4 Ways to Build An Antifragile Business

How many times have you heard the phrase: “What doesn’t kill you makes you stronger”?

Indeed, some of our most radical leaps forward as human beings come as the result of stressful misfortunes including deaths, romantic breakups and job losses. So, given that people can learn to be resilient, how can we infuse the notion into our businesses?

The concept of "antifragility" has recently been applied to businesses—and for obvious reasons, it's more relevant than ever. In his book Antifragile: Things That Gain From Disorder, author Nassim Taleb defined antifragility as a system state that can withstand considerable impact and even improve because of it.

“Antifragility is beyond toughness or resilience," Taleb writes. "The resilient resists shocks and stays the same. In an antifragile system, high-impact shocks and events are potentially beneficial.”

Taleb observed that our society has fragilized the economy by suppressing randomness. In reality, he writes, we’d be better off embracing the volatile nature of our existence and growing because of it.

Antifragile suggests four strategies for building a business that can do just that. Let's take a look at each one. 

Train Broadly Skilled Workers

Even before COVID-19, the business world was focused on attention was on upskilling and reskilling. (Upskilling refers to training a person in skills they can use to do their current job better, and reskilling means training someone to do a completely new job.)

Organizations recognized that increasing automation and other forms of machine intelligence required certain jobs to be broken down into tasks. Instead of mastering a single job with a set of narrow responsibilities, employees of the near future will need the skills to handle many generalized tasks across a wide range of functions.

An antifragile business accepts that because we don’t yet know what all these generalized tasks will be, we must train our people for career durability. Coined by DeVry University, this term refers to the ability to sustain gainful employment over a long period of time despite inevitable disruptions.

Career durability includes a focus on:

• Soft skills: the interpersonal attributes that enable successful collaboration with others.
• Hard skills: the skills in a specific domain for which learning can be assessed and measured.
• Applied technology skills: the ability to leverage people, processes, data and devices to do a job more efficiently.
• Institutional knowledge: the industry specific expertise gained through experience and/or tenure.
• Growth mindset: the positive attitude that influences how an individual sees their world, which motivates them to learn and change.

Developing and executing training initiatives that focus on these five components can help your workforce be as antifragile as the rest of the business if and when the next traumatic event comes along.

Build an Effective Innovation Pipeline

Organizations have recently embraced the concept of intrapreneurship—that is, the practice of employees deploying entrepreneurial strategies while using the resources of a much larger company. In the face of escalating disruption, leaders have formed innovation committees, hosted hackathons and hired design thinking experts to protect their businesses from toxic stagnation.

Too often, though, innovation still happens sporadically. Taleb recommends that would-be antifragile businesses deploy continuous innovation on a much wider scale. 

Aim for ideas that can win big and grow in a nonlinear fashion, avoiding areas with high barriers to entry and fierce competition. Test and validate new products early and often and create exit options to quickly move away from an idea that isn’t working.

By fostering innovation across functional and departmental lines, Taleb writes, leaders can increase the upside potential, limit the downside risk and emerge with greater antifragility.

Create a Flexible Supply Chain Infrastructure

Many would agree that the pandemic threw the supply chain world into chaos. While organizations worked frantically to keep up with disease mitigation measures and secure essential raw materials, their response to the disruption has been reactive, uncoordinated and globally inconsistent.

A September 2020 Supply Chain Brain video featuring the Association for Supply Chain Management’s Peter Bolstorff highlighted what makes a supply chain resilient. (Bolstorff’s comments were based on research initially published during the 2008 Great Recession and updated to reflect this year’s pandemic response.)

According to Bolstorff, organizations that mapped their supply networks prior to the pandemic had better visibility into their supply chain structures and received critical information right away, in an easy-to-digest format. By understanding the status of at-risk suppliers, materials and products in real time, these companies were better equipped to hunt down scarce inventory and site capacity.

Bolstorff and ASCM described the qualities of resilient (really antifragile) supply chains as the five Ss: scanning, smart, scalable, shiftable and sustainable. By investing in the right digital capabilities, organizations can sense disruption and tweak their demand and supply plans as conditions evolve. This provides a great segue to Taleb's last strategy.

Stay Current on Digital Transformation

Digital transformation is the process of using technology to create or modify processes, culture and customer and employee experiences to address evolving business requirements.

Staying with the example of the supply chain world, in 2019 technology analyst firm IDC predicted that by the end of 2021, half of all manufacturing supply chains will have invested in supply-chain resiliency and artificial intelligence. If this is accurate, it also means that a huge number of organizations entered the COVID-19 pandemic behind on digital transformation efforts.

Leaders can't make the same mistake again. Digital transformation doesn't have to be overwhelming. You can start by brainstorming the trends that will likely shape your company’s growth and create potential forecasts about the future of your industry. The exercise should help you create or refine an antifragile business vision for the next few years.

From this you can prioritize one to three areas in your business ripe for digital transformation. Then, over the course of six to 18 months, you can re-architect the processes affected by a move to digital in these areas.

Regardless of whether your area of focus is HR or accounting, if you’re doing it right, your efforts should touch your culture, your employee and customer engagement, your product and service development, your technology and your data collection and analytics.

Test each new process in iterative bursts and seek an IT or a vendor service team’s help with selecting and integrating new technology, as well as troubleshooting any issues that arise. Always keep in mind the end user experience and keep your employees in the loop when you're integrating a digital component into a traditionally human-driven endeavor. Your digital transformation strategy should be just as antifragile as the processes it’s meant to safeguard.

While disruption isn’t something most relish, building an antifragile business can help you look at it as a necessary part of growth—and perhaps even as a blessing.

Read more articles on strategy.

Photo: Getty Images