Just finished the book: The Black Swan, by Nassim Taleb, and here’s what I learned. The book defines a black swan as the occurrence of a highly improbable event that has significant positive or negative impact, and has been rationalized with hindsight. The invention of the internet or jets flying into crowded buildings are examples of black swans. It’s these events that shape our society yet we are so bad at predicting them. After the fact people say they understand why they happened, but really don’t.
The big point that the author makes is that we humans have trouble understanding random events or the unknown. Since the future is all about the unknown and we have everyone from the guy in the barbershop to large organizations (corporations with five year plans, government agencies predicting future economic trends, etc) trying to predict the future, we got a problem. Taleb outlines a lot of factors that impact our ability to assess the unknown, for example, we tend to estimate too low or very high and we tend to way underestimate our margin of error by 300% or higher. We apply estimation and assessment techniques to the unknown that are only meant for environments where variations are no significant, such as the weight of people – we don’t get a person so heavy that it blows the sample sent, but Bill Gates salary can. We ignore the silent evidence – those books about those people that talk about how to make millions that say to be aggressive, break the rules, etc? How about all those books we don’t hear about or weren’t written by people that followed the same advice and lost millions?
There’s a great chapter on innovation and predicting innovation trends where he says to get exposed to lots of ideas and trials. Great innovation has almost always come from people cleaning up mold in a lab or finding bird poop in antenna. Trying to predict the unknown unknown doesn’t usually work.
It’s these factors that he outlines in this book that are incredibly valuable. The author does tend to rant about ‘those stupid people’, but I think he fails to see that it’s those people that took their ideas as far as they could, into areas where they didn’t belong, but it was through those efforts that that helped Taleb to know where not to go. I just let the ranting go.
The application in the area of internet trends is obvious – lot’s of people predicting, but most can’t – so be happy, they can’t do any better than you! Related to this is a strategy for finding the next great thing: don’t listen to people trying to predict the future – go start fiddling now! From an information systems deployment perspective, I find this material very relevant to the development of schedules – aren’t they predictions of the future?
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