Around My Mind: Michele’s new LinkedIn Series

Subscribe to my new weekly LinkedIn series, “Around My Mind” – a regular walk through the ideas, events, people, and places that kick my synapses into action, sparking sometimes surprising or counter-intuitive connections. I’ll show how the topics I ponder connect in sometimes surprising ways. Many of my musings will relate to gray rhinos –the obvious yet neglected risks we face but often ignore not just despite but because they are so obvious. I’ll also spend a lot of time considering markets and the global economy; the Fourth Industrial Revolution and the future of work; immigration and demographic change; policy ideas big and small; cultural attitudes toward risk; and how the human mind works –and how these play out in both day to day life and in business and around the globe. SUBSCRIBE HERE.

Image from Yang Liu, East Meets West. Berlin: Taschen, 2015

How do we get from Point A to Point B? Not just a particular A to B, but in general. Do you think of yourself of taking a linear or meandering path?

The answer might not be as, well, direct as you might think.

As a journalist and policy analyst, I long thought of myself as taking the rational, direct approach. Yet there have been many times when this strategy led me only to butt my head against a brick wall. By necessity, I had to learn to go around, particularly when working across cultures. For someone with a Midwestern background that prioritizes order and frowns on uncertainty, it was an acquired skill, to put it kindly.

As I’ve spent more and more time in Asia, particularly since China has incorporated into its financial risk strategy the gray rhino metaphor I coined for obvious but neglected dangers, I’ve realized two important things. First, my approach to problems is very different from most Americans. Second the Western ideal of rationality is not as rational as we’d like to think; it’s more of an illusion.

My gray rhino metaphor makes the simple point that we need a fresh look at the obvious because humans tend to tune out ever-present risks and thus are surprisingly vulnerable.

Gray rhino theory thus directly contradicts Western ideals of rationality and agency: if something is obvious, so the thinking goes, of course we’re dealing with it –so if something goes wrong, it must be because it was beyond our ability to foresee and predict. This is not direct, clear thinking: it is circuitous rationalization.

Many Asians, by contrast, intuitively understand what I mean, and apply gray rhino thinking to everything from financial risk to urban safety to personal lives.

What explains this difference? The answer lies partly in how different cultures process information –in systems or silos, in close or broad focus– and in how members see themselves and their ways of thinking.

The Chinese designer Yang Liu, who grew up in both China and Germany, expressed the differences between Asian and Western thinking in her 2015 book of infographics, East Meets West. The image that I’ve included above this post involves the difference between Asian and Western views of connections and contacts; Westerners see a greater number of bilateral relationships, while Asians see a much more complicated web of connections.

Another drawing in Liu’s book represents a Western approach to problem solving as footsteps marching straight through the middle of a dot, contrasting with the Asian approach of walking right around the edge. And yet another shows Western self-representation as a straight line between two dots, compared to a circuitous line between two dots for Asians.

After looking at Liu’s images, I was startled to realize that I identified much more closely with the Asian views than the Western ones. I grew up in the Midwest and Texas, made my first trip abroad to Germany and Belgium, and worked in Latin America early in my career, this came as something of a surprise.

Liu’s book goes to show that not every Asian or Westerner is like every other, so it’s important not to let stereotypes constrain how we see other people.

Her images also show the importance of complex systems thinking –something I will explore over the course of this series. Great power comes from embracing serendipity, and from stepping back and take a big-picture look at the connections between our ideas and experiences.

My friend Jerry Michalski maps his brain using The Brain app that shows not just what he’s been thinking about, but how those thoughts and ideas connect to each other. He’s amassed hundreds of thousands of entries.

Since I’ve been writing and speaking a lot about risk lately, the first thing I looked for was what Jerry had thought about risk.

Jerry’s been working on trust building lately, so naturally he included an article connecting risk, trust, and impact. The piece’s premise was a familiar theme for me –that promoting innovation means supporting “good” risk—but it added some welcome nuance, particularly that you can’t support risk without building trust.

The authors cited a survey of philanthropy by the Open Road Alliance that found donors and grantees rarely had frank and open conversations about risk and unexpected obstacles. The result is that foundations generally fail to provide enough support for grantees should events take an unforeseen turn.

One of the Open Road Alliance’s recommendations, thus, was that grantmakers open a conversation about risk throughout the application process, signal an acceptance of the presence of risk, and formally exploring partners’ risk appetites.

I could not agree more. In fact, I’ve been spending much of my time lately having exactly this sort of discussion with people of all kinds of risk sensitivities and preferences, and exploring how people manage differences within relationships and teams. Part of that involves understanding how we came to our attitudes about the risks and opportunities in our lives, and that those paths are not as linear as we might think.

This column is about many things, but above all about the connections among many parts that both make up the backbones of systems and connect to other systems. I’ve called it “Around My Mind” to reflect the wide range of ideas and connections among them, as opposed to a more traditional and linear “On My Mind.” I’d love for you to join me on this journey.

I’ll be writing more about these issues in this weekly “Around My Mind” series. You can subscribe by clicking the blue button on the top right hand of this page. If you like it, I invite you to subscribe and share with others. Please don’t be shy about leaving comments or dropping me a private note with your own reactions.

Who’s Talking about The Gray Rhino in China

Pointing to the existence of a gray rhino -a highly probable, high impact danger that nevertheless is being neglected, downplayed, or outright ignored- is a way to create a sense of urgency toward addressing it before panic sets in. Senior Chinese officials have used the term extensively for exactly this purpose for issues from financial risk to US tax policy to urban fire safety, earning it a spot on the “Top Ten New Terms of the 2017 Chinese Media” list compiled by China’s National Center for Language Resource Monitoring and Research in December 2017.

China’s President Xi Jinping keeps a copy of the Chinese edition of THE GRAY RHINO on his bookshelf, where media commentators noticed it during his 2018 New Year’s Day Speech, and has discussed the gray rhino with senior economic policy makers.

A reference to the gray rhino on the front page of People’s Daily in July 2017 following the National Financial Work Conference sent the prices of risky stocks down more than 5 percent in a day. The concept influenced Chinese policies on heavily indebted companies (covered on the front page of The New York Times) whose aggressive overseas expansions the government reined in.

In a much-commented-upon essay posted on the central bank’s website in November 2017, People’s Bank of China Governor Zhou Xiaochuan warned that China faced many gray rhinos, three in particular: macro-level financial high leverage and liquidity risk; credit risk including non-performing loans and increasing bond market credit defaults; and finally, shadow banking and criminal risk.

Cai Qi, secretary of the Beijing Municipal Communist Party Committee, referred to urban safety as a gray rhino after the tragic Daxing apartment fire in November 2017.

Senior Chinese officials told The Wall Street Journal in December 2017 that the US tax reform was a gray rhino threat to China, and raised interest rates in response to it.

China Banking Regulatory Commission director Guo Shuqing told People’s Daily in January 2018 that gray rhinos and black swans threaten China’s financial stability.

At Davos in January 2018, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), the nation’s stock market regulator, warned that China’s debt was a gray rhino, again generating headlines worldwide.

Shortly afterward, Fan Hengshan, vice secretary general of the National Development and Reform Commission (NDRC), the country’s top economic planning agency, warned in a commentary in the state-controlled Beijing Daily that the year to come faced many gray rhinos.

Baidu Baike, China’s largest online encyclopedia, explains the gray rhino and its evolution in China.

Read more below for additional detail on recent gray rhino coverage from China.

Close to retiring, China’s central-bank chief warns of financial riskThe Economist. November 9, 2017.

China’s Central Bank Governor Warns About Financial Risks — AgainThe Diplomat, November 9, 2017.

Chinese Banks Enjoy Few Bad Loans But Central Bank Warns Of Risks Forbes, November 11, 2017.

Hidden Debts Accumulate at Local LevelsCaixin Global. December 27, 2017.

Beating Targets: China’s Economy Grew 6.9 Percent in 2017The Diplomat, January 18, 2018.

China eyes black swans, gray rhinos as 2018 growth seen slowing to 6.5-6.8 percent: media. Reuters, January 29, 2018.

Use your browser to translate the following links from Chinese.

Zhou Xiaochuan: China must be vigilant “black swan” and “gray rhinoceros.” Gold Network. November 5, 2017.

Debt, shadow banking, capital market volatility, “gray rhinoceros” are moving toward China? qq, November 10, 2017

Zhong Wei: Considering Grey Rhino, China Should Balance Overall Gradual Reforms and Partial Radical Reforms. qq. November 16, 2017.

Exchange currency “gray rhinoceros” annual inventory. Gold Network. November 24, 2017

Ren Guanqing. The Greatest “Gray Rhinoceros”: an interview with Michele Wucker author of the Gray Rhinoceros Phoenix New Media, November 30, 2017.

Yearender: China moves to tame its “gray rhinos.” Xinhuanet. December 17, 2017

The Gray Rhino on Xi Jinping’s Bookshelf

After Chinese President Xi Jinping’s annual New Year’s address, it has become an annual tradition for Chinese media to scour his bookshelf for new titles. In 2018, the new books include The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore, which was released in China in February 2017.

Other new economics books include textbooks on ecological economics, W.W. Rostow’s 1960 classic The Stages of Economic Growth: A Non-Communist Manifesto, and Money Changes Everything by William N Goetzmann. The bookshelf also included texts on understanding artificial intelligence, augmented reality, and machine learning, including The Master Algorithm by Pedro Domingos and Augmented by Brett King. Very good company!

Read the whole list here in Shanghaiist or, if your Chinese (or your browser translator) is good, a longer article on qq.

Introducing www.thegrayrhino.com

The launch of my latest book, THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore (St Martin’s Press), kept me very busy in 2016, with appearances in New York, Washington DC, Chicago, Milwaukee, San Francisco, Phoenix, London, Luxembourg, and Oslo.

I’ve also been working on turning the concept and framework introduced in the book into keynote speeches, workshops, and practical tools for companies, policy makers, and individuals to use in making better decisions that will help them avoid preventable but too often overlooked “gray rhino” problems.

It’s very, very exciting to formally launch Gray Rhino & Company through its very own brand new website, thegrayrhino.com. The site includes blogs about geopolitical gray rhinos as well as behavioral tools to help with gray rhinos at work or home. Along with my own thoughts, the site hosts guest commentary. It also has multimedia resources, including video, audio, slides, and e-books.

Please visit the site, take a look around, and let me know what you love (or hate!). I’m open to suggestions, to guest posts, and collaboration opportunities.

You’re also invited to sign up for my newsletter, the Gray Rhino Tracker. Every month, I’ll share insights and tips designed to help you to make sure you’re not about to get run over by a gray rhino. Plus you’ll get special offers, links to articles, and recommendations of work by people I respect.

But wait, there’s more! (I always wanted to say that…) Gray Rhino Tracker subscribers also get a FREE e-book companion, What’s Your Gray Rhino? 5 Questions to Keep You from Getting Trampled, with a simple set of questions to help you keep track of your organization’s -or your own- gray rhinos. Sign up for the Gray Rhino Tracker to get a download link.

I’ll still post content here regularly, including things related to Why the Cocks Fight and Lockout, but you can take a much deeper dive into gray rhino thinking on the new site. Thanks for taking a look!