Shock proof – how to protect your business from unforeseen events

1 year ago

Nassim Taleb introduced the concept of antifragility into the modern business world in his book Antifragile. For Taleb, something is antifragile when it benefits from uncertainty. Taleb distinguishes entities that are fragile and robust, from antifragile entities – fragile things break when they encounter harsh outside forces, robust things remain unchanged in the face of outside forces.

By distinguishing the third class that grows under stress, the antifragile, Taleb shows that we should reconsider the ideals from which we design things. Businesses are often confronted with uncertain externalities. For Taleb, our economy should be antifragile, our businesses should be antifragile.

With this new concept established, the key question becomes: How can I make my business anti-fragile?

Identifying antifragility

Antifragile entities are things that benefit from volatility and disorder. When faced with some event that causes harm, the antifragile entity learns from that event. Among the key attributes of an antifragile business is diversity.

Diversity means having a number of resources from which to draw when faced with a new, potentially harmful situation. Finding the best use for the resources can lead to mistakes – but for Taleb, mistakes are to be embraced. Mistakes are the means by which a business can learn and strengthen itself.

Absorbing mistakes

The key to diversity as a value is that it can allow your business to absorb the mistakes you may make, and change for the better in response. Diversity may mean having people in leadership roles who are adaptable and able to enact different tactics quickly, employing people with a strong sense of autonomy who provide a variety of perspectives when needed, or being able to pivot in terms of product or service when new opportunities or challenges are encountered.

Don’t be rigid

Fragility is created when a business’s structure is rigid. Rigidity emerges as a key trait for businesses that are reliant on debt and leverage – if you are unable to change your business because of your financial obligations, then you leave yourself open to breakage when a shock is encountered.

 

Likewise, insisting on a top-down hierarchy for planning and implementation created unnecessary rigidity – useful business information can come from any point in your business, and often the lowest paid employees will be able to identify business weaknesses that you are blind to because of your position at the top of the management pyramid.

When it comes to your employees, their work can create fragility under certain conditions. Taleb argues that salaried employees are fragile, while self-employed workers are antifragile. In order to put this into practice, a business might commit to an employee share scheme. Managers love to talk about employees taking ownership of their work, but if there is no reflection of this sentiment in reality, then it is advice that is condemned to be ignored.

Antifragile is a concept that demands attention. It can open your eyes to weaknesses in your business that you had overlooked, and it could show you hidden virtues in your business that you’d failed to appreciate.

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