5 things you need to know about living in times of deep uncertainty

For a long time in developed nations, there was a veneer of stability that meant change was largely incremental, and to some extent predictable. Around the turn of the Century, that sentiment of incremental change started to erode as “black swans” multiplied (events considered highly unlikely events beforehand but with a big impact when they happened). Examples include: 9/11, The sub-prime financial crisis, Fukushima, Brexit, Trump elected, COVID, the Russian invasion of Ukraine, AI (not so much its development, more the speed at which it is improving), Trump re-elected, Trump dumping NATO….

As you can see, the number of black swans seems to increase over time. This has led some people to talk of a “polycrisis” – where we have not exited one crisis before the next one hits. And around the table, it was clear that there is a fear that we may end up with a chain reaction of events that could force a wildly different political and business environment in a very short period of time.

And change always causes anxiety in societies, which itself causes reactions such as voting for extremist parties. But having had the fortune to study such events over a number of years with the many very bright colleagues from the Global X-Network, there are a number of things to bear in mind that may help in the current situation:

1. Black swans are essential to life and growth. It sounds harsh to say this, as President Trump seems prepared to sacrifice NATO and Ukraine on the altar of America First, but black swans – precisely because they have a hefty impact – are what we need to jolt our systems out of the sub-optimising equilibria they get locked into over years of stagnation. The status quo will always be defended by vested interests, and those powerful forces usually seek to maximise their own short term good, not the long term common good. Only a big external shock can generate the level of force needed to burn away the deadwood of processes, institutions and habits which are no longer relevant, but which are too difficult to abolish otherwise. And yes, this means that black swans are an opportunity, and even a President Trump is a chance that we must seize to bring about desirable change. For instance, Europeans should stop depending on the US for their security, and start taking things into their own hands again – but learning from the past, this should be collectively!
2. Do not waste time trying to guess what the next black swan will be. Black swans are merely the trigger. They open the door to substantial change. But the key determinant of how much change will happen, is usually not the strength of the black swan itself. To understand why this is so, imagine a ball perched on the peak of a mountain, versus a ball at the bottom of a deep circular pit. In the former, if the ball is even slightly blown, it is may roll for miles – and in any direction! In the second case, almost any amount of force will not shift it. So, when looking to the future, do not focus on what the surprise will be. Focus on the social mood around you: how fragile are the structures surrounding and within your organisation? How likely is a big shift? And right now, we seem to be on the top of a mountain, rather than in a pit. Hence, rather than talking about “keeping a place warm for the US in NATO when it returns under a (friendlier) administration”, start thinking now about the alternative and better set up we need.
3. Black swans, are often white swans that we spray paint black afterwards. We Like to think that e.g. the re-election of President Trump was a black swan. After all, who would vote for a man who tried to hang on to power using a group of thugs who ransacked Congress? But that is only one side of the story. This line blindsided many to the deep-felt sense of most Americans that something is fundamentally wrong with the way the political system was working, and only somebody who is nearly criminal in their intent will be able to break the stranglehold of the ”deep state”. We will often find that on retrospect there were plenty of warning signs, and the very unlikely events (as a black swan is supposed to be) were not at all unlikely. And there are many other similar events that could still strike us in the future which fall into the same category. For instance, another Carrington event could fry our electricity transformers. Thanks to the data we have gathered, we know that that such events have happened about every 200 years – and that we are getting ever closer to he 200^th anniversary of the last global Carrington event. It is only a question of when, not if. Hence we disregard black swans, as “unlikely”, not because they are truly unlikely but as they have not happened in our living memory/in an area that is geographically relevant/to our industry (delete as appropriate!), or as we simply do not want to believe they could be true.
4. Resilience is a paradigm shift, antithetical to our focus on efficiency. Our societies, and especially our corporations, aim to maximise short term profit, and to be as efficient and lean in their use of resources as possible. On the one hand, this is tremendous: imagine the ecological damage if we were less efficient! On the other hand, it means we are vulnerable: floods in Thailand stop car factories in Germany, export bans suddenly leave us short of Personal Protective Equipment… But resilience is not just about shortening supply chains. It is about changing the incentive systems to reward those who invest in flexibility, and long-term returns, rather than in short term bean-counting. Resilience is the ability to bounce forward after an extreme event, and to do so with a continued sense of identity (i.e. it is not a totally different organisation that bounces forward).
5. Resilience requires agility: this means Aikido, not boxing. The role-model is not a boxer, who picks him (or her)-self up, again and again after a pummelling. Tough objects may be robust – they withstand a battering for a long time – but they are finally brittle – when they break, it is a catastrophic breakage. So robust is not resilient. The role-model is an Aikidoka: when the hit comes, the Aikidoka is no longer there to take it. She uses the energy of the incoming blow to cause the opponent to fall… That requires agility, which in turn requires a depth of space to move in – and super rapid decision making (which requires decentralised empowerment and a common sense of what we are trying to achieve together when talking about an organisation rather than an individual person). It also requires a lot of practice, and for that role playing through alternative futures, and pre-identifying different strategic options are a super way to develop this organisational agility.