Is business in its Black Swan era?

Today we’re facing a faltering economy, soaring living costs, rapid transformation via AI and unpredictable global geopolitics. 

Five years ago it was a health virus which reshaped the world of work as we know it. Before that, a global financial meltdown that threatened the very core of modern capitalism. Go back even further and you won’t find it hard to spot a series of seismic events which left a profound mark on the world. 

Yet the idea persists that we’re living in a period of unprecedented change. The incredible pace of AI and the speed at which we can access information certainly makes it look that way. Seen from a long-term perspective, however, what might feel like a one-off ‘Black Swan’ event could look more like a recurring pattern of change. We might argue that unprecedented change is now the ‘new normal’. 

If we can assume that change is certain, even if the exact circumstances of change are harder to predict, it gives us the opportunity to test, improve and build the resilience of our businesses. 

Boards should prioritise this in preparation for the next Black Swan that comes along, as it surely will. Therefore they should operate on the principle of when it happens rather than if it happens. By making it a standing item on every board meeting agenda it’s possible to take a long-term view on potential shocks, rather than having to respond to them as they happen. Identifying these big events allows you to play them out and test resilience, spot gaps in your response and augment your plans. It also means that longer-term thinking becomes embedded in the culture of the organisation and it becomes business as normal.  

Since globalisation, the impact of change has crossed countries and even continents. Multinational trade agreements, security structures like NATO and environmental agreements as laid out in the annual COP summits mean that what affects one country often affects many. 

And change, once in motion, can have an impact far beyond its initial effects. Unchecked climate change is likely to affect global population movements with all the associated knock-on effects that suggests. We’ve already seen pandemics change everything from technology to healthcare and international relations; and the shockwaves from the Ukraine-Russia war have been felt in much more prosaic ways like the cost of construction materials, soaring grain prices, and heightened cyber security issues.  

While our interconnected world creates enormous opportunities for people and businesses, the new advantages we create are usually accompanied by downside risks. That means an international outlook, with a future focus, is something boards cannot afford to leave for another day. 

The future is here already. The best boards make sure their companies can do more than simply survive the next crisis – instead they grow stronger from it. With the right planning and resilience, it’s possible to emerge from major challenges in the right shape to take advantage of whatever comes next.