We have experienced several decades of enthusiastic globalization.
Confident in the power of economic logic, we have built global interdependencies, we have relocated to low-cost countries, our flows have become intertwined worldwide—supply chains have become complex multidimensional networks.
Black swans are proliferating
Popularized by statistician and philosopher Nassim Nicholas Taleb, a Black Swan is an unpredictable event with devastating consequences, which we try to explain after the fact to make it seem rational.
The three criteria of a Black Swan
- Unpredictability (Rarity): The event is an "aberration." Nothing in the past could have predicted with certainty that it would occur.
- Extreme impact: Unlike the small hazards of everyday life, its consequences radically change the course of history, the economy, or a life.
- Hindsight: Once the event has passed, the human mind forges explanations to give the impression that it was predictable. We say to ourselves, "But of course, it was obvious!"
Why this name?
For centuries, Europeans were convinced that all swans were white because they had never seen any others. This belief was based on repeated but incomplete observation. When they discovered the existence of black swans in Australia, their view of the world was turned upside down in an instant. The Black Swan theory teaches us that it is not what we know that is dangerous, but what we don't know.
Black swans and supply chains
Until recently, black swans with a global impact on supply chains could be counted on one hand. Fukushima, SRAS – remember those good old days?
When I started promoting demand-driven approaches in 2014, the companies I told about how the world was becoming increasingly VUCA*listened politely and went back to refining the accuracy of their forecasts. (*Volatile, Uncertain, Complex, Ambiguous)
Brexit, COVID-19, the war in Ukraine, customs tariffs, the Suez Canal, Iran, etc. – black swans are proliferating, and there are no signs that this will slow down.
This article, based on a survey by Allianz Research, indicates that more than half of those surveyed predict a paralysis of global supply chains that could impact their businesses. Geopolitical Conflict to Create Black Swan Scenarios for U.S. Supply Chains | Food Logistics
Here are five scenarios considered highly plausible.
1. Paralysis of global supply chains due to a geopolitical conflict involving several major economies, disrupting the flow of goods and raw materials.
2. Global internet outage caused by a major cyberattack or communications failure, disrupting digital operations and communications worldwide.
3. Sudden collapse of major financial institutions or sovereign debt crisis/fiscal instability at the government level, leading to a global liquidity crisis and high market volatility.
4. Massive social unrest and political instability, such as widespread protests, strikes, or populist movements disrupting governance and business continuity in multiple regions.
5. Climate disaster and simultaneous power grid failure, such as a heat wave triggering forest fires and widespread power outages in one or more regions.
Admit it, when you read this list, you thought to yourself, "Yes, unfortunately, that's entirely possible."
What can be done to combat these vulnerabilities?
Yesterday's planning and execution principles and tools, designed for a world of white doves, are clearly no longer adequate to provide the visibility and speed of decision-making required in this extremely unstable environment.
You need to think about risk, anti-fragility, visibility, and speed—you will inevitably be impacted by the next major crisis, but what's important is that you are better prepared than your competitors!
You know the story of the two hikers
Two friends are hiking in the middle of the forest when suddenly a huge grizzly bear jumps out of a bush and starts charging them.
Panicked, the first man stops dead in his tracks, opens his backpack, takes out his best running shoes, and frantically starts lacing them up, abandoning his heavy hiking boots.
The second man looks at him in amazement and exclaims:
"What are you doing? You're crazy! You'll never outrun a bear!"
The first man finishes tying his shoelaces, stands up, and calmly replies:
"I don't need to run faster than the bear. I just need to run faster than you."
Just do it!
We developed Intuiflow with this VUCA context in mind: how to protect flows, how to prepare plausible options, how to reduce risky interdependencies, how to speed up decision-making, how to make IT systems more secure - to provide you with running shoes and enable you to outperform other players in your market, stuck in their ERP and Excel maze, when you encounter the next black swan or grizzly bear!
