The term “unknown unknown” has recently become ubiquitous, thanks to the Covid-19 pandemic.
It first gained public attention in early 2002, when Donald Rumsfeld, then US Secretary of Defense, mentioned it in a Pentagon press briefing. He was referring to evidence (or lack of) for the involvement of the Iraq government in supplying weapons of mass destruction to terrorists.
Subsequently, the term crept into the lexicon of project management and strategic planning. Now it’s part of lingua franca of general business.
Meaning of unknown unknowns
The first unknown is an adjective that describes the second one, a noun. The noun refers to a negative risk (threat) event that is not known because it’s uncertain, meaning that it may or may not happen. The first unknown refers to the fact that it is not—and cannot be—known or identified before it happens. It’s a threat that you cannot foresee. If it can be foreseen, by definition, it cannot be an unknown unknown. Unknown unknowns of concern are generally unpredictable with severe negative impacts.
Historic examples include the Japanese tsunami of 2011, global financial crisis of 2008, and the collapse of the Soviet Union in the early 1980s.
Animal metaphors
Such unpredictable events only evident in retrospect are often referred to as black swans. Historically black swans were presumed non-existent until they were first encountered in southern Australia. Nassim Nicholas Taleb, a risk analyst, popularized the black swan metaphor through his bestselling books in the 2000s.
Corporate and political leaders may refer to events like the current pandemic as black swans. They claim they couldn’t take advance action to prevent this kind of event or minimize its impact because it couldn’t be foreseen. Therefore, the leaders avow they should be absolved of accountability for any catastrophes resulting from black swan events.
Michele Wucker, an author and strategist, contends that the term black swan is often misused for making excuses, although the threat event is evident to many observers before it actually happens. She went on to coin a new metaphor, gray rhinos, to describe known and highly likely and impactful yet ignored threats. According to her and other critics, the current pandemic is a gray rhino.
Whatever the animal metaphor you’re fond of, we seem to be facing-off gargantuan beasts more than ever before.
Dealing with unknown unknowns
The key to dealing with unknown unknowns simply lies in building a resilient organization. An organization that can swiftly recover from the crisis created by the threat and get back to business as usual as quickly as possible. A recovery on steroids for not only your operations but also for the project initiatives thwarted by the threat! A truly resilient organization will not just survive, but will use the crisis to thrive.
Five key strategies can help build resiliency:
- Adapt agile leadership to pivot swiftly to a new strategy and advance business agility.
- Create a silo-free organization to promote effective communication and cross-functional teamwork, two key ingredients to speedy crisis recovery.
- Build agile teams that are empowered with a singular focus on implementing the new strategy with no other responsibilities.
- Install redundancies into your systems and processes that enable results, even if some parts have failed.
- Maintain a “rainy day” reserve or contingency fund that can help you with the urgent resources needed for the speedy recovery.
Redundancy and contingency built in to travel schedule
I’m a road warrior with millions of air miles under my belt. Traveling to around 50 countries, some many times over, during the 35 years of my professional life, I know a little about travel threats. So as an avid risk management practitioner, I use several strategies to manage my travel risks.
Late one Monday morning, to catch a flight, I drove from my home to Chicago O’Hare International Airport and parked my car. I opened the trunk to pick up my bags only to find it empty. I was positive I had the bags in my hand when I walked to the car. So how did the bags magically disappear? It turned out I forgot to load them into the car. I left them behind in the garage. A true unknown unknown!
My wife arrived at the airport with my bags an hour later so I still made my flight. Surprisingly, it was on time! I always arrive at the airport at least two hours before flight departure for domestic travel and even longer for international. This translates into creating contingency into my schedule. Another strategy I apply is to avoid the last or later flights in the day so I have more flexibility. Even if I had missed my original flight, there were other flights that day. That’s the redundancy I build into my schedule.
This is by no stretch a black swan with a huge impact but a fun example of unknown unknowns.
Airbnb swiftly pivoted its strategy
Here’s an example of how one organization not only survived the early days of the pandemic but, in fact, came back roaring using some of the strategies we mentioned earlier. Airbnb, an online market place for vacation rentals, was in financial dire straits, like many of its competitors in the traditional hotel industry, towards the end of spring 2020 due to the pandemic.
It became clear to its chief executive, Brian Chesky, many urban residents were shunning air travel to reach far away cities. While Airbnb was focusing on far away vacation rentals, prospective customers were instead looking more for nearby places. Chesky swiftly pivoted his strategy to focus on local stays rather than big cities and distant places.
Chesky reduced costs by cutting staff and killed off many ongoing projects. He redirected resources to focus on the organization’s recovery and empowered his teams to dedicate their time to the new initiative alone and gave them no other responsibilities.
By early summer, the teams had redesigned the website and app. They changed the algorithms to show rentals ranging from small cabins to lavish beach houses near where prospective customers lived.
By mid-summer things started to turn around. The third quarter resulted in profit leading to a gangbuster IPO in December. They hoisted the company from the brink of bankruptcy to volant victory. Recounting his journey through the crisis, Chesky commented in an interview, “I didn’t know I’d make 10 years’ worth of decisions in 10 weeks.”
In the next blog post I discuss “known unknowns.”
Rahul says
Great article! Love the topic and your insights. Looking forward to reading the next post.
Vijaya says
Wonderful article. Enjoyed reading . Made notes . 👍🏻
Bill Yates says
Prasad, your explanation and advice are spot on. In particular, I appreciate your 5 steps a company should take to build resiliency and be prepared to survive those unknown unknowns. AirbnB is a great example.
Charles R. Stack, MPH, BCES says
This is an excellent article & analysis of “unknown unknowns!” I like how you analyze the phrase in comparison to the more widely known “black swan” metaphor.
Padma Kodukula says
Good one Prasad. Keep them coming
Sunil Veeramachaneni says
Thank you for sharing your knowledge.
Iara liscombe says
So good to read it, simple and full of content, as your classes. Congrats.
Uma says
Hi Prasad, great article. What a great way to start your “blogging career”! You are a great writer – I knew that already. What is unique in your blog is you made some abstract concepts more tangible with pointed examples!
PS – I can’t help but say “what would you do without your wife coming to your rescue?” 🙂
Prasad says
I’d be fish out of water. Haha!
Pam G says
Excellent article! Looking forward to the next post on ‘known unknowns’
Xara says
Excellent article. I have enjoyed the read. The Black Swans, Grey Rhinos and Unknown Unknowns. Looking forward to the next blogs.