# Predicting Black Swans – Part II

In the earlier post we dealt with the concept of predicting a ‘black swan‘.

In this post, I intend to explore the concept a bit more: what exactly we monitor to notice a ‘black swan’ in time?

In doing so we would be forced to consider the natural response of a system.

The starting point of our exploration would be to understand how any system, as a whole, whether natural or engineered, would disturbed by a ‘black swan’.  A system is disturbed in three possible ways, which are as follows:

a) A system loses energy till it reaches a tipping point

b) A system gains more and more energy till it crosses the point of system resilience

c) A part of a system emits more energy than it is normally supposed to, that is going beyond the linear response of the part.

So the natural way to watch a system to expect a ‘black swan’ in time, is to keep a tab on the ‘energy’ of a system in the following ways:

a) Monitor the entropy of a system. As a system functions the entropy of a system gradually rises till it hits a threshold limit indicating the appearance of a ‘black swan’ or an outlier.

b) Monitor the energy gain of a system till it crosses the ‘resilience’ point to give birth to a ‘black swan’, outlier or a ‘wicked problem’.

c) Monitor critical parts of a system for excess emission of energy till it goes beyond the linear response of a part.

It is useful to remember that energy is transferred in ‘quanta‘ or in packets of energy. Therefore, it is natural to expect jumps of energy levels as we record by capturing the different manifestation of energy levels on monitoring trend charts. So when a ‘jump’ is big enough to cross a threshold limit or resilience point or linear response level indicated by its presence outside the Gaussian distribution range  we can be quite sure that a ‘black swan’ or an outlier or a ‘wicked problem’ would soon arrive on the scene. We call such an indicator as a signal.

Therefore, the central idea is to capture such signals in time, just before a ‘black swan’ makes it way to appear on the scene to dominate and change the system.

However, the question is how early can we detect that signal to effectively deal with the inherent ‘black swan’ in a system, which is yet to appear on the scene?

That would be explored in the next post.

# Problems, Landscapes, Habits; Leadership in the 21st Century

Excerpts from forthcoming book ‘Dancing on Peaks; Resolving Wicked Problems – A Nemetical View of Life

……

Fortunately, not all problems that we face in life are wicked. For most of these, though relatively few, we can get over them with our effort and practice. And we can do that so well indeed that they don’t seem like a problem any more. Like for instance, my getting to my desk, booting up my laptop, connecting it to the net and then letting my fingers fly over the keyboard at great speed to write this book is a simple problem. Though years back it took me some time and effort to master the process today it is effortlessly simple and predictable. But I remember my first brush with the computer, which was over two decades back and those were tense moments. It took me hours and some training to figure out MS-DOS and hours of brutal typing practice with some coaching from a friend. Resolution of such problems doesn’t require much thought. These can be easily mastered through controlled and dedicated effort guided by mentors if possible. The solution to such problems are known and are easily available. These I call the “library type of problem”. The operating context is predictable. It is something similar to mastering maths. A teacher or mentor is available and the answers are at the back of the book. We can refer to such ‘library type problems’ as problems of ‘flat landscape‘ since it is akin to walking in the park. Such problems can be easily mastered through the ‘habit of memory’.

Then there are problems that are slightly different to ‘library’ problems. It might be something like this – how can I get from my house to my office (10 km) in the shortest possible time and expense without sacrificing comfort. Given the information, such type of problems are straightforward problems. The problem opens up choices and a fairly intelligent choice has to be made. However, the result is always not guaranteed. Sometimes things can go wrong and we can be thrown off our desired intention. Such straight problems are fairly easy to tackle. And with some experience these can be tackled quite well. Hence I call these ‘experience type of problems. Such problems can be framed like – how to climb Mount Everest safely. There is one particular objective to be achieved. Once that can be done the problem no longer exists. More the experience better are the choices we can make and better can be the associated planning. And with better choices, planning and action the targeted outcome is achieved easily. Adopting best practices in the field also helps a practitioner. Hence such ‘experience problems‘ are problems of ‘single peak landscape‘. Such problems can be mastered through the ‘habit of planning and making choices‘.

Then there is a third type of problem which is continuous in time. We achieve something and then prevailing situation demands that we achieve something more. It is like scaling a mountain range, like the Himalayan range, which is full of peaks. We climb one peak and then we try to climb the next peak and then figure out how to reach the next. Sometimes we can get from one peak to the other peak quite easily, if they are nearby with a reliable connection between them. At other times we might have to take a detour, climb down from a peak and then scale up another. In real life this might resemble improving productivity or opening up new markets in a closed economy. While the economic environment doesn’t change much we strive to become better and better from our existing position. These are not very easy problems to resolve. It is similar to a cricketer who excels playing at local level and then aspires to excel playing his game at regional level before trying to move up and play at the national level. This is where complex problems start to surface. It would need enhanced cognitive skills, a basic level of contextual intelligence, ability to learn from mistakes, strategizing, refining intentions, better decision-making skills, emotional balance and continuous moment to moment adaptation without losing a sense of direction over long periods of time. Such type of complex problems may be termed as problems of ‘Rugged Peaks landscape‘. Such type of problems can be mastered through the ‘habit of time and learning‘.

However there is a fourth type of problem that needs constant adaptation in a complex environment. Such systems are called Complex Adaptive Systems. And the problems in this category can be seen as ‘adaptive type of problem’. Continuing our analogy of the ‘rugged peak’ problems, let us imagine for a moment that the ground below us continuously dances and also gives away at time. So the peaks, which were rather stationary in the previous case now start having different heights at different points of time. The peak that appears small suddenly grows big and the bigger peak suddenly drawfs in relation to the peak we are presently on. Nothing remains constant in both Space and Time. These are real ‘wicked‘ problems. Everything is dynamic leaving us clueless about both position and the rate of change (velocity) at any given instant. It might be better to call them the problems of ‘Dancing Peak landscape’.

In this book we would focus specifically on such problems. Such problems need a high degree of contextual intelligence, where previous experience would hardly be of any use. Sharp cognitive skills would be needed that would call for taking various perspectives at different levels along with a high ability to reflect, ability for deep understanding, instant strategy, quick actions and strong adaptation skills. This type of problem can’t be easily tackled by the habits of ‘memory’, ‘planning’, ‘making choices’, or by habits of ‘time’ and ‘learning’. Taking on such types of problems would need the habit of ‘practice of preparedness, attention and serendipity’, that is the habit of a ‘prepared attentive mind’ moving from moment to moment in time. This in Nemetics we call as ‘attentive contextual intelligence’, which is a mix of collective intelligence, combined with feelings, intuition, rationale and intelligence of an individual.

Finding such problems is not difficult. Actually such problems occupy most of our lives; problems for which we don’t have the answers and can’t predict when such type of problems would surface. And they are dynamic in nature. Slight changes in global economy throw national economies out of gear. It affects business operations, which must quickly adapt in order to survive. Customers change. Markets go topsy-turvy. Profitability goes under tremendous squeeze and the notions and targets of productivity and performance change continuously. Job markets fluctuate. Nature of jobs are redefined. Personal lives get affected. Even Nature gets affected. Climate changes. Plants and animals get affected. It then appears that we are caught in a deep and frightening whirlpool.

Under such situations, there are no answers at the back of the book. There are hardly any choices to quickly select from. There is no question of optimization. Experience hardly helps. Dedicated hard work might prove useless. Agility and resilience might have no real meaning. There is only one answer but we are left clueless. There are no best practices to follow, no techniques to use, no process to adopt, no framework to guide our minds. We either get it or we don’t. If we get it wrong we are doomed to be sucked into the whirlpool even deeper till we suffocate to death. If we get it right we live to see another day and perhaps another new moon. However, the only wherewithal we might have to rely on is the quality of our feelings and thinking brought together through the habit of ‘practice and serendipity’ or simply having a ‘prepared attentive mind’ since the need is to adapt moment to moment. Or simply stated, our contextual intelligence can come to our rescue to maintain balance.

In order to develop and apply such contextual intelligence to wicked problems operating in a ‘dancing peak’ landscape, Nemetics is an option. Nemetics is a flexible thought model that allows us to synthesize mathematical thinking, subjective insights and feelings to re-design our lives for the better. The objective of the flexible thought model is to make sense of complex adaptive systems and to act upon them. It may be effectively applied to various fields like organizations, manufacturing systems, engineering, organizational sociology, economics, design, system design, system reliability and even to psychology and a host of others fields.

In short Nemetics can be best described as a study of origins of the various complex phenomena within which we exist. Or in other words it is the ontological inquiry in general that seeks the transcendental truths operating behind everyday phenomenon.

This practice of Nemetics stems from the fundamentals of complexity science as applied to complex adaptive systems and is based on the time-tested principles of Engineering, Chaos, Complexity Science and humanities like social and economic systems.

Since the aim of Nemetics is to gain direct knowledge of the transcendental the fundamental premise is praxis for the simple reason that the theory of such complex emergence (a term which we shall deal with later) simply might not exist. It has to be worked out. The idea is to move from practice to theory and then to practice again.

In other words we first explain the situation, then act upon it and then only predict the outcome as a way of reflecting on our thought process and our decisions. We do so through attentive reflection. It is a practice to train the eye and mind to be prepared and attentive to spot emergence, engage with its structure and behavior, mull about the drivers that drive complexity and then exchange that helps to adapt to complexity.

Life is then in perpetual beta – no hanging on to assumptions, beliefs and opinions. That points to adopting a stance of nuanced but effective adaptation based on ‘attentive contextual intelligence’. It is a tall order, which asks us to do what is needed to be done and then keep adapting and tweaking as time goes on and situations change.

That is what Leadership of the 21st Century would look like. Problem solving would grow lesser in importance. Problem solvers would be passe. Problem and paradox resolution would take prominence. And persons who can resolve complex problems and have the ability to predict in the short-term would be highly regarded and would be in high demand. That can only be done by people who can gain direct knowledge of transcendental truths through their highly developed contextual intelligence. They with their highly trained minds would be simply priceless!

Summary:

1. Types of Problems: Library problems, Experience Problems, Complex Problems, Complex Adaptive Problems.
2. Types of Landscapes: Flat, Single Peak, Rugged, Dancing Peaks
3. Habits: Time, Planning & Making Choices, Time & Learning, Attentive Contextual Intelligence
4. It is not unusual to find combinations of ‘Type of Problems’, Landscapes and Habits co-existing within the same situation.
5. Whole of life is nothing but a series of changes and issues waiting for resolution, facilitation, modification and nurturing to leverage us to new dimensions and states.
6. Leaders of the 21st century would posses an unusually high degree of ‘contextual intelligence’ to reach essence of complex situations in a wink and know how to deal with those.