Herein on “antifragility”: an attempt to integrate within intelligent business design the concept of antifragility with future uncertainty, randomness and other related phenomena probed to humbling depths by Nassim Nicholas Taleb in his book Antifragile: Things That Gain From Disorder, a volume from an equally compelling collection of his work entitled The Incerto. All of the ideation in this chapter ought to be rightly credited to Taleb; they are his original ideas, it is due to his inspiration, and it is because of his strength in literary instruction that we are even able to attempt a logical explanation for the necessary inclusion of antifragile elements for systemic and firm sustainability.
Disorder is one of the few things we humans can depend on. It never ceases to make itself re-known, no matter how much we may try to forget it exists or defend against it. Staving off unpredictable change is a losing, one-sided battle in which we can make no progress and score no points. And in the midst of an ever-evolving natural world, wherein disorder is constantly re-introduced in unpredictable ways, how can we fortify our economic efforts against the undoing threats waiting just out of sight in the uncertain future? In most cases, humans have taken up the challenge by attempting to increase the strength and robustness of our things and institutions, including our business forecasts. We have tried mightily to make our creations resistant to disorder, anarchy, chaos and change. Things can only ever be robust up to a point. That is, no matter how “strong” or “resistant” a thing (company, idea, etc.) claims or seems to be, beyond a certain point, disorder, which has no limits or expiry, will ultimately find a way to exploit vulnerabilities and bring about the fracture, crumbling, and destruction of the thing which attempts to fend off and exclude uncertainty. Something that is antifragile, however, is something that gains from disorder. Something that is antifragile adapts positively to the new conditions brought by previously unforeseen information, and within this quality is embedded the principle of constant learning.
When disorder strikes a fragile business, it fails. When disorder strikes a robust business, it resists, to a point, then fails, eventually. When disorder strikes an antifragile business, the business grows and evolves to incorporate the new information and become less susceptible to similar risks in the future. This understanding ought to be straightforward. The real noodle-baker is why our society of economic entities is, instead, so chock-full of peacocks and peacocking. Virtually every business is engaged in the constant illusory effort to represent itself to its customers, shareholders, the media, etc., as stronger, larger, and more robust than it may actually be. But who is really benefiting from this portrayal of “strength”? This illusion of greatness is remarkably thin from the right angle, but still remains incredibly widespread across all markets.
Peer into a business’ internals and evidence of fragility is everywhere. One finds it wherever they find wage labor, or public ownership, or local resource extraction, or executive ownership that “earns” hundreds or thousands of times more than the lowliest wage-laborer. The signs are abundant and easy to spot beneath all the peacock feathers. For a simple, straightforward example: businesses that strive for high efficiency go to dramatic lengths to expand the tightness of coupling of various business components to reduce waste, reduce production time, reduce expenses and generally increase the efficiency of output. However tight coupling (as detailed in the late Charles Perrow’s Normal Accidents: Living with High-Risk Technologies) is extremely vulnerable to both systemic and idiosyncratic shocks and disruptions, i.e. It is fragile. When a single component fails, the whole system can go offline. Most efficiency-based business models (like Six Sigma) implicitly and explicitly strive for tight coupling.
Ultimately, as disorder and change remake the landscape, literally and figuratively, ever-unique sets of environmental conditions are continuously unfurled and one would be wise to adapt their model of understanding to how the thing they are looking at interacts with its environment, because as we all know, “It’s the environment, stupid!” To work in harmony with the ubiquitous unfolding of time, businesses ought to be designed with elements that allow them to flexibly adapt to changing environmental conditions, learn from disorder, and shift into modes of sufficiency, which will allow them to alter operating conditions to be sufficient for survival, rather than the detrimental efficiency model of pure capitalism (aka: capitalism-as-usual), which constantly strives for profit-maximization despite changing environmental conditions. Increased sufficiency among businesses will lead to a higher survivorship after systemic catastrophes and unpredictable disasters, a quality which also increases the overall antifragility of the system, allowing it to thrive as environmental-economic conditions evolve.
The reality of an ever-changing environment also highlights an important concept in business evolution known as leaping, introduced by Howard Yu in his book Leap: how to thrive in a world where everything can be copied. To paraphrase the thrust of his point: when a business is confronted with a new set of environmental conditions, it must find a way to adapt its operations and leap to a new way of doing business in order to thrive in those new conditions. Perhaps it needs to shift to a new sector, or tweak its products/services, or its strategic focus, or its business model. Whatever the case, it must leap, as opposed to trudging along in its ingrown path. We find this notion of leaping compelling, and it also serves as a helpful way of expressing how events may transpire for a company that has incorporated antifragility into its business design.