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22 December 2022 | Posted by angela.tuduri

The Black Swan Theory - Forecasting Projects in the 21st Century

Very often, projects fail for seemingly improbable reasons as they begin to unfold.

This is increasingly noticeable given the increasing complexity of projects, geographic distribution of teams and time pressures. The Black Swan Theory captures events that can jeopardize the development of a project without being expected.   

Want to know more?   

The black swan - Understanding the theory 

Black swan theory is a term coined by Lebanese writer and philosopher Nassim Nicholas Taleb to describe a highly unexpected and unpredictable event that will have a major impact. In project management, the black swan theory refers to the possibility of sudden and unplanned events that may affect the development of the plan.  

The history of this theory dates back to earlier years, when the existence of black swans was discovered in Australia. To date, only white swans were known, making it an unpredictable event that led to what we now know as the black swan theory.    

This theory is based on the idea that most events are predictable and can be controlled or managed in some way. However, there are events that are completely unpredictable and have a significant impact on the project. These events are known as black swans, and can include natural disasters, system failures and/or serious human error.  

In project management, it is important to consider the possibility that they may occur, and to be prepared to deal with them effectively. This can include contingency planning and preparation to adapt and respond quickly to changes.   

Key features - What defines the theory   

In addition to what has already been mentioned, this theory is useful because:   

  1. Black swans are highly unexpected events - Black swans are one-time events that are highly unexpected and unpredictable and have a large impact. They cannot be accurately anticipated and are often difficult to predict even after they occur.  

  1. Black swans can have a positive or negative impact: Black swans can have a positive or negative impact, depending on the situation. For example, a breakthrough innovation could be considered a positive black swan for a company, while a natural disaster could be a negative black swan.  

  1. Black swans can have a major impact on project management: Black swans can have a big impact on project management, as they can significantly change project plans and requirements. It is important to be prepared to deal with these unforeseen events and adapt quickly to them. 

  1. The black swan theory applies to more areas than project management: Although black swan theory has been mentioned in relation to project management, it also applies to a wide variety of other areas, such as finance, insurance and politics.  

Black swans can have a major impact on project management and it is important to be prepared to deal with them and adapt quickly to unforeseen changes.   

Uses in project management  

Overview of black swan theory helps managers understand the existence of sudden events that can have a major impact on the project and put it in jeopardy. This can be especially important in high-risk projects or projects involving complex technologies or processes, where there may be more potential for black swans to occur.  

Project managers can take steps to minimize risk and be prepared to deal with them effectively. This may include creating contingency plans, implementing quality control measures, and allocating additional resources to address unforeseen challenges.  

Benefits  

Some of the benefits to consider with black swan theory in project management are as follows: 

  • Helps minimize risk: By taking into account the possibility that black swans may occur, project managers can take steps to minimize risk and be prepared to deal with them effectively when they do occur.  

  • Improves flexibility: By being prepared to deal with unpredictable events, project managers can be more flexible and adapt quickly to unforeseen changes.  

  • Improves confidence: Knowing that they are prepared to deal with black swans, project team members can feel more confident that the project is under control.  

  • Helps keep the project on track: By having contingency plans in place and being prepared to deal with black swans, project managers can keep the project on track and minimize the impact of unforeseen events.  

In summary, taking black swan theory into account in project management can help minimize risk, improve flexibility, enhance confidence, and help keep the project on track.  

Studies related to project management and risk and contingency management are necessary to optimize and improve processes in projects of any scope. At La Salle-URL we are pioneers in project management education, with more than 20 years of experience in the sector and highly qualified professionals.   
 

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