For my job, I work in a technical field with high-level people in medical research who make important decisions that impact many. Thus, though I am not a primary decision-maker, anything I can do to better understand their mindsets and the impact of their decisions benefits my organization and my career. It is with this perspective that I approach this book. In it, Taleb uses a rare philosophical approach to business by addressing how we think. Many high-impact events (like, say, 9/11), when forecasted, are immediately and instinctively dismissed as “highly improbable.” Yet they have the potential to shift the future dramatically, for better or for worse. These events, nicknamed “black swans,” receive the focus of this book.
This book’s central metaphor comes from an observation many in history made about swans. For a long time, Europeans observed that swans were always white and therefore never black. No one thought to do a conclusive study to prove or disprove the potentiality of black swans. They just made an immediate leap from observation to rule. And that leap was incorrect. Eventually, people saw black swans in Australia. Thus, a highly improbable event happened (fortunately without life-or-death impact).
Managing risk is a central theme in the modern world. Rare events often prove to be a crux of history. Most of the time, those events are originally dismissed because they do not meet the center of a bell curve. Nonetheless, because of their potential to have great impact, planning for these events should be attended to. Through philosophical discussion, Taleb seeks to change our thoughts to instead focus on these events as potentially impactful. He relies on research of the mathematician Benoît Mandelbrot (of fractal fame) to illustrate how seemingly unlikely random events occur when looked at prospectively.
Professionally, I spend a lot of time with data and value Gaussian bell curves immensely for biomedical applications. However, I also recognize their limitations – especially, that the data has to be shown to be “normal” to begin with in order for Gaussian analysis to be valid. Many behavioral and financial researchers skip this step of rigor in their statistical analysis. Taleb is writing for a business/finance market that can dismiss outcomes as improbable. The biomedical world, of course, has its own black swans in the form of adverse health events (like cancer), but the threat of litigation and cultural accountability often keep these events on the forefront of diagnostic minds. Nonetheless, it’s good practice to consider potential outcomes when considering risk, regardless of small probabilities. Taleb addresses this thought process directly in this book and seeks to help us all manage an uncertain world more wisely.
The Black Swan: The Impact of the Highly Improbable
By Nassim Ticholas Taleb
Copyright (c) 2007, 2010
Random House
ISBN13 97808122973815
Page Count: 444
Genre: Business/Economics, Philosophy
www.amazon.com