Tuesday, 28 April 2009

Black Swans in a post six sigma world?

Black Swan is the name of a book by Nassim Taleb. His life work on the topic of randomness raises good questions for us all in the current situation. Before Black Swans were discovered, accepted wisdom was that all Swans were white. It's a short hand metaphor for surprisingly likely, unusual, extra-ordinary events that can have enormous impacts, unpredictable in a six sigma, normal curve mindset.
Think of monitoring a production line using control charts, working on reducing variation, identifying special causes and then.... the Power supply line to the whole factory is cut by contractors (its happened to me, in my case it was a continuous steriliser in a food factory, and manual control of the steam became essential).
It's outside of your "system envelope", unpredictable, but with a massive impact.
Nassim Taleb shows us that we can't predict these black swans, but we can identify what types of endeavours are likely to suffer them, and hence we can prepare, and maybe react quickly.
On the other side of this are the unexpected, big win black swans. The sort of big impact, highly unexpected wins that are beloved of entrepreneurs. Again we can't predict them, but you have to be in the game to win them...working hard at getting lucky!
Post a Comment