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Will 2017 be a Black Swan year?

Posted on February 6th, 2017 by in Pharma R&D

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A few years ago, I sat with some friends aiming to make predictions for the year ahead. Our goal was to see how close we could get, with a plan to review the following new year. We made several predictions for the world of science & technology, finance, politics, entertainment, and a few others. As expected, we were all way off the mark, although the experience was good fun. Our predictions were more hopes and fears rather than reasoned assessments, and I have not made such predictions since.

Predictions are difficult and I imagine there will be some successes and challenges in all our lives this year. However, with the events of last year starting to come into gear, it feels as though 2017 will be the year of the Black Swan. The Black Swan is a great book from Nassim Taleb which highlights the impact of highly improbable events. These random events come as huge surprises, especially to experts. We may not be able to predict them, but we need to be able to adjust and adapt when they occur. It is about being resourceful. If the impact of the Black Swan event is negative, I need to manage the situation. If the impact of the event is positive, I may want to make the most of it.

In the world of R&D, these Black Swan events are often seen as anomalies. Our basic human nature can easily overlook what does not fit our perception of the world. This confirmation bias is an important part of how we make sense of the world around us. It can help us see patterns and make connections, but they may not always be the right ones. Thomas Kuhn spoke about the paradigm shifts that can occur in science, when current concepts change to new understandings and new principles are developed. This concept has perhaps been a little overused, but seems apt for the impact of Black Swan events. Our normal scientific investigations are usually targeted testing current concepts, and when the Black Swan arrives, it is perceived as an outlier or anomaly. However, if the context is right, it can lead to dramatic change.

In managing an R&D portfolio or leading a project, it is difficult to spot these opportunities. Furthermore, it is very difficult to know whether they will be useful or not. There is a risk involved in doing something new, whether it is a big or small deviation from the norm. This is an inherent dilemma in the R&D world. For an Industry that spends significant funds on innovation, we can be incredibly conservative in our approach. The challenge for 2017 for research and portfolio leaders is how to spot the useful outliers, how to create the space for new innovations and processes to increase industry productivity and value to investors, patients, practitioners, and payers.

2017 seems to be a year where the R&D environment is potentially undergoing significant changes in political, financial, and regulatory processes. Changes in the US government are already driving decision making in some industries. The UK is very likely to start negotiations for leaving the EU, and the financial impact is already manifesting in exchange rates. There will be a new world order. With these developments there are likely to be some changes in how the industry regulates itself and how it is regulated by healthcare and research agencies.

So, is 2017 the year for Black Swans? Time will tell. However, those researchers, leaders, and organizations who are prepared for them may do better than those who are not.

Get more insights into how to deal with R&D under unpredictable circumstances download this free white paper: Holistically Addressing Bottlenecks and Attrition Rates in Drug Development


 

All opinions shared in this post are the author’s own.

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