Dealing with Black Swan Events: An Interview with Vijay Mahajan, Founder and CEO of Basix

• Published date: 01 September 2016
• Date: 01 September 2016
• DOI: http://doi.org/10.1002/jsc.2085

RESEARCH ARTICLE

Strat. Change 25: 625–639 (2016)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2085

Copyright © 2016 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2085

Dealing with Black Swan Events: An Interview with

Vijay Mahajan, Founder and CEO of Basix1

Arvind Ashta

University of Bourgogne Franche‐Comté, ESC Dijon‐CEREN, France

Social entrepreneurs who are genuinely following their mission may nd

unexpected disaster if the industry as a whole does not conform to the social

consciousness created by their image.

Unexpected disasters with low probability and high magnitude have been catego-

rized as ‘black swan’ events by Taleb (2010). Taleb takes the case of a turkey. Every

day that the turkey is fed, reinforces its belief that it will continue to be fed in the

future. It would not realize that on the day before Christmas, it will be killed.

is is, to the turkey’s mind, a highly improbable event with a great impact. Yet

owing to its low probability, the turkey discounts it. Taleb goes further and indi-

cates that the mind chooses to see that which conrms its belief. Moreover, even

if a risk is known to be possible but highly improbable, our bounded rationality

requires us to sift out the extremely improbable event and focus on the more

probable. Finally, people tend to focus on a few exceptional successes and ignore

the silent evidence of failures.

Certainly, one can learn from such events by hindsight. Yet, when a well‐

growing industry is suddenly halted, it brings its own problems, not just of confu-

sion and chaos in the enterprise, but also problems of leadership, human resources,

and management development, which have not been explored in the management

literature. is is normal, since these events are rare. We have therefore used one

such disaster by asking a key leader how he reacted to it. We hope that the account

will serve others with a possible way to behave in such a future outcome.

One of the fastest‐growing industries of recent times, and perhaps the most

extolled, has been micronance. Lately, it has been criticized and vilied. ere is

nothing surprising in this about‐turn. Social innovation leads to social change, and

this change is positive for some, negative for others, and neutral for many.

1 JEL classication codes: D81, M12, M13, M14, M54. e author is grateful to Hugh

Sinclair for an interesting discussion, which prompted the clarication of some notions

in the introductory part. However, this article does not reect his views. e Conseil

Regional de Bourgogne and Banque Populaire are thankfully acknowledged for their

co‐nancing of this research.

Cognitive dissonance between

social entrepreneurs’ perceived

mission and prots can ruin an

industry.

Unexpected disasters leave a

leader in emotional discomfort,

which needs to be managed.

Philosophy and poetry are

supports that leaders can use.