Anti-fragility (described by Nassim Nicholas Taleb in his book – Anti-fragile) is a property of gaining/ getting better with disorder. This is probably the most enduring form of longevity. In his previous book he talks about how humans are not geared to deal with randomness in nature – Randomness. The best alternative is to STOP PREDICTING the path of randomness and to gain from it (anti-fragile).Some examples of things that gain from disorder are
- Evolution : In a volatile environment , evolution favors the hardier organisms.
- Ideas: Some ideas like freedom get stronger with the stress applied on them
- Living things: Most living things display ‘hormesis’ – an adaptive mechanism to stresses in the environment. E.g.: muscles and bones get tougher and denser on the application of weight up to a certain limits
The idea of anti-fragility seems to be nascent and not formed well. However some common properties that can be associated with anti-fragility are
- Time: they withstand the stresses of time. The best genes and the most influential ideas have survived in one form or the other and have a high probability of surviving for an equally long period in the future.
- Redundancy: they have an inbuilt redundancy that provides a fail-safe mechanism. Hormesis is a mechanism of redundancy where the body will over-compensate to allow for additional stress. It must be true of evolution too. Are there redundant species?
- De–centralized: they are the sum of functional sub-units. This ensures that randomness or stresses are dealt in a distributive manner. A centrally planned mechanism is susceptible to a single flaw that can have debilitating effects on the entire system whereas in sub-units the effect of error is contained to that unit.
- Sacrifice/skin in the game: These sub-units can be sacrificed for the betterment of the overall. E.g.: species becoming extinct, revolutionaries dying for an idea or cells dying to ensure the survival of an organism. Without this filter there would be no drive towards betterment
- Optionality: All anti-fragile things like to exploit optionality. This allows you to structure a pay-off with limited downside and unlimited upside
ANTI-FRAGILE COMPANIES
- Time: An anti-fragile company can be identified by the fact that it has survived for a very long time.
- Redundancy: These companies will generate redundancy, in certain areas that they have experienced stresses in. Like a porter has a strong back/legs a company that has been through spikes in demand may build excess inventory or one that has been hit by collapse in demand might build a cash buffer
- De-centralized : The company has to function in sub-units , decision making is decentralized and they work like individual companies within companies
- Skin in the game :The weakest/loss-making units will cease to exist and the resources will be redistributed for the benefit of the entire company
- Optionality : These companies are not constrained by business forecasts and management catch-phrases. It makes more sense for these companies to tinker at a small scale to exploit the optionality of a wind-fall with limited downside. Eg: GE had many small entrepreneurial divisions
ANTI-FRAGILE CAREER
It is good to have 2 jobs, a stable one and a riskier one that you can depend on for a positive black swan. It could be entrepreneurial, writing, a band etc.
Parting thoughts: Order and antifragility are not at odds (Social Structures)–. Liking dis-order does not mean that “organization” is undesirable. That would be like saying , let us not plan/organize an event because that will make us anti-fragile. The right approach is to organize the event to be able to absorb randomness. Finding a time-tested venue/caterer, having a back-up plan for parking / alcohol (redundancy) , delegating responsibilities to sub-groups (sub-units) , make sure that incompetence is punished and sending an invite to the prime minister to exploit the (optionality) of a VIP guest is the right way.