Markets have just done that weird thing again: staring down an AI jobpocalypse, a possible energy shock, and frothy valuations. Then acting like everything is basically fine.
Sound familiar? You leaders and organisations do this too.
We ignore weak signals and talk ourselves into believing a wobble isn’t the start of a horrible fall.
Then one day: "bad" happens, fast, and we get whiplash.
Three things matter this week, imho:
1. Most crises do not come out of nowhere.
2. You will rarely predict the exact moment of “fast bad”.
3. We humans are terrible at predicting bad things because we’re not rational.
1. Most crises do not come out of nowhere.
They build slowly, then land fast. A complaint here. A regulator’s shift in tone there. An issue or two that take longer to settle than the last one. What looks like a shock event is often actually accumulated risk finally going public.
2. You’ll rarely predict the exact moment of “fast bad”.
But we can get better at predicting fragility. Remember Nicholas Taleb of Black Swan fame? His point is it's not when the glass falls, it’s whether it's already wobbling on the edge of the table. If the same issues keep resurfacing, if recovery times are getting longer, if stakeholder trust is thinning, we’re not looking at bad luck. We’re looking at a system, CEO, or a brand-wide problem.
3. We humans are terrible at timing bad things because we are not rational.
We explain away weak signals because each one, alone, is manageable. We also discount risk.
The science is useful here. It tells us we're sh$t at decisions generally, (thanks Kahneman and Tversky) money specifically (Dan Ariely, Morgan Housel), and crisis prediction! Mathemetics has given us two gifts with this. René Thom’s catastrophe theory shows how slow pressure can produce sudden collapse. Extreme Value Theory tells us yes, rare, high-impact events do happen, but beforehand averages may mislead us.
That is why early warning systems matter.
They can help us spot the accumulation of risk early enough to get ready.
That means paying attention to patterns. Things like recurring complaints, slower recovery from minor issues, shifts in stakeholder tone, patterns across legal, regulatory, customer, and media channels, and near misses that get waved away.
The solution isn't to become alarmist. It’s to build the skill of sorting noise from accumulated signal.
Once “fast bad” starts, you're managing things in public, at speed, under pressure. You're often also not thinking as well as you were. A terrible time to start planning, heeding warning signs or saving your reputation.
So imho your unbeatable move isn't predicting the timing of the sh*t st0rm. It's getting ready before everyone else realises we're in one!
The signal we needed is usually there before the crisis. It just wasn't wearing high vis.
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