I have just finished re-reading (I think for the 3rd time now) ‘The Black Swan: The Impact of the Highly Improbable’ by Nassim Taleb. It’s a dense read, but if you need to make decisions in unpredictable arenas, then it’s well worth picking up. Oh, wait… Making decisions in unpredictable arenas? That’s all of you. It’s called life.
A Black Swan is a completely unpredictable event that has outsized consequences. Human history is made up of these big unpredictable events that nobody saw coming. Things like the 2008 financial crisis, 9/11, along with many other events throughout history. It can even be something you predict but under-or overestimate the impact. You launch a startup expecting 1,000 users, and you go viral and get a 1,000,000.
If you are working in a domain that is unpredictable, and where the outcome has big consequences. You have to be aware of the Black Swans. Part of the problem is that we humans aren’t great at being ready for them. We love stories. We look back at an event, assign a narrative, and use that to rationalize why something happened. This gets dangerous when we use that to project forward. We think we are “learning” from history. But if you are dealing with something complex, there is no guarantee the future will be anything like the past. In fact, it’s probably the opposite.
What does this mean for you? First off, beware the expert. If somebody calls themselves an “expert” in a domain that is based on prediction, is complex with variability, then believe nothing they say. You can see that in real time with AI. It seems everyone has become an “expert” in AI and knows what the future is going to be. In reality, nobody knows anything. Without real, hard, empirical facts, all you have is speculation. If the “expert” omits the potential variability in their prediction, trust them even less.
An important aside, you should definitely trust the experts in domains that are more static. Doctors, surgeons, etc… If the domain isn’t unpredictable, trust them. Human brains are pretty static.
Once you become skeptical of experts, you can make more pragmatic decisions about your day-to-day life. You can take the views of ‘experts’, look at the variability in outcomes and use that variability to decide your approach. Look at the positive and negative potential outcomes, and ensure you are prepared both. The Stoic idea of premeditatio malorum feeds into this. What’s the worst thing that could happen, prepare for it.
You might not change, you might even carry on as if the positive outcome is going to happen. Being prepared for the worst makes it less of a shock if it does happen, though.
Expect much more from The Black Swan over the coming weeks.
James