The Gray Rino: How to Recognize and Act on the Obvious Dangers We Ignore by Michele Wucker

 After hearing Michele Wucker's TedTalk and long after I read The Black Swan: The Impact of the Highly Improbable, I decided to read her book on gray rhinos. Wucker contends that many social phenomenon that receive the label of black swan actually come under the designation of gray rhinos. As the title, The Black Swan, suggests events occur unexpectedly and without warning. Gray rhinos, in contrast, result in "highly obvious but ignored threats" (p. x) or threats responded to insufficiently, weakly, and ineffectively. Gray rhinos encompass past "clear dangers that were recognized but weren't being addressed" (p. x), 

Wucker listed current gray rhinos: climate change, financial crises, digital technologies, infrastructure failures, wildfires, water shortages, and others. To distinguish the types of events that individuals, organizations, agencies, governments and others face, Wucker categorized them according to four characteristics: low probability and high probability and low impact and high impact. Of the three types, white swans, black swans, and gray rhinos, she placed each into one of the four slots. White swans have a high probability of occurrence and low impact. In contrast, black swans and gray rhinos have high impact. However, black swans have low probability and gray rhinos have high probability. With any risky situation, the faster the response, the lower the cost. Leaders who procrastinate when confronted with major challenges--gray rhinos--ignore the opportunity or avoid the danger that the challenges offer. Wucker views assessing risk as the counterpart to danger. Assessing risk is inherent in the avoidance of danger or calamity. 

Each year at the World Economic Forum, assembled leaders in government, business, media, and Non-governmental Organizations prioritize what they consider the greatest risks in the Global Risks report. The United Nations conducts a similar survey. "In 2013, only 32 percent of those CEOs believed the economy was on track to meet the demands of a growing population within environmental and resource constraints, and just 33 percent believed that business was doing enough to meet those challenges" (p. 12). Behaviors that prevent action include two large category of reactions: freezing and a lack of any response or denial and ignoring the threat. These reactions describe the first stage of the gray rhino response. The other four responses, according to Wucker, include" muddle along. . .come to an alert. . .play the blame game as we search for solutions. . .and, finally, we do something--occasionally before the trampling, but all too often after the fact" (p.27). These responses constitute the five phases that most go through. To create a culture vigilant about gray rhinos or any of the other threats, "change perverse incentives in order to encourage leaders to act sooner" (p.27). In short, leaders should thwart groupthink and encourage diverse and independent thinking. Project directors of the Good Judgment Project identified traits that separated a good forecaster from others: "First were psychological factors: inductive reasoning, pattern detection, open-mindedness and the tendency to look for information that goes against one's favored views, especially combined with political knowledge.' Second was the forecasting environment, including training in probabilistic reasoning and team discussion of rationales. Finally, not surprisingly, effort made a difference; the more time forecasters spent deliberating their predictions, the better they did" (p. 50).

Addressing water shortage specifically as a gray rhino, Wucker described how companies can examine the use of water throughout their supply chains.  Realizing the growing demands on water use and the requirement of some firms on the natural resource in their production process, Wucker connected wise use with industry sustainability.  MillerCoors,  Wucker's first example,  initiated an effort to economize on the use of water throughout its entire supply chain. After reviewing internal processes and water utilization, the company then examined the agricultural processes of the growers of barley, hops, and the grains in making beer. Among 850 farmers, who supplied the brewer with crops, MillerCoors sought ways of water reduction. Additionally, MillerCoors compared country variations in water use from the United States, Peru, Ukraine, Tanzania, to South Africa.  "Tanzania, in contrast, used nearly three times as much water overall to make beer" (p. 165). The 2030 Water Resources Group of 2009 reinforced MillerCoors efforts, as it spurred Coca-Cola, Nestle, and other CEO to examine their water efficiencies. MillerCoors cost savings on water of $90 million demonstrated the environmental, business process, sustainability, and cost benefits of monitoring.

Wucker attributed three reasons for the lack of initiative throughout business to target water conservation and potential shortage as a gray rhino. First, the lack of clarity of the issue of water--linking the risk of "water scarcity in the face of rising demand" (p.167). Second, the "tragedy of the commons" dilemma, vying individual interests with group interests. Third, the absence of internal stakeholders within organizations to argue for water savings.  To highlight the immediacy of water shortage as a gray rhino, Wucker mentioned water shortages at the time of her writing around the globe--from Atlanta, and California, to Sao Paulo and Rio de Janeiro.  More ominously, the author mentioned demand/supply challenges by pointing to the Middle East, where 5 percent of the world's population have 1 percent of the world's water.