in a far less passive and more creative state. We are experiencing a mass perspective shift that could lead to new thinking and new opportunities.

In this short video clip David Snowdon talks about the troubled Apollo 13 mission. Snowdon explains that for innovation to happen three conditions need to be in place: starvation, pressure, and perspective shift.  In terms of the current situation, we are being starved of our usual way of working and living, we have a pressure to maintain the services we provide and our perspectives have shifted towards self-isolation, limited social contact and the stark realities of covid-19.

As Simon Penny writes “perhaps during this time of isolation and slow living, we might gain a fresh perspective on what’s really important, and paradoxically our social distancing might actually bring us all closer together”.

In the past week I’ve spoken – actually spoken rather than text – to family and friends more than I have in the preceding year. I’ve spoken to neighbours who I’m ashamed to say I didn’t even know the names of.

When life returns to ‘normal’, we may never go back to living and working in exactly the same ways we did before. In fact it would be a collective failure if we were to do so. 

Whatever happens during the Coronavirus post-mortem we have to accept a couple of things:

  • We must getting better at preparing for high frequency, high impact events
  • We have to get better at understanding and reacting to exponential growth across complex systems.
  • We must understand that we’re all connected. In a globalised , perma-connected world we are all linked by increasingly close chains of acquaintance.

In the midst of a pandemic it’s sobering to be reminded that we can look after each other best by just thinking globally and acting locally.


 

Image by Alina Kuptsova from Pixabay 

What Coronavirus Tells Us About Risk

As I sit down to write this post I’ve just received an email from a weekly design blog I subscribe to.

This edition is titled , alarmingly, ‘Pandemic Prep’.

It begins “We are interrupting our regularly scheduled newsletter format and rhythm to advise our clients and subscribers to prepare for the possible impacts of the coronavirus”.

Now I don’t know about you, but when seeking advice about pandemics I might look to the NHS or the World Health Organisation but I’m not sure service designers, innovation labs or bloggers would be my go-to source.

At the time of writing COVID-19 has led to approximately 3,000 deaths reported worldwide.

Deaths from regular flu on the other hand are somewhere between 291,000 to 646,000 deaths – every year.

Coronavirus is extremely serious and could yet reach pandemic levels –  but it is also a  good illustration of how we can overestimate personal risk. UPDATE 4/3/20: The virus has killed about 3.4% of confirmed cases globally. The seasonal flu’s fatality rate is below 1%

That said , why are people worrying about receiving post from asian countries , or whether you can catch the virus from beer, or even choosing not to order food from chinese takeaways?

According to Dr Ann Bostrom,  the mind has its own – entirely non-evidenced – ways of measuring danger. And the coronavirus hits nearly every cognitive trigger we have.

Paul Slovic, a University of Oregon psychologist who helped pioneer modern risk psychology, speaking to The New York Times, helps explain what is going on in our minds here.

When we encounter a potential risk, our brains do a quick search for past experiences with it. If it can easily pull up multiple alarming memories, then our brain concludes the danger is high. However it often fails to assess whether those memories are truly representative.

“A classic example is airplane crashes. If two happen in quick succession, flying suddenly feels scarier — even if your conscious mind knows that those crashes are a statistical aberration with little bearing on the safety of your next flight. But if you then take a few flights and nothing goes wrong, your brain will most likely start telling you again that flying is safe.”

When it comes to the coronavirus, Dr. Slovic says, it’s as if people are experiencing one report after another of planes crashing.

This week we’ve launched the new Bromford Lab Podcast and in the first edition we interview Vicky Holloway and Mitch Harrington exploring the relationship between risk management and innovation – and our propensity to sometimes see risk in the wrong places.

Many of our organisations, we know, are risk averse and constrain innovation. The culture is superbly designed to repel anything new or mysterious.

There are two main reasons for why we over emphasise risk:

We are scared of making mistakes

Failure is rarely promoted or even talked about in organisations. This can breed a culture where there is a fear of failure.

Existing in a culture like this will promote risk aversion as once colleagues are fearful about something they will tend to overestimate the likelihood of things going wrong. Research show that fearful individuals overestimate the danger associated with their feared objects or situations.

In the same way as my fear of spiders leads me to overestimate the ability for a spider to harm me, an organisation whose biggest fear is negative media attention will tend to overestimate the reputational damage of trying out a new service or project.

Successful innovation however requires us to fail more often, and to get better at how we fail.

Arguably it’s not fear of failure we need to tackle but fear itself. How does fear manifest itself where you work? What are you frightened of and what is it preventing you from doing?

No-one ever gets fired for exaggerating

The second reason organisations can overestimate risk is there are few negative consequences for estimating risk too highly.

Underestimating the risk of something bad happening has seen organisations go under and many people lose their jobs, but no-one has ever been sacked for over-estimation.

In 2002 , the Guardian predicted that the world would face famine in just 10 years , and a few years later the UK Prime Minister went a step further and said we had only 50 days to save the planet.

Arguably these are just well meaning attempts at highlighting a serious problem that also illustrates how hopeless we are at predicting the future. However a climate of fear is never a good climate for clear eyed problem definition.

This is why fear of failure should not go unchallenged, as it ultimately becomes debilitating and either stops you innovating or leads you to make bad choices.

As Vicky says in our podcastwe are all risk managers and generally we do it very well. We manage risk everyday in our personal lives and we largely make the right choices.

We need to look for risk in the right places and make intelligent assumptions, constantly challenging ourselves to seek out new experiences and solve problems.

The future requires us to be cautious , yes, but also to be a lot less fearful.


 

Labcast , the new podcast from Bromford Lab , will feature special guests discussing the innovation and design challenges of our day, the big ideas and the bad ideas. 

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It’s available now. 

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Featured Photo by Hello I’m Nik 🍌 on Unsplash