Managing Leadership^®

A principle purpose of Nassim Taleb’s in writing this brilliant book is to demonstrate two sides of the same coin: we are most convinced of our grasp of what we actually know the least about, and we are almost completely ignorant of the scope and meaning of what we do know. This coin flips mysteriously in the background of our lives, coming up heads or tails, generating this or that baffling event, and setting us scrambling to try to understand.

Taleb’s concern is that in our desperate efforts to protect ourselves from the future by trying to predict it, we are actually blinding ourselves to those baffling mega-events, the black swans. These are the comets that strike us from beyond our comprehension, changing the very landscape.

Taleb argues that in our effort to develop the predictive capability, we dismiss random events which disturb the models we create. We believe we can do so because these events are so rare and, well, unpredictable. But they are the very events we need to be alert for. All of our meticulous bean-counting, trend analysing models are undone by these momentous occurrences. As Peter Drucker said, it is not the trends you want to identify, but the changes in the trends. Taleb explains why we fail to do that.

And in so doing, he offers a hugely entertaining and energetic dialogue. He romps through a wide range of academic disciplines, tossing hand grenades - with apparent abandon and delight, but actually with carefully thought out discipline - in seemingly every direction. The result is a highly readable, and quotable, essay on a subject of absolutely central importance to every manager working today. Consider this:

The appearance of busyness reinforces the perception of causality, of the link between results and one’s role in them. This of course applies even more to the CEOs of large companies who need to trumpet a link between their “presence” and “leadership” and the results of the company. I am not aware of any studies that probe the usefulness of their time being invested in conversations and the absorption of small-time information - nor have too many writers had the guts to question how large the CEO’s role is in a corporation’s success.”

And,

Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.”

But Taleb’s purpose isn’t merely to confront hubris, or even individual initiative and contribution; he merely wants to show us that the best way to protect ourselves from disaster, or to position ourselves to benefit from sudden opportunity, is to be, as he puts it, not a hedgehog, but “a fox with an open mind.” He finds support in another thinker who we have reviewed on these pages (here and here), F.A. Hayek:

For Hayek, a true forecast is done organically by a system, not by fiat. One single institution, say, the central planner, cannot aggregate knowledge; many important pieces of information will be missing. But society as a whole will be able to integrate into its functioning these multiple pieces of information. Society as a whole thinks outside the box.”

Along these lines, Taleb describes how diversity benefits societies that allow it to play out, to the extent that they do so:

America’s specialty is to take these small risks for the rest of the world, which explains this country’s disproportionate share in innovations.”

And,

Capitalism is, among other things, the revitalization of the world thanks to the opportunity to be lucky. Luck is the grand equalizer, because almost everyone can benefit from it. The socialist governments protected their monsters and, by doing so, killed potential newcomers in the womb.”

Finally:

This same point can be generalized to life: maximize the serendipity around you.”

Indeed. To do precisely this is increasingly the role of the manager in the new organizational age.

Buy this book.

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Technorati Tags: Nassim Taleb, black swans, CEOs, leadership, Hayek, America, innovation, Capitalism, Peter Drucker