Zapaterismo

While it sounds fairly abstract, the practical applications of Taleb's book are obvious and significant.  In fact, one of the great additional contributions that Taleb makes in The Black Swan is his outline of the two parallel realities that dominate our world.  These are:

Mediocristan:  This is, primarily, the physical world that is bounded by natural laws and limitations and where, consequently, variance is limited.  Taleb uses the example of human weight.  To illustrate, take 1,000 people.  Suppose that 999 are selected at random and weighed, and that their total weight is summed up. Now suppose person #1000 is specifically selected because he happens to be the fattest man in history.  Even though this man may be significantly larger – perhaps 1,000 lbs larger – than any of the other 999 individuals, his weight still only makes up a very small percentage of whole – maybe 0.5%.  

So, even with a relatively small sample of observations – 1,000 people – we can use statistical methods to derive fairly accurate conclusions and make predictions.

Contrast that with the world of social phenomena – those categories that are constructed by people for our purposes, not necessarily bound by any natural limits and where, consequently, variance can be dramatic. You've just entered the realm of: 

Extremistan: Continuing with Taleb's examples, Extremistan can be illustrated using individual wealth.  Again, take 1,000 people, 999 of them selected at random and their total wealth calculated.  Now suppose that Bill Gates is person #1,000.  This time, instead of the single outlier being relatively inconsequential, it dominates the total.  

In Extremistan, then, our ability to understand and predict is inhibited by the existence of consequential outliers, also known as Black Swans.

Taleb's book plays with this idea in a number of very fun and interesting ways that are beyond the scope of this blog entry, but one that is worth noting relates to professions.

According to Taleb, some professions exist in Mediocristan.  That is, they are marked by linear and predictable returns. In essence, to get more out of them, you need to put more (time and effort) into them. These are the jobs most of us work in – consultants, analysts, and HR professionals included.

On the other hand, there are jobs that are subject to Black Swans.  These jobs are much more "scalable" in that returns can be enormous despite people exerting the same amount of effort, but also much more risky and incredibly unfair for the same reason (not everyone benefits from the Black Swan).  Obvious examples are authors, actors, and artists, as well as investment brokers and traders.

While I don't want to misrepresent Taleb's ideas, if we stretch his metaphor a bit we can start to see a connection to the concept of Pivotal Jobs, which has been made increasingly popular by Boudreau and Ramstad's Beyond HR.

While I'm thrilled to see so many companies adopting the idea of Pivotal Jobs, most are confusing the concept in the process.  Thinking about jobs in terms of Taleb's Mediocristan and Extermistan, on the other hand, might actually provide a clearer path to implementation of the Beyond HR ideas.

Try this.  Think about the jobs in your organization where variance between A and C players is worth noting (and rewarding) but not hugely consequential. Additional investment, either on the part of your company (i.e. additional headcount or training) or your employees (additional work or self-development), yields predictable and incremental returns to the organization. These jobs lie in Mediocristan and, in Beyond HR parlance, may be "important" but not pivotal.

Now, think of those jobs where occurrence of a Black Swan (an unusually and maybe unexpectedly high-(or low)-performing individual or group of individuals) will yield massive and even unexpected returns (or losses) to the company as a whole.  Additional investment in headcount, recruitment, training/coaching, etc., and, at times, just plain luck, would dramatically impact the performance of the entire organization.  These are Extremistan – Pivotal – jobs. 

Kind of a fun exercise, isn't it?

If you've been struggling with this concept, hopefully this analogy helps. If not, let's hope it has least been a fun exercise in thinking about our discipline a bit more broadly.