What is a black swan?

Until black swans were discovered in Australia in the 18^th Century, Europeans were convinced that all swans were white. Author Nassim Taleb has taken the term black swan to describe an event which is rare, unpredictable, and high impact. The terrorist attacks on the 11^th September 2001, the rise of the internet and the 2008/9 meltdown of the financial system are all black swans.

Black swans can change the way you make plans and think about the future

In his Black Swan book, Taleb goes on to make three further points:

It's extremely hard to predict most things in business – most economists get it wrong when forecasting the economy and most business plans are never fulfilled.
Even thought we know that human beings are bad a predicting the future, we somehow won't admit this to ourselves – we go on living our lives as if the future is, more or less, predictable.
The events which make a real difference to our lives, both personally and in business, are black swans – events which just seem to come out of the blue, but which have major consequences.

So if Taleb is right – and you only have to think about your own experience for a few moments to know that he is – what can you do about it?

Stop relying on detailed plans, because they're not a reliable guide to the future

But don't stop thinking about the future. In fact, think about possible futures more than you do now: this will help you top be better prepared to deal with the consequences of negative black swans and exploit the positive ones.

When Pfizer was working on a new treatment for hypertension and angina called Sildenafil, the clinical trials showed that the drug wasn't really having the effects that the Pfizer boffins had planned. It was turning out to have only minimal effects on the heart problems it was designed to treat. But Sildenafil was producing some interesting side effects, side effects that the patients in the clinical trials were often a little embarrassed to talk about. Had Pfizer ignored these side effects, the world would never have heard of Viagra, as the drug is more generally known. (And your junk mail folder would be a little emptier). Viagra was a black swan – rare, unpredictable, but with high impact. Responding to it flexibly has helped to make Pfizer is now the biggest pharmaceutical company (by sales) in the world.

What are the black swans that have affected your life, both personally and professionally? What can you do to prepare yourself to deal with the next black swan that will come along? You certainly can't predict it.

The Black Swan, by Nassim Nicholas Taleb, is published by Penguin.