Quick Summary - "Black swan" is an unexpected event or upheaval with colossal consequences. It cannot be predicted, but its possibility can be accepted as a fact. This means being ready to meet this 'bird' in order to stay afloat and even reap the benefits.
9 mins read
February 22, 2023
On March 10, 2000, those who were earning fabulous sums turned out to be bankrupt. After a meteoric rise, the NASDAQ index plummeted, dragging down hundreds of US Internet companies. Several executives had been convicted of embezzling money. Few companies like Amazon have managed to survive, but it cost them a huge loss of market capitalization. The event went down in history as the Dot-com Bubble. And this is one of the classic examples of a “black swan” in the technology sector.
Why “black swan” and what does this term mean
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For a long time, people believed that absolutely all swans were white. This statement was based on their observations before Australia was discovered. A single black one was enough to erase all previous experience, the term’s inventor, mathematician and analyst Nassim Nicholas Taleb says.
The theory suggests that what you don’t know is much more important than what you do know. Therefore, when preparing for possible events, the “black swan” may turn out to be a completely different one that you have not thought about.
Anything can be such an event. The sinking of the Titanic, the Chernobyl tragedy, all of the wars and global political upheavals – all these are examples of “black swans”.
Taleb wrote a book about the idea in 2007. Almost immediately after its release, the world was hit by the economic crisis of 2008. It was a vivid example confirming the theory. And this made Taleb rich and famous.
Recent “black swans” that have affected the tech sector the most and what lessons they have taught us
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The world is still recovering from the effects of the pandemic. In 2020, the virus spread with enormous speed, no one was prepared, and the consequences shook the economy for several years.
If we are talking about hiring in the technical field, then the pandemic has changed the picture beyond recognition. And many trends that began during quarantine do not roll back even after it ends.
According to the Workable survey 2022, 82% of companies remained remote or hybrid even after the pandemic. Almost 42% say that the flexible schedule introduced during the quarantine became a permanent way of working after it ended.
Thus, it is clear that business is trying to meet the aspirations of existing and potential employees. According to the GoodHire survey, in the USA, 63% of workers believe companies will have a hard time attracting people without the remote working option. 33% say they would quit in case of returning to the office.
Those companies that were able to switch to a different mode of operation or even change the specialization of their business, survived during the pandemic. After all, COVID-19 gave an incredible boost to startups that specialize in, for example, delivery or medical IT services. For them, the “black swan” was not a collapse, but a starting point.
Statements about a possible full-scale Russian invasion in Ukraine had been heard several months before the event itself. But the beginning of a full-scale war led to such an upheaval that it was impossible to be ready for all its consequences anyways.
Thousands of Ukrainian developers who provided outsourcing services to companies around the world were forced to become refugees or went to the front to defend the country. Due to the aggression, Russian and Belarusian programmers are no longer considered as possible outsourcing employees.
Thus, high-tech companies were forced to look for other markets for hiring and switch to Eastern Europe or Asia. In Latin America, salary rates for programmers have increased by 24%, as the region has become more popular due to the search for an alternative to Ukrainians.
In just a few months of 2022, such high-tech monsters as Amazon, Twitter, Meta and Apple have laid off tens of thousands of workers.
It’s hard to say for sure whether it is a “black swan” but in any case, such a large-scale event already has consequences that other nimble companies can take advantage of. After all, the market is currently flooded with underappreciated techies with experience at Amazon and Apple looking for a new job. They will become much more accessible for hiring.
How to prepare for events that cannot be prepared for
Of course, in the original sense, “black swans” are events of a planetary scale. But tentatively, we can also call such “birds” local unexpected situations that can cause a collapse at the level of a company or team.
The history of hi-tech is full of such situations. What is only worth the case of the fail of the mobile wallet ISIS, launched in 2007. The company couldn’t predict that it would soon unwittingly become the namesake of a brutal extremist group.
As mentioned above, you cannot prepare for a “black swan”, but you can realize its possibility, reduce risks and work on flexibility.
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As for the hiring sphere, here are some tips based on existing cases
The team has a weak player and stronger developers are tired of doing his work. As a result, several programmers quit at the same time. The existence of the problem came as a shock to the CEO. Moreover, employees discussed the situation for a long time in alternative chats in Slack, where the manager was not even invited. This is a case of one of the Ukrainian IT companies cited by DOU. Although this is a typical situation, it catches team leaders around the world by surprise every time.
Share values, implement them in the process and working life of your staff. In crisis situations, they need to know how to quickly make the decisions. They don’t have instructions for every case, but they have a good understanding of priorities and react at the right moment.
Also, be attentive in the head-hunting process and consider whether the new employee shares the company’s values.
Antonio García Martínez, a former Facebook product manager, joined Apple in April 2021 and was fired within a month due to a petition signed by thousands of employees. Colleagues were outraged by remarks in his 2016 autobiography, considering them sexist and racist. At the same time, Martínez said that Apple was aware of the contents of his book.
Technically incompetent VCs and the managers they hired buried ArsDigita and wasted over 40 million dollars. Executives blindly trusted engineers, abandoned successful products, and spent insane amounts of money creating meaningless software.
Each employee is a carrier of experience gained in his country. By involving international staff, it is possible to create synergy of different knowledge and, as a result, anticipate more scenarios. Therefore, hire in different locations, diversify vendors, and study markets.
The situation with 2022 large-scale layoffs in tech giants illustrates the thesis that powerful enterprises are more difficult to go through a crisis than small companies. The reason lies in the long decision-making process, when signals are slowly passed through the organization, or do not reach the top at all. Therefore, managers should carefully track and analyze data within the organization, notice trends and quickly react to them.
You can’t foresee a sudden toothache for a key developer the day before a major release, or a difficult divorce that unsettles the team lead. No matter how you calculate the risks, the human factor cannot be avoided. Therefore, it’s worth being flexible and able to correctly prioritize and distribute responsibility in a crisis situation. Paying close attention to soft skills during hiring is also a good help.
Take the advice from Greg McKeown’s bestselling book and invest your time in exploring. Analyze in detail different recruitment strategies, consider new locations, pay attention to various types of cooperation such as outsourcing and staff augmentation. This allows you to take a broader look at hiring, not stuck on well-worn strategies and get additional advantages in the market.
Avoiding employee turnover is always better and easier than hiring new ones. So don’t forget to convey to the team how important each of them is to the company.
At PerceptionBox, we have extensive experience in assembling and maintaining a reliable team that can perform consistently even in critical moments. Contact us for a consultation.
