Unknowns, Black Swans, and Bounded Rationality in Public Organizations

• Published date: 01 September 2022
• Author: Alberto Feduzi,Jochen Runde,Gary Schwarz
• Date: 01 September 2022
• DOI: http://doi.org/10.1111/puar.13522

958Public Administration Review • September | Oct ober 20 22

Public Administration Review,

Vol. 82, Iss. 5, pp. 958–963. © 2022 by

The American Society for Public Administration.

DOI:10.1111/puar.13522.

Gary Schwarz is a professor in public

management and strategy and Director of

the Public Management and Regulation

Group at Queen Mary University of London.

His research focuses on how public

organizations and employees can improve

their performance, innovation, and the role

of leadership in strategic decision-making.

His articles have been published in journals

such as

Public Administration Review

,

Public

Administration

, and

World Development

.

Email: gary.schwarz@qmul.ac.uk

Jochen Runde is a professor at Cambridge

Judge Business School, University of

Cambridge. He has published widely in the

areas of decision-making under extreme

uncertainty, social ontology, and innovation.

His work has appeared in journals such

as

Academy of Management Review

,

MIS

Quarterly

, and

Strategic Management

Journal

.

Email: j.runde@jbs.cam.ac.uk

Alberto Feduzi is a management practice

associate professor at Cambridge Judge

Business School, University of Cambridge.

His research focuses on individual, strategic,

and organizational decision-making under

uncertainty. His work has been published in

journals such as

Academy of Management

Review

,

Organizational Behavior and

Human Decision Processes

, and

Cambridge

Journal of Economics

.

Email: a.feduzi@jbs.cam.ac.uk

Alberto Feduzi

Jochen Runde

Unknowns, Black Swans, and Bounded Rationality in Public

Organizations

Abstract: “Unknowns” and “Black Swans” have become familiar terms in the public administration literature

but tend to be used in different and often conflicting ways. This article provides a typology of the terms, develops a

framework for thinking about how their elements relate, and distinguishes four varieties of the Black Swan. Using

the Challenger Space Shuttle disaster, 9/11, the international withdrawal from Afghanistan, and the trade boycott

associated with the Danish cartoon controversy as examples, we examine how these four varieties may arise in

public sector organizations. We offer recommendations on how such organizations might reduce psychological and

organizational barriers to uncovering unknowns before they can go on to become Black Swans.

Evidence for Practice

• Black Swans are consequential shocks that arise in four varieties in public sector organizations: (1) those

formerly unimagined by the organization, or those formerly imagined but (2) deemed impossible, (3)

sufficiently unlikely to dismiss as impossible, or (4) lost, by the organization.

• Black Swans are often the product of organizational myopia emanating from psychological or organizational

barriers.

• There are steps organizations can take to improve their foresight and be better able to mitigate or exploit

what might otherwise be Black Swans.

The many unforeseen, unprecedented, and

often highly consequential ways in which

COVID-19 has affected our lives remind

us once again how the fortunes of citizens can

turn on events that were simply not on the radar

of public organizations prior to their occurrence

(Hall et al.2020). Nobel Laureate Herbert Simon

and members of the Carnegie School recognized

long ago that boundedly rational individuals

and organizations routinely face such events

(Simon1997[1947],1955), sometimes called “Black

Swans” when they are significant, and which emanate

from the broader category of what are often called

“unknowns” (Phillips, Roehrich, and Kapletia2021).

These two terms have become familiar in the public

administration literature (Kettl2020; Termeer and

van den Brink2013; Van der Wal2020), perhaps

not least because of the link to government agencies’

responsibility to maintain citizen safety and security

and prevent crises from occurring (Boin and

Lodge2016; Christensen, Lægreid, and Rykkja2016;

Comfort2002).

The idea of Black Swans is closely associated with

Nassim Taleb and his bestselling book The Black

Swan, where they are understood as “consequential

shocks” that come as a significant surprise

(Taleb2010, xxix). Taleb suggests that public

organizations tend to focus on what they know and

have evidence for, while what they do not know and

cannot be explained by past experiences and available

data is ignored and conveniently deemed an “act of

God” when it occurs (Comfort and Kapucu2006).

The idea of unknowns is most closely associated with

former US Secretary of Defense Donald Rumsfeld and

is memorably captured in the following extract from a

famous press briefing he delivered in 2002:

… there are known knowns; there are things we

know we know. We also know there are known

unknowns; that is to say we know there are

some things we do not know. But there are also

unknown unknowns—the ones we don’t know

we don’t know.

(Rumsfeld2002)

There is however considerable diversity in how

the terms are understood in the literature. For

example, while 9/11 is portrayed as a Black Swan by

Taleb(2010) himself, it has also been described as a

“predictable surprise” (Bazerman and Watkins2004),

an “unknowable” event (Snowden and Boone2007),

University of Cambridge

Queen Mary University of London

Gary Schwarz

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