Ethos Issue 4, Apr 2008

Governance at the Leading Edge: Black Swans, Wild Cards, and Wicked Problems
Peter Ho

At the 2008 Strategic Perspectives Conference, Head of Civil Service Peter Ho traced the evolution of contemporary public sector practice. He concludes that while the Public Service has successfully adopted best practices from the private sector and elsewhere in the past, these are not enough to ensure good governance as we move into an unpredictable and complex future. In the following excerpt, he highlights the nature of the challenges ahead and argues that Singapore must develop its own new brand of governance in order to manage these critical uncertainties and generate original solutions to the wicked problems of our time.

OF BLACK SWANS AND WILD CARDS
Much of the current practice of good governance assumes that a high level of predictability and order exists in the world. This is a dangerous assumption, because it encourages simplifications that are useful in ordered circumstances but which can lead to leadership failures if they are applied in more complex or chaotic situations, where unexpected yet highly significant occurrences are more likely to appear.

At a Pentagon briefing in 2002, Donald Rumsfeld, then Secretary of Defense, said

"Reports that say that something hasn’t happened are always interesting to me because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns–the ones we don’t know we don’t know.”

His remarks attracted some ridicule for not coming straight to the point. But “unknown unknown” is a legitimate and indispensable concept in decision analysis that we should expect a Defense Secretary to understand very well. In fact, Rumsfeld also said that “the absence of evidence is not evidence of absence.”

Nassim Nicholas Taleb’s book The Black Swan is about “unknown unknowns”. A ‘black swan’ is a rare, large-impact, hard-to-predict and discontinuous event beyond the realm of normal expectations. Before black swans were discovered in Australia, people believed all swans were white—an incontrovertible view confirmed by available empirical evidence. “The sighting of the first black swan,” wrote Taleb, “...illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge.” The discovery of a single black bird invalidates millennia of confirmatory sightings of only white swans.

Black swans have three traits. First, it is an outlier: it lies outside the realm of regular expectations, because nothing in the past points to its possibility. Second, its impact is extreme. Third, in spite of being an outlier, human nature makes us concoct explanations for its occurrence after the fact to render it explainable and predictable.

Taleb argues that black swans account for almost everything in our world, from the success of ideas to the dynamics of historical events and our own personal lives. He further asserts that the impact of black swans has been accelerating since the Industrial Revolution.

In the same vein, futurologist John Petersen writes about “wild cards”. These are major surprises: high-impact events which come out of the blue. They are characterised by their scope, and a speed of change that challenges today’s capabilities. Wild cards develop very fast, and challenge governments, societies and nations to respond effectively since there is a tendency to react to warning with discussion and compromise, rather than rapid, cohesive response.

Singapore has had its own wild cards and black swans: the Asian Financial Crisis of 1997, the severe acute respiratory syndrome (SARS) crisis of 2003, and perhaps the sub-prime mortgage crisis of 2007 and the rice “shortages” of 2008. Black swans are probably more frequent than commonly perceived—the human mind has a tendency to underestimate such events. Clearly, we must make an extra effort to brace ourselves to deal with greater uncertainty and unpredictability.

Of course there are also good black swans and wild cards, like the emergence of the Internet, Google, and the economic resurgence of China and India. If we are able to identify them early and understand their significance, we must then be able to exploit them to our advantage.

THE PROBLEM OF WICKED PROBLEMS
Wild cards or black swans generate what the political scientist Horst Rittel first called “wicked problems”. Wicked problems are large, complex and intractable issues with no immediate solutions, and which involve multiple stakeholders who see the problem in many different ways. A high degree of process knowledge about creativity and collaboration is required in order to make even a dent in wicked problems. A good example of how to deal with a wicked problem is the way we addressed the problems with our education system in the late 1970s.