The Black Swan Comes to TV Phone Ins

I’m reading the fascinating “The Black Swan: The Impact of the Highly Improbable” by Nassim Nicholas Taleb. It’s very readable, though contains some complex theory, but the central theme is the difficulty of predicting random events (Black Swans), especially when your guide is history.

One example is a turkey, who builds up trust in the farmer over 1,000 days of being fed, watered and cared for. Historically, that turkey could have no way of predicting that the 1,001st day is the Wednesday before Thanksgiving and he’ll experience a random event of his own. Actually, the idyllic 1,000 day life of the average turkey is the only flaw I’ve spotted in the book so far – most are lucky to survive 26 weeks in broiler sheds that can only be described as Turkey Hell. But that’s an aside and far be it for me to get all veggie and preachy on you.

An example of such an event in my own experience was back in the late 1980s. For many years a handful of companies had made a very good living taking kids and teachers on school skiing trips. Then Mrs Thatcher’s administration introduced the Educational Reform Act in 1988, which introduced the National Curriculum. This spelt out in detail what children in England and Wales must study and by default, what they could not.

Whether by accident or the design of a puritan politician or bureaucrat, skiing wasn’t included on the National Curriculum. Maybe it was an accidental omission, as a sport that is impossible to practice naturally in England and Wales, couldn’t exactly have been top of mind.

This meant that kids couldn’t go on school skiing trips during term time anymore and had to go in the holidays, which just wasn’t nearly so popular with teachers. Result; a decimated industry that no one predicted and just couldn’t have been if they’d relied on historical patterns.

Fast forward to today and the UK TV Phone In industry has had its own unpleasant Black Swan come to visit. A series of scandals have been exposed recently which meant that many, many people phoned in, paying premium rates for the privilege, but who had no chance of winning – for instance, one common theme was that a short list had already been selected before the lines were closed. Even more shockingly, some of TVs best loved, whiter-than-white shows were involved, many of whom had run consumer watchdogging features themselves over the years.

This has caused an outcry, though the timing puzzles me – it’s been common practice for years, so why the press should lead a crucifiction campaign now seems odd. And to an extent, all Phone Ins are fixed in that the chances of getting through to the prize are about as unlikely as that turkey farmer letting off one of his proteges before Thanksgiving.

Despite this, the campaign has resulted in many programmes stopping these highly lucrative features. And a recent poll found that 4/5ths of respondents say that they wouldn’t enter one again and suggesting that trust in TV programming has fallen as a direct result.

Of course, the scapegoats in this scandal have been the companies appointed to outsource and administer the Phone Ins, who, like the turkeys and tour operators in the examples above, couldn’t have predicted that their industry would practically cease to exist in a matter of a few weeks.

You could argue that the ones “guilty” of fixing these competitions deserved what they got and while I wouldn’t defend them too vociferously, I doubt many actively considered that what they were doing was “wrong” as such – it was more a way of delivering the profits that the TV companies demanded, while fitting in with their stringent timing and editorial demands about when winners needed to be decided.

But doubtless there’s also been some companies operating unblemished policies who have suddenly found themselves without an income – or one that has been severely reduced anyhow. I heard of one company that turned down an offer to buy them of around ¬£80 million ($160 million) a few months ago – some would say a little arrogantly – only to find themselves holding a bag of worms today. So one lesson is that if you’re ever in a position to create a life changing event by selling your company, think hard before turning down a good offer – this happens more than we might think. Remember Friendster’s ¬£500 million valuation?

If the spectre of a Black Swan coming to roost in your industry adds more stress to your daily life, I apologise. But the least you could do, it seems to me, is try to understand more about the phenomenon and then at least you might recognise one when it’s looking to land. That might just give you enough time to react while the rest of your industry is still going “WTF?”

So, I suggest you buy the book and give it a damn good reading. Let me know what you think of it or leave comment if you’ve already read it.

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Disclaimer: I obviously don’t profit from sales of the book, but thought I’d better make that clear if you’ve come here from a search engine or something.

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