Positive Black Swans

There are no black swans in the Northern Hemisphere, so whiteness was assumed to be an essential quality of swanness. When a Dutch explorer spotted a black one on an expedition to Australia in 1697, that concept had to be restated. It is a simple but useful analogy for how fragile a system of thought actually can be. Our assumptions, whether they result from reason, logic, falsifiability and/or evidence, can be undone in a moment.

As the second decade of the 21st century experiences continued natural and man-made disasters, the popularity of books like The Black Swan (by Nassim Nicholas Taleb) can be seen in a negative light. Added to the natural shocks is a string of unfortunate black swan (rare event) moments that have appeared successively in economics, the financial world infrastructure and politics. (See a brief description at the bottom of this post regarding Taleb’s use of the term “black swan.”) However, when enough people become dissatisfied with the business-as-usual approach, a world of increasing connectedness is also offering opportunities to create movements and infrastructure that can lead to the beneficial, good news black swans.

My take on the past year is that a lot of positive black swan road building is happening that is not visible to the business-as-usual crowd. As these new roads open up – and in many cases this is happening in the not so visible backwaters of the Global South – new innovations, commerce, solutions and jobs will continue to go unnoticed by the short-term profit maximizers.

Here are a few examples we encourage you to build into your thinking as you position your careers, companies and capacities to benefit from the unpredictable positives and mitigate risks of the unpredictable negatives:

Impact Investing While the numbers are still small – $25 billion by some estimates – the concept is big. Two decades ago Domini, Calvert and others began a crusade that resulted in $7 trillion dollars being placed in socially screened investments, i.e., companies that are actively demonstrating they are doing less harm. Now an intrepid group has set out to demonstrate your entire portfolio can be investments that are solving global and/or local challenges. These are organizations that produce significant social benefit as well as making a profit. Space does not permit a list of all the positive events, but the OPIC Impact Investing call is a $250 million bellwether. What if 10 percent of that $7 trillion moved to impact investments?

Innovation and Social Enterprise This first decade saw a lot of attention being paid to innovation. And there’s no question that global problems attract innovation leaders. Innovation conferences have begun to shift their focus to newer concepts like open innovation, crowd sourcing and challenge innovation. One of the largest innovation ecosystems centers on social enterprise and is led by organizations like Ashoka, The Skoll Foundation and a long list of others. If you do not recognize these names then it is time to do some open innovating of your own. The leading global corporate innovators (GE, P&G, Unilever) are definitely opening to the burgeoning sources of innovation represented by social enterprise.

Social Capital Formation I had the pleasure to hear Wayne Silby, founder of Calvert, speak to the Impact Investing conference hosted by Asad Mahmoud of Deutsche Bank last December in NYC. Besides Calvert’s leading role in social investing mentioned above, the Calvert Foundation is one of many leaders in the social bonds space. Calvert’s innovations have placed over $400 million from individuals into social enterprises that can access debt capital earlier than traditional entrepreneurs. Social impact bonds now promise to enable non-profits (and for-profits) to pay back the loans with results instead of assets.

Social Enterprise Scaling Infrastructure A broad range of efforts are coalescing here – Ashoka’s accelerator program, Santa Clara University’s Global Social Benefit Incubator, Poptech, New Profit and our own ReachScale outreach to find the corporate scaling partners for the most innovative SEs – and the trend is growing.

These ecosystems are increasing in richness and connections. They are beginning to demonstrate the “power of pull” (from the book of the same name by John Hagel III, John Seely Brown and Lang Davison) and the “powerlaw” lens (as referenced in Chris Anderson’s guest review of The Black Swan ) that Taleb talks about at length, and they will continue to attract resources and drive innovation. Putting yourself in the path of these positive trends is a good thing, for you and for your co-travelers.

Note: Taleb’s “Black Swan Events” theory is offered up to explain the following:

1) The disproportionate role of high-impact, hard to predict, and rare events that are beyond the realm of normal expectations.

2) The non-computability of the probability of the consequential rare events using scientific methods (owing to their very nature of small probabilities).

3) The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs.

A version of this post first appeared on CSRwire Talkback.

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