The banks closed – is there a lesson in that?

Egyptians wait at an automatic cash dispenser in Cairo
Egyptians have been forced to rely on cash machines until now to get at their money

Things stay the same, that is until they change. A friend of mine commented to me yesterday that he had noticed I had not written much about business lately. And of course I haven’t, the events in Egypt and the rest of the Middle East are just too compelling to ignore – two or three years from now if someone was to ask you who won the Super Bowl in 2011 you might struggle to remember; but if that same vague and mysterious someone walks around Egypt two or three years from now and asks people who won the battle of Tahrir they will know; there are a couple of articles in the Arab press about the 1919 upheaval, comparing those events to these and even after 90 years most people in Egypt know how that one turned out. In fact, because the “revolution” only produced a small part of what the people were demanding, 1919 is one of the reasons that people are insisting the Mubarak and his government have to go – they don’t want the “tokens” they got 90 years ago.

Still as important as these events are on their own, there is a way to draw a connection between these events and business and maybe even to find a lesson; if there is a lesson it is found in surprising and sudden beginning of the Tahrir Square saga.  There were no signs, no clues, Egypt a month ago seemed to be very much the same as it was 10 years ago or 30 years ago. Egyptians relied on that, Americans relied on it, Israelis relied on it and certainly Hosni and Gamal Mubarak – guess who he was named after – with estimated 70 billion dollar family fortune relied on it.  And now all everyone has to rethink their position.

In the middle of the 20th century evolutionary scientists were struggling with missing links in evolution.  Every one agreed that evolution was a process, a long slow process involving deep time; in the course of very long time periods species gradually changed and became something different.  At each stage, each tiny change was driven by most adaptive, the best able to survive and the best at mating passed their characteristics on to the next generation.  However, evidence was sometimes difficult to find, there were very large gaps in the fossils records and no way to explain some very big changes in species. Where did dinosaurs come from?  How do you get from a fish to a man? And a whole host of much more subtle and difficult to answer species development.

In 1972, Steven Gould and another scientist proposed another explanation to the gaps in the records, instead of saying that no one had yet discovered the evidence – the common explanation at the time – he suggest that there was none, no missing evidence and indeed no evidence.  Instead he said there was phenomenon he called puncutated equilibrium – sudden change.  He said that there were to states in nature, stasis and puncutated equilibrium (change).  He said that species remain the same for very long periods of time and then suddenly change.  Later work in genetics has given us a mechanism for the possibility, the sudden change; it is now known that genes are not coded to one and only one possibility, but that each possibility contains two options, not one and the difference is government by a switch – an off-on switch.  On gives us one possibility, off gives us another.

Forty years after Gould first published his theory, Nassim Taleb used punctuated equilibrium  to explain some other events – events in the business, political and social world.  He calls the dramatic changes in his theory Black Swans; totally unexpected and dramatic shifts in the human-built world.   Taleb says that one cannot predict a Black Swan, but that one should anticipate it.  He developed his theory based on events in Lebanon during his formative years.  Taleb says no one could have predicted some of the events in Lebanon, things had been the same for a long time, stable and constant; political parties stayed the same, the mix of religions stated the same, villages, cities, businesses, society and everything else remained the same; and then one day it was different.  There is no biological mechanism to explain how this might happen, but the changes are not genetic they are societal – except of course by analogy – so we don’t need to have a biological mechanism.

It is a metaphor and we always have to be careful in using metaphor or explaining events with analogies; however, there are enough events in all of our lives to give credence to the basic idea – things stay the same until the day they change.  We cannot predict the change or the nature of the change, but we can anticipate a change will occur and it will occur without warning.  For example, long up or down trends in stock , gasoline and housing prices will change – beware.  Social trends and fades – tattooing, hairstyles, length of skirts, genres in music, film and art, transportation, sports and everything else that today appear to be a permanent part of our lives and our social fabric are not – all of them will change, someday.

The lesson in Egypt is not so much about the desires of the Egyptian people, but of unexpected, unpredictable, startling, sudden and dramatic shifts are always waiting just off the stage in the wings.  We should anticipate them, not bury our heads in the sands and like Hosni Mubarak and Stanley Ho pretend that today will last forever.  If we are not careful, like the Egyptians we may wake up and find the banks are closed or something.


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