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The Grey Swan Effect
The Covid-19 year of 2020 will be considered a rich year by historians and economists. Economists may argue over whether the pandemic was a Black Swan event, a Grey Swan event, or even a White Swan event, but whatever it was, it was a change-maker.
And change is a catalyst for growth (with our positive entrepreneurial hat on). Companies that can identify the ‘new normal’, validate whether it really is the new normal and most importantly, understand quickly what it means for their customers, could be well placed to prosper relative to their competitors. These new normals could be part of what we are attributing to the Grey Swan Effect
Grey Swans and Rhinos
In 2007, the economist Nassim Nicholas Taleb popularized the term, ‘Black Swan Event’. This is a highly improbable event leading to dramatic, unpredictable consequences and often considered inevitable with the benefit of hindsight. World Wars and nuclear reactor meltdowns fall into black swan territory.
Experts then introduced more swans. A ‘White Swan’ event is certain to happen, and its impact is predictable. Indeed, while many refer to the current pandemic as a black swan event, it may be more accurate to say it was entirely predictable and society should have taken more steps to mitigate against the risk.
But the world does not operate in black and white – enter the grey swan.
The Chinese call Grey Swan events ‘Grey Rhinos’. They are predictable and possible events with significant cascading consequences that could - and should - be planned for. There may also be visible signs of their impending arrival; including a black swan event. As with the stampeding grey rhino, you can either be trampled or mitigate against that risk by stepping away. But there is a third exciting and skilful option: to cling onto the rhino and forge a path through the herd.
Predicting the Grey
If we once again put on our positive hat, lots of exciting opportunities are emerging, accelerated by - or as a direct consequence of - 2020. So, we thought it would be interesting to look at some of these opportunities considered through a consumer lens:
Consumers at Home
Good things come to those who wait. That wait is becoming shorter, though, and consumer’s expectations are growing. The Grey Swan event beneficiaries could be the start-ups enabling the last-minute logistics solutions. For example, Instacart and Getir have different models, but both are counting on super-fast home delivery being part of customer lives. And plenty of others are coming to a home near you (weezy.co.uk, Dijanow.com)
Consumers on Holiday
The leisure travel industry will see a spike and much-needed income is already coming in. Grey Swan impacts, such as super flexibility on bookings and payment terms, could be here to stay. And there are innovations such as the birth of the term ‘seacations’. Cruise operators unable to take customers to international destinations have turned their cruise ships into the destination itself. Taking customers around the British Isles, many of whom are new to the idea of the cruise ship experience.
Consumers at Work
The Grey Swans are still flying when it comes to fully predicting the impact of changes in work/life patterns. However even small changes in behaviour on such a huge topic can lead to big opportunities. Can hotel groups repurpose their facilities and reposition themselves as part of the flexible workspace ecosystem, combing business and leisure? Will we see the rise of ‘nomad’ hotels (e.g. www.umayavillage.com) catering to the growing number of people who will choose to spend a few months a year working from sunnier destinations?
There are Grey Swans across many other industries including health (personalised medicine is coming faster), high street retail (live events meets shopping meets “Etsy”), and finance (new savers means new investment products such as buying and trading of fractional assets).
How Can We Prepare?
Grey Swan opportunities can be by-products of dramatic improbable events. Despite these unpredictable origins, by recognising cascading consequences early, businesses can get a head start on trends that are destined to become the status quo.
Swans and rhinos aside, this is an undeniably opportunistic and optimistic perspective but it can be addressed in a methodical manner for any business and as Zag, that always means starting with the consumer.
Turning analysis and insights into real-world opportunities also needs the right outcome based culture and skills set - but that is another story involving polymaths and more (www.wearezag.com/news_views/the-rise-of-the-polymath).
While we cannot predict the unpredictable events and their often-dramatic consequences, organisations can rapidly assess the long-term impact on their consumers and identify areas for innovations and/or mitigation. We can’t avoid the Black Swan, but with the right approach we can all come out of it stronger than ever before.