In business, a black swan is an unforeseen and unexpected event. They are something of an outlier in statistical terms, a high variance or even random deviation.
The term is around 2,000 years old, based on an ancient Latin saying when it was presumed that black swans did not exist. Later they were discovered in the wild (by the Dutch in Western Australia around 1697), and the meaning gradually changed to denote our current definition.
There have been lots of black swans in the market over the last year. In politics, much has been made of Brexit in Europe and the election of Donald Trump in the United States. In business forecasts for 2017, energy and commodity markets could react to unpredictable geopolitical events as outlined here by analysts at Barclays. In the computer industry, black swans often take shape as supply chain issues, public relations incidents, or other variable events.
These events are by definition difficult and hard to predict. But I do believe there is a way to overcome them – or at least to lessen their impact.
Here are three key ways to address unpredictable changes in the market:
I don’t mean to imply that leaders should be excessively or needlessly fearful – but it’s a very good idea to retain some healthy or “positive paranoia” about the status quo.
Challenge yourself and your teams to consider and plan for a number of “what if” scenarios. For example, we used to have a more limited product portfolio which could leave us exposed if certain countries underperformed in our main category. Now, we have a much more balanced portfolio which shields us when certain product sales go through cyclical downturns in certain geographies.
Get help from data
Using your data effectively is another way to increase agility and react faster to market changes.
For example, when we sell new products and immediately access the activation data sent to us , we get a better insight into our customers. This is real time information, not simply historical big data. And its real time nature is what allows us to produce a swift response to certain market conditions, as we need to.
Timely availability of this new data is the key, but you must also think about how you design your organisation and your people to capitalise on this information. Data availability itself is not the challenge – the real task is in how you design your processes to act quickly enough. At Lenovo, we have worked hard at getting this right.
Work with people who can react in a fast-paced environment
In a market that changes quickly, one of our challenges is to attract the right kind of people who thrive in this environment. Certainly, we are conscious of attracting a younger workforce to our company (a task that is a distinct challenge, but it’s more about being in sync with our values which is a concept not restricted to age groups). Why is this important? We need to capture new opportunities in a market that’s full of surprises and risks. This is very much a cultural consideration: we’re still a young company so we can afford to be bold and courageous. We must show preparedness to take a measured risk – based on solid data and an analytical eye on market activities.
It is far better to look upon black swans as a naturally occurring set of events – connected or not – rather than calamitous occasions to be feared.
In business, risk is an element that will always be present to some extent. Furthermore, Asia can be described in certain respects as a “catch-up” setting – so you cannot afford simply to follow. Instead, you must find different ways to get ahead in the market.
Black swans, counter-intuitively, can provide opportunities for organisations, as long as your business fundamentals are in good shape. These events and risks are never really going away, so to manage them, we find a way to learn from them and turn them to our advantage.