Black Swan Farming in Agile Development

Nicholas Taleb shaped our understanding of “Black Swan events” in his 2007 book: The Black Swan: The Impact Of The Highly Improbable. Black swans were thought to not exist… until someone spotted one of course. Focusing on finance, it helped explain the Dot Com bubble of 2001 and the financial crisis of 2008. It also has merit in societal change, with the events of 9/11, both world wars, the rise of the internet and the fall of the Soviet Union being classified as Black Swan events.

To be classified as Black Swan, the event needs to comply to these characteristics:

1. It is extremely rare, and the consequences are severe.
2. It cannot be predicted beforehand.
3. After the fact, many falsely claim it should have been easily predictable.

Further more, thorough modeling can’t predict these events due to their extreme rarity. A reliance on standard forecasting tools can even increase vulnerability to black swans by propagating risk and offering false security.

The Product Perspective

When we’re building products, we’re working within a set of rules, best practices, standardized processes that can potentially blind us to the black swans that are inevitably coming. New competitors, a missed market trend or simply not investing enough into your product can all lead to failing products.

I often use this chart to show where organizations need to allocate budget.