Monday, August 27, 2012

Errors, Misjudgments and Dishonesty- "We are all prisoners of our own experiences"

There is one more kind of error and misjudgment I want to cover before closing out this extended discussion of an important topic.  This last topic is what I'll refer to as "the Black Swan".  I take this type of misjudgment from Nassim Nicholas Taleb.  In his books "Fooled By Randomness" and "The Black Swan" Taleb deals with our overestimation of causality in general and specifically in our tendency to ignore the possibility of events for which there is no data to support that possibility.

In Taleb's words

 "What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

The metaphor is simple.  Up until the late 1600's all swans in the Western world were known to be white.  For hundreds of years, observations of generation after generation revealed no evidence of anything but white swans.  the conclusion then was that all swans are white and there can be no such thing as a black swan..  Then in 1697 Dutch explorer Willem de Vlamingh discovered Black Swans in Western Australia.

Another example comes from the book Isaac's Storm.  In this book author Eric Larson tells the story of the 1900 Galveston hurricane from the point of view of the National Weather Service forecaster Isaac Cline who was based in Galveston.(as an aside I find it highly ironic that the hurricane currently threatening the US Gulf coast is named "Isaac").  An important contributing factor to the lack of preparation for the 1900 storm was a belief among US weather forecasters that hurricanes could not enter the Gulf of Mexico.  Why did they believe this?  Because no hurricanes in the 19th century had entered the gulf; as they approached Florida they inevitably turned north up the US East Coast.  Although they didn't know exactly why this was so, all their available data suggested no hurricane could cross Florida or Cuba and enter the gulf .  The Cubans knew otherwise based on their own long history and tried to warn US authorities of the path of this storm.  A combination of arrogance and racism caused the US authorities to ignore their warnings.  Somewhere between 6,000 and 12,000 people(most likely 8,000) died as a result.

So what's a leader to do?  The top 10 leader behaviors I listed in the 27 July blog still hold.  To those ten I would add be especially cautious when you are most certain....slow down.  Challenge your own assumptions.  Ask the question, "What if we're wrong...then what?"

Last, recognize randomness rules our lives and we are often not in as much control as we think we are.  How you react to those unexpected events will often be the final measure of success.


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