The Black Swan estimate
A guide to help leaders make decisions under pressure
Ask anyone who has served in the military what the seven questions are (also known as the combat estimate) and you shall get a wry smile. The combat estimate is a system designed to help leaders make good decisions under extreme pressure (combat).
A ‘black swan’ is defined as an extremely rare and unpredictable event with severe consequences. In order to help leaders navigate this current black swan, we have adapted the military’s seven questions to help you formulate your thinking and response. This series of questions works whether you have 20 minutes to make a decision, or 20 days. With more time you go into more detail at each stage.
1. Time – When do I need to make a decision by?
When you have an important decision to make, you actually have two. The first one is when do I need to make a decision by: the second one is what is my decision?. Defining how much time you have to make a decision is the first thing you do. Always.
“These are the red balls that can’t be dropped – human safety, criminal law, tier one capital et cetera”.
2. Define – What exactly is the problem?
Black swan events are multi-layered, nuanced or ‘wicked’ as David Epstein would say. Therefore, spending time defining the root cause means for you ensures that you don’t solve the wrong problem.
3. Obligations – What rules and regulations must we comply with?
Before designing solutions, gaining clarity on what your obligations are is crucial. These are the red balls that can’t be dropped – human safety, criminal law, tier one capital et cetera. These red balls will apply to all the options generated in question four.
4. Explore – What are my options?
Inviting as many perspectives – internal and external – as possible here is advisable. It is important to separate the generation of options from the triage of options. Generate as many options as possible (impractical or otherwise). Then triage them. During the triage it is useful to ask yourself ‘who is this good for?’ and ‘who does it harm?’ For each option you can calculate a likely return-on-decision. This phase gives you your plan A, B and C.
“You immediately lose some control once the plan begins”
5. Communicate – What communication and direction do I need to give to whom?
This is a planning phase to tailor communication to various groups – staff, suppliers, shareholders, government, regulators, customers and the media. The order of communication may be influenced by the answers to question three.
6. Control – What are the control and supervisory measures needed?
You immediately lose some control once the plan begins. Defining your up-front control measures is critical so that colleagues understand their own latitude of action – how far they can go, and when they have to stop. Clarity on control measures is required or the disaster can get bigger very quickly.
7. Damascene moment – Can I live with this?
This is the question where you remove yourself from the maelstrom, close your eyes and use your moral imagination – can I live with this decision? No one can help you with this, nor should they.