Tuesday, May 20, 2008

Black Swans in your life

Just had a "Black Swan" event in my job, which has a big impact on what I do.

What's a Black Swan? Let me explain..

Nassim Nicholas Taleb author of bestselling "Fooled by Randomness" writes on problems of luck, uncertainty, probability and knowledge. He also wrote on the phenomenon of "The Black Swan" which is a highly improbable event with three principal characteristics: its unpredictability, its massive impact and after the event has happened, our desire to make it appear less random and more predictable than it was. Taleb argues that a small number of Black Swans explain everything in our world and that their effect is ever increasing. While the effect of Black Swans is growing, the ones we try to predict have increasingly become inconsequential. Taleb concentrates on our blindness with respect to randomness, particularly the large deviations. As per him, a handful of cumulative shocks make our lives what they are. Still we concentrate on the minute and miss the large events.

As examples of the Black Swan phenomenon, Taleb refers to the astonishing success of Google and the tragic 9/11 event. We do not acknowledge the phenomenon of the Black Swan as we are unable to estimate risk. We take the shorter route to simplify, narrate and categorize events rather than opening ourselves to the 'impossible'.
Hence large events continue to surprise us and shape our world, like one has just done to mine.

1 comment:

వేంకట రమణా said...

You didn't mention the event and impact though, but thanks for explaining the "Black Swan". I think you might need to write a dictionary with example, instead of blog, :)