MAY 2016 / NO. 1
TAGS: CHANGES, MANAGERS, GREY SWANS, SAXO BANK
Most managers ignore small changes
“Small changes appear one-by-one. Most managers ignore them. Managers fail to believe they will affect them. At the end management is surprised because competitors outpaced them”
“Your challenge is to look for early signs of new customer habits (1), new production technologies (2), new lateral competition (3), new regulations (4) and new means of distribution (5)”
Do you recognize these statements? What can you do about them? Do you feel accountable? A key challenge is to improve your ability to recognize and respond to signals of incremental change.
Potential Grey Swans
In the previous Intelligence Briefing, we discussed “Key Predictive Indicators” explaining the upcoming slowdown of the Chinese economy that might shock Western economies in 2018-2020. Sometimes banks also try to do this.
Let’s take the example of Saxo Bank, which listed “Ten Outrageous Predictions for 2016”, which we could consider as potential Grey Swans.
However, they were wrong on most of their predictions.
- Euro-Dollar: weakening of the dollar
- Russian ruble: up 20% by the end of 2016
- Silicon Valley’s ‘unicorns’ will come back down to earth
- The Olympics will drive Brazil’s recovery
- The new US President will be a Democrat
- OPEC turmoil will lead to higher oil prices: $ 100/b oil
- The price of silver will increase by 30-40%
- El Nino will spark a surge in inflation because of droughts which negatively influence agricultural production
- Meltdown in global corporate bonds
- Increase in inequality in Europe: 25% of the population at risk of poverty and unemployment of over 10%
De-maturity has one thing in common: executives are surprised when it happens to their industry. Small changes appear one at the time. That is the reason why executives ignore them and why they fail to believe that the changes will affect them.
“The most important challenge for management is to improve its ability to recognize and respond to signals of incremental change before the competition does”