How to Look for Bird Poop
The tendency to engage in extensive long-term planning despite unpredictable events (Black Swans) that render such plans obsolete, while failing to learn from past failures.
THE IDEA
HOW TO LOOK FOR BIRD POOP
In the summer of 1998 I worked at a European-owned financial institution. It wanted to distinguish itself by being rigorous and farsighted. The unit involved in trading had five managers, all serious-looking (always in dark blue suits, even on dress-down Fridays), who had to meet throughout the summer in order “to formulate the five-year plan.” This was supposed to be a meaty document, a sort of user’s manual for the firm. A five-year plan? To a fellow deeply skeptical of the central planner, the notion was ludicrous; growth within the firm had been organic and unpredictable, bottom-up not top-down. It was well known that the firm’s most lucrative department was the product of a chance call from a customer asking for a specific but strange financial transaction. The firm accidentally realized that they could build a unit just to handle these transactions, since they were profitable, and it rapidly grew to dominate their activities.
The managers flew across the world in order to meet: Barcelona, Hong Kong, et cetera. A lot of miles for a lot of verbiage. Needless to say they were usually sleep-deprived. Being an executive does not require very developed frontal lobes, but rather a combination of charisma, a capacity to sustain boredom, and the ability to shallowly perform on harrying schedules. Add to these tasks the “duty” of attending opera performances.
The managers sat down to brainstorm during these meetings, about, of course, the medium-term future—they wanted to have “vision.” But then an event occurred that was not in the previous five-year plan: the Black Swan of the Russian financial default of 1998 and the accompanying meltdown of the values of Latin American debt markets. It had such an effect on the firm that, although the institution had a sticky employment policy of retaining managers, none of the five was still employed there a month after the sketch of the 1998 five-year plan.
Yet I am confident that today their replacements are still meeting to work on the next “five-year plan.” We never learn.
When to use it
When an organization allocates significant resources to multi-year strategic plans in rapidly changing industries (e.g., tech, finance).
When leaders spend excessive time on forecasting and vision-setting instead of adapting to real-time feedback.
When individuals or teams fall into the trap of believing that past success was due to planning rather than luck or adaptability.
When evaluating whether a project timeline is realistic in the face of unknown unknowns (Black Swans).
FROM THEORY TO EVERYDAY LIFE
In practice
The 1998 Five-Year Plan
A European financial institution's managers spent the summer of 1998 creating a detailed five-year plan, flying to meetings in Barcelona and Hong Kong. Despite the firm's most profitable department originating from a random customer request, they insisted on top-down forecasting. A Black Swan event—the Russian default and Latin American debt meltdown—rendered the plan irrelevant, and all five managers were fired within a month. The author predicts the replacements continue the same planning behavior.
A MOMENT TO REFLECT
Put it to work.
In your own work, have you ever participated in a long-term planning exercise that was later made irrelevant by unexpected events? How did that affect your view of planning?
What small, unexpected opportunities have led to major successes in your organization, similar to the chance customer call in the story?
How can you distinguish between valuable strategic thinking and the illusion of control that comes from detailed plans?
CONTINUE THE CONVERSATION
Source texts
- The Black Swan The Impact of the Highly Improbable With a new section On Robustness and Fragility (Nassim Nicholas Taleb)