Michele Wucker talks to us about her new hit book, "The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore"
Gray Rhino & Company Founder and CEO Michele Wucker coined the term “gray rhino” to draw attention to the obvious risks that are neglected despite – and often because of – their size and likelihood. The timely metaphor has moved markets, shaped financial policies, and made headlines around the world, especially as a metaphor for the ignored warnings that led to the COVID-19 pandemic.
Michele’s 2019 TED Talk has attracted well over two million views. She is the author of four books including the global bestseller THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore; and the forthcoming YOU ARE WHAT YOU RISK: The New Art and Science of Navigating an Uncertain World (April 2021).
What is a Gray Rhino?
The Gray Rhino is a metaphor for the threats that we can see and acknowledge yet do nothing about: the two ton thing that should be hard to ignore, but from which we look away even though it’s in our interest to get away before it charges. It may be pawing the ground, snorting, and getting ready to charge at you; or it may still be a ways up the road when you still have time to manage things before they become urgent.
I created it for talking about big policy issues, like debt crisis and financial fragilities, climate change, and inequality. Along that vein, it’s struck a chord during the Covid-19 pandemic as so many of us ask why so many warnings went ignored. But it’s also useful for business issues, whether outdated business processes and systemic decision-making failures, industry trends, or product safety issues.
I’ve been surprised at how many people apply the concept to personal issues as well: the suspicious mole on your back that you keep meaning to get checked out, the long-overdue tax returns, the stitch-in-time maintenance issues with your home or car.
The gray rhino counters two familiar metaphors. The elephant in the room normalizes saying and doing nothing. That’s not okay. The black swan gives people a “nobody could have seen it coming” cop-out excuse for ignoring gray rhino problems that many people did see coming and warned about.
The Gray Rhino Framework
The Gray Rhino metaphor and framework is a way to get people to acknowledge and counteract our vulnerability to obvious, dynamic risks not just despite but because they are so obvious. There are five stages, each of which has different obstacles and strategic imperatives that shape your response:
Denial. Insistence that there is no threat.
Muddling. Acknowledgement of the risk but come up with a litany of reasons not to do anything about it.
Diagnosis. A switch to the active planning stage, analyzing what it takes to solve the problem and getting our ducks in a row.
Panic. Frenzied anxiety in face of an imminent crisis; the time when we’re most likely to act but also most likely to make the wrong decision absent a strong action plan.
Action. Taking steps - often led by positive mavericks - to avert the problem, inspiring others to join in the action, tracking the results, and adjusting as needed.
How does The Gray Rhino apply to business?
Businesses can apply the Gray Rhino to risks, problems, and situations of all types and sizes. The metaphor and framework can help both leaders and their teams take a fresh, strategic threat at the kinds of highly probable threats that they are more likely to be ignoring than they think. That might be digital disruption, cyber-security, succession planning, turnover, over-expansion, or falling revenues.
One of the biggest threats is what I call a “meta gray rhino,” a structural problem that gets in the way of solving - and often recognizing - specific problems. The business landscape is full of examples of companies that ignored their gray rhinos and paid the price: VW with its emissions scandal; GM with the faulty ignition switch; Blackberry, Blockbuster Video and Kodak failing to embrace new technologies… the list goes on and on.
Though these past cases illustrate the concept, gray rhino theory is most useful when businesses use it to look ahead at the challenges they see coming at them, rather than in the rear-view mirror the way black swans are used. Successful gray rhino wrangling depends on skills in leadership, risk management, cost-benefit analysis, and decision making.
What is the psychology behind the gray rhino?
Why does a person, who sees a gray rhino charging at them, prefer to ignore it?
Humans are vulnerable to many cognitive biases that get in the way of us acting. We are prone to denial because our brains are trying to protect us from information that is overwhelming and allows us time to absorb it slowly. We also are prone to taking mental shortcuts that are supposed to make decisions easier but often lead us in the wrong direction.
Some of the key biases are:
Optimism Bias. The tendency to embrace information that we want to hear, while ignore bad news.
Confirmation Bias. The failure to take seriously information that does not confirm our existing views.
Group think. The habit of agreeing with other group members, especially those with similar views and backgrounds.
Solution Aversion. Resistance to acknowledging a problem because we don’t like the steps needed to fix it.
How do these biases manifest in different individuals?
As a start, being aware of these biases helps us to push back against them, though it’s hard to completely escape the tension between reason and emotion. It’s also important to be aware of how each person’s personality plays into how likely they are to recognize and act on a gray rhino threat.
The UK based group, Psychological Consultancy has developed a tool called the Risk Type Compass, oriented around two axes, ‘Anxious versus Calm’ and ‘Methodical versus Impulsive,’ as well as how strongly you align with each pole. This is a useful tool for understanding how you and your team members differ in your responses to gray rhino risks so that you can compensate for your relative strengths and weaknesses.
How does the Gray Rhino impact group decisions, where consensus building is often necessary?
Groups often end up making decisions that are considerably more or less risky than their members would have made individually. This phenomenon is called “Risky Shift.” Groups made of people from the same demographics and backgrounds are more susceptible to it. The more people look alike, the less likely they are to consider alternative scenarios and look at red flags.
Homogeneous groups can be very dangerous to an organization, just as a room full of hammers will see every problem as a nail, members are too likely to see an issue from the same angle and may miss important information. A tool-box, by comparison, sees a variety of solutions to an issue. That’s why having a diverse group of backgrounds and demographics is critical to good decision making.
How should organizations think about risk as a diversity metric?
First, it’s worth thinking about the risk attitude composition of key executives, the board, and the overall risk culture across the company. If everyone in the room is a lawyer, they may be so focused on reducing risk to zero that they unintentionally create other risks.
The ideal is to have a combination of people with different backgrounds, personal histories and professions –as well as a mix of risk attitudes. This dynamic will make consensus building harder but improve the quality of decisions.
There is always a myriad of decisions to be made. How do you triage?
When The Gray Rhino was first published, people often asked about the possibility of a major asteroid collision. The odds of such a disaster are small –though not nothing-- but the cost of an ‘asteroid zapping laser’ is high, especially when compared to the other gray rhinos we could manage with that money.
The ‘Muddling’ stage of the gray rhino framework is the one where people dither and come up with all kinds of reasons not to do anything about an issue. In that case, everything gets triaged because everyone fears acting. What you need to do is switch to the ‘Diagnosing’ stage and ask the hard questions that will give you a better triage strategy. First, how serious is this problem related to others, and what does it take to get it fixed?
Some businesses approach risks by only considering likelihood and potential impact. But it’s also important to look at how close it is, how fast it’s moving, what it takes to solve the problem, the extent of resources at hand to fix it, and whether you can get what you need to respond effectively. Also look at how this particular issue is related to others, upstream, downstream, and sideways. Can you fix this while also fixing a related issue? If you fix this will you also solve another problem? If you use your resources here what is the opportunity cost. These questions help you to identify additional stakeholders and allies.
Thank you to Michele Wucker for taking the time to talk with Stranberg Resource Group! We loved talking with Michele and highly recommend her book, don't forget to check it out at one of the links below!