The Black Swan Strikes (Part 2 of 3)

In a previous post I mentioned Black Swan Theory, which was introduced by Lebanese mathematician Nassim Nicholas Taleb in his book, “The Black Swan.” In this post I aim to look at the extent to which the English degree requirement could be considered to be a black swan event. More specifically I want to examine whether this alleged black swan in any way exonerates TBI (PT. Titian Buana Ilmu, which also styles itself as ‘The British Institute’) for their terrible market performance under the current leadership of Mariam Kartikatresni. The short answer, of course, is that it does not.

Black Swan Events

According to Taleb,  a “Black Swan event” has three characteristics:

  1. It is a surprise.
  2. It has a major impact.
  3. People contend that they expected the event to take place (in hindsight).

To what extent does the 2011 decision by DIKNAS to start insisting that TEFL teachers must have a Degree in English or Applied Lingusitics qualify as a Black Swan Event?

First, was it a surprise? The answer is clearly yes. The fact is that no one was predicting this. I have scanned dozens of Indonesia TEFL threads from 2009 and it was clear everyone expected the old regime to last. For example, one person asked if it would be possible to get a KITAS (work visa) without any qualifications at all. Here is one response:

You don’t necessarily need a TEFL certificate or degree. You should still be able to get a KITAS without one- many do.

The thought that regulations were on the verge of being markedly tightened was not even considered as a possibility. Similarly, look at the Indonesian expat forums from 2011 (after the new regulations had been announced) and there are long threads full of expat teachers doubting whether the regulations would ever be enforced. Surely someone in the government would see sense before the regulations were implemented, the doubters argued. Others made the reasonable prediction that the whole thing was a ploy to extract more bribes and would have no real effect. Evidently, the dominant tone of the debate was surprise, so the first condition for a Black Swan Event is met.

On to the second criteria. Has the English degree requirement had a ‘major impact’? The case for this one is wobblier. It would be fair to say that it has a far bigger impact on some schools than others. There are some schools in Indonesia which even welcomed the new regulations. The most prominent example is LIA (Language in Action). LIA only uses local teachers, so they realized that the English degree requirement would make life tough for their competitors while having no negative impact on them.

It was the subset of language schools which were heavily reliant on ‘Native Speaker’ teachers which felt the brunt of the new regulations. It only had a major impact on schools with lots of ‘Native Speaker’ teachers. But we can accept that at least for this subset of schools, it did have a major impact. The fact that articles about these regulations have now appeared in newspapers as far abroad as Thailand and the United States also indicates that the regulations have made a big splash.

So how about the final requirement? Have the ‘experts’ taken to saying that the tightening of visa rules was forseeable in hindsight?  The short answer is that there are some who do. After all, they point out, the Bahasa Indonesia fluency test was first announced back in 2003. It had long been clear that there were some xenophobic people in DIKNAS and Manpower who wanted foreigners out. The English Degree requirement had also been on the books for some time before it was actively enforced. So yes, there are some people who claim it was forseeable with hindsight. Therefore, the third criteria is also met.

TBI’s Particular Fragility

Hence, we can conclude that the English degree requirement was a Black Swan Event, though its impact was only felt on a small subset of language schools. But that is far from the end of the story. TBI has long been willing to paint itself as the victim of capricious government regulations, but is that really the case? Taleb himself warns that only ”an imbecile” would read his book and say, “Now I understand. Shit happens. There’s nothing that I can do.” Yet that is mostly what TBI did. They were largely passive and inert during the period when these regulations came into effect, as if there was nothing they could do to save themselves. In contrast, other schools proved much more nimble-footed.

This leads us to the question of why TBI in particular was so badly impacted by the new regulations. To answer this fully, it will be useful to look at a further idea from Taleb. In his 2012 book “Antifragile” he considers the qualities that make companies and systems liable to thrive in volatile conditions. Basically, none of these were to be found at TBI, which explains why they have fared so poorly since 2011. (We will take a detailed look at the differences between ‘fragile’ and ‘antifragile’ systems in the next post, but I will pre-empt myself a little by saying that TBI is obviously a very fragile entity). Here are 3 introductory reasons why the English degree requriement hit TBI hardest of all:

  1. They don’t have connections. They are not well-connected with government departments, so they have little bargaining power, influence or ‘pull’. It used to take TBI teachers much longer to get their visas processed than teachers at other schools even before the new regulations came into effect
  1. There was a severe shortage of foreigners with formal academic qualifications in the organization before 2011. None of the three most Senior expats in Bandung- Preece, Sheik and Martin- had a university degree, for instance. A culture of complete indifference to academic credentials (besides the CELTA certificate) existed in the company, which meant that almost none of their existing staff met the new regulations when they were issued.
  1. Perhaps most crucially of all, the organization was top-down, autocratic and inflexible. Many people in the company felt that the English degree requirement was a huge threat to TBI and wanted the company to raise teacher salaries for people with degrees and spend a lot more money on teacher recruitment. Instead, Ibu Mariam, the autocratic and high-handed TBI Director, insisted that salaries were already high enough and refused to change course. Several months later, TBI was faced with a severe teacher shortage and began illegally hiring teachers on VKU visas. Her inflexibility and intolerance for dissenting opinions was directly responsible for TBI’s inability to adapt.

In conclusion, we can see that TBI was already a very fragile company in 2011, with a highly inflexible management structure, a lack of people with academic qualifications and few useful connections in the government. All of these factors meant that they were bound to struggle if the visa rules were tightened in any way. Ibu Mariam had already been mismanaging TBI for several years, greatly weakening it thereby. When the Black Swan event of the English degree rule arrived, they were singularly ill-equipped to deal with it.

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