Is your business prepared for a Black Swan?
Professor of Risk Engineering Nassim Nicholas Taleb introduced the idea of the Black Swan in 2001, and it stuck in the popular imagination.
According to Taleb, a Black Swan is an event that fits three criteria:
- It’s a surprise to observers.
- It has a major effect.
- It is rationalized as explainable in hindsight.
Though it was originally conceived as a finance principle, Taleb and others have determined that the Black Swan definition applies more broadly. Black Swans are fundamental moments that shape history — and it’s only with the benefit of hindsight we realize how.
Smart investors prepare for Black Swans, and the principles they use don’t just apply to investing. You can apply Black Swan “investment thinking” to improve your content marketing results even in the throes of a crisis.
Preparing for Black Swans
To withstand a Black Swan, you have to be prepared for the unknown. Investors do this by diversifying into a variety of investment vehicles and channels. That’s exactly how smart marketers should prepare too.
Don’t Rely On Business As Usual
When a Black Swan like the COVID-19 pandemic shows up, business norms fall apart.
There have been 200,000 extra business closures so far in the United States since the COVID crisis hit in March 2020. Some are still just hanging on by a thread. Businesses that require in-person service like hospitality and personal care have been hammered the hardest.
I was talking to someone in the rare coin industry a few weeks ago and they mentioned how hard COVID had hit their sector. I hadn’t even though about it, but coin shops that relied on foot traffic no longer had it. Coin shows, the main source of new inventory, shut down. It turned the whole field upside down, and the ones who fared the best were the ones who already had a digital presence. Dealers who had barely touched the Internet suddenly realized they might not survive without technology and they had to begin putting their inventories online.
Brick and mortar just isn’t enough any more. Click and mortar is the new normal.
COVID-19 taught all business owners that they must be visible online, from search engines and map sites to industry directories, social media and their own websites. Every business needs to be prepared for change. Every business needs to solicit and take charge of their digital presence, manage customer conversations, engage and participate in their brand’s social media conversation. Greater reach and more channels provides diversity and more resilience in the case of a Black Swan event.
Don’t Be Afraid of New Opportunities
“The Chinese use two brush strokes to write the word ‘crisis,’” said John F. Kennedy. “One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger — but recognize the opportunity.”
Black Swans change norms and create new avenues for your business, if you have the foresight to jump on them.
Remember Blockbuster?
Did you realize it could have bought Netflix — if it had the foresight?
As the dot-com bubble tore itself apart, cash-strapped Netflix went cap-in-hand to its gargantuan competitor in September of 2000 and asked for a buyout. Netflix asked for a valuation of $50 million. Blockbuster CEO John Antioco reportedly almost laughed.
Today Netflix is worth $239 billion and Blockbuster is a memory.
“The dot-com hysteria is completely overblown,” said Antioco.
He was wrong.
Netflix’s model was new and unproven, and the markets were still reeling from the dot-com bust. Blockbuster didn’t want to try something new and its digital forays came too little, too late.
As a digital marketer, you’re part of an industry that thrives on change. New platforms are born every year; old platforms die. Opportunity is everywhere — and with it comes risk. Investors, from angels to venture capitalists, are constantly scouting for opportunities to get in ahead of the crowd. Not all investments pan out and investors lose money. But without setting aside something for experimentation, investors might miss the market and the astonishing returns it generates. The same applies to digital marketing.
You need to be willing to experiment with new platforms and new techniques. Look at Gary Vaynerchuk — he’s constantly trying new things, and it’s worked out well for him. Imagine what would happen if you invested everything in Vine in 2014 and never bothered to build a YouTube audience.
Great marketers try new things. Be curious and open to new ideas, or you run the risk of becoming Blockbuster. Think like an investor. Today’s Netflix is already out there. Will it be creator coins, NFTs or the Metaverse?
Tame the Black Swan
Black Swan events change the fate of whole industries — and they’re unpredictable. You can’t predict exactly what the next Black Swan will be. But you can take lessons from the world of investment.
Embrace digital. Experiment with new ideas. Apply these principles and you’ll get through the next Black Swan — you may even find opportunity. And, if you need a hand adjusting your digital marketing in this new climate, feel free to reach out. We’re here to help.
Best Regards,
Ed Bardwell
President
Rainmaker Digital Services