At the intersection of business model strategy, technology, and business development, The Business Engineer is the only official newsletter of FourWeekMBA.com, the leading blog about business model strategy and business engineering. The blog reaches millions of business people each year.
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“Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better,”
This is how, author, Nassim Nicholas Taleb defines it!
Antifragility is a characteristic of systems that thrive due to stressors, volatility, mistakes, attacks, or failures. And it's a life-changing concept.
A concept that, when I first discovered it in 2014, changed everything I knew.
It made me rethink most of the concepts I had learned as a business person, restructure my understanding of the business world, and become one of the foundational concepts of my career and life.
Why cover it now, after many years of making this one of the core concepts that drive my life?
Because this is one of the most uncertain times, and because most people misunderstand the concept, thus meaning exactly the opposite of what antifragility is.
Let me explain then!
But before, I draw the concept for you:
Antifragility was first coined as a term by author and former options trader Nassim Nicholas Taleb.
In his book Antifragile: Things That Gain from Disorder, Taleb described antifragility as follows:
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it anti-fragile. Anti-fragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the anti-fragile gets better.”
Taleb suggests human society be made antifragile to benefit from black swan events.
These events, which are unpredictable and can have severe consequences, are traditionally managed by suppressing randomness, chaos, and volatility (which is often what causes them, in the first place).
First of all let's define what's a black swan, as most people nowadays get it backward.
A black swan is an unpredictable event, which given the structure of reality, can have severe consequences, as it's very extreme.
In the world in which we live, a black swan, rather than being a once in a million years event (as many financial models assume for market crashes), is way more frequent, and actually, black swans often shape our world way more than the other events.
While black swan events are impossible to predict, Taleb argues that a better strategy is to accept their inevitability and take advantage of the ensuing disorder. When you set yourself, a system, or your business for these "rare events," you're antifragile.
Indeed, Taleb’s antifragility strategy thrives during black swan events because it assumes there is more to gain than there is to lose.
Conversely, the fragility strategy where randomness is suppressed perishes during a black swan event because it assumes there is more to lose than there is to gain.
For the individual, antifragility helps them navigate a world full of random and unpredictable stressors intent on altering their life trajectory.
A fat-tailed world is a world where most information hides in the tail.
And since it's impossible to tell with hindsight what's the nature of the tail, we can only create a context to prevent it from being damaged by negative events in the tail (what Taleb calls Black Swans).
And instead of being exposed mostly to positive events in the tail (what Taleb calls White Swans).
For instance, if you run a business with very tight margins and burn a lot of cash, you know that, at the first market turmoil, you might be out of business.
And unless you want to fly very high to the sun, you might want to keep a redundancy layer, which in this case, is cash sitting around for these extreme events where the market turns around.
To explain the difference between fragility, robustness, and antifragility, Taleb used the example of three ancient myths:
As you might have guessed, an antifragile way of life involves finding ways to benefit from the chaos and disorder we will inevitably experience.
Generally speaking, individuals who embrace antifragile principles are playing the long game.
They do not optimize for today or tomorrow, sacrificing short-term efficiency for long-term antifragility.
To achieve this, they engage in second-order thinking, where the consequences of their decisions are analyzed for their future impact.
Here are some simple principles for leading an antifragile life:
Ciao!
With ♥️ Gennaro, FourWeekMBA
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The Only Official Newsletter of FourWeekMBA - By Gennaro Cuofano
At the intersection of business model strategy, technology, and business development, The Business Engineer is the only official newsletter of FourWeekMBA.com, the leading blog about business model strategy and business engineering. The blog reaches millions of business people each year.