David Lawson, Ph.D.

Mar 19, 2020

3 min read

Black Swans: The Ultimate Disruption

Black swans are the events on a national, international or global scale that has a devastating effect on your business. Many things can have an effect on your business such as hurricanes, earthquakes and other natural disasters. Couple this with political unrest, embargos, or in the worse case, armed conflicts. All these can have a dramatic effect on business but are these true black swans. No, more of a dark gray swan would be a better description as these events can be worked around.

The current coronavirus or COVID 19, a global pandemic, is a true black swan event. The virus has caused major disruptions in global trade, business and personal travel, and scores of other business functions. It has caused businesses to allow employees to telecommute (remote work) that has turned out to be a major disruption for many firms as they have not had plans in place. Many states have closed in-house dining for all restaurants, closed drinking establishments, college and professional sports have come to a standstill, and large gatherings have been canceled. This is not to mention the fear that many people are feeling and are avoiding going to a public place such as grocery stores. This is a true black swan event that will be felt for months or maybe years as people will evaluate their daily routines and eliminate all unnecessary parts of their daily lives.

When one looks at a black swan event from an XY axis view, it becomes easy to grasp the impact of a true black swan event. Placing your business at the axis, looking forward or upstream to the firms you sell your product if you do not have the input goods to make the product you can not sell. Looking backward down the axis if your supplier can not deliver the input goods, you can not produce. The horizontal axis is the employee level that reaches outward to the local or regional firms such as restaurants, shopping, and other daily events. Sadly, this could mean restaurants or stores shuttering permanently. On the other end of the horizontal axis is the tax revenue felt by the local communities, state or federal levels. The reduced earning means less tax revenue, that could result in reduced service. This is what a true black swan event looks like.

To some, it spells recession, or worse, depression, which is heard on the news daily. There are still people alive who lived through the depression and the rationing era of World War II and it rekindles the fears they once lived.

But don’t lose heart or let fear overcome you. With every bad turn, there is always an upside with great opportunity. President Roosevelt said famously, “The only thing we have to fear is fear itself.” That statement rings true today. Common sense is the key to pushing through the situation. F irms will have the chance to make improvements to their structure allowing for improving services and manufacturing. The firms’ corporate citizens will find ways to work smarter and improve efficiency and effectiveness. Firms will become better, the economic situation both locally and globally, will improve and become more stable. There is a bright future ahead for all.

Dr. Lawson is an executive coach and a Professor of Economics and Strategy. He writes on business issues, education, and developing today’s modern executives. He can be found on Twitter @dplwsn and #TMIBS.

© Dr. David Lawson 1997–2020

Originally published at http://lwson.wordpress.com on March 19, 2020.