Antifragile Businesses: Transforming Uncertainty and Change into Competitive Advantage

A firm can take advantage of clutter and change if it is better at understanding it than its competitors and quicker to adapt to them.

We are talking about antifragility. Resilience is the ability of an organization to return to its initial state after undergoing external stress. Antifragility is the ability of organizations to adapt quickly to external stresses.

The resilient firm overcomes the unexpected, the antifragile firm improves thanks to the unexpected.

What are the main characteristics that distinguish antifragile firms from others?

Awareness

Customers and their desires change, technologies change, competitors and business models change. Antifragile companies are able to promptly identify changes, interpret them and correctly imagine the future scenario, thus making a series of enlightened strategic choices ahead of their competitors. Such companies typically use a variety of methods to collect information (from market research to data collected while using the products). They are then able to translate them into emerging needs, effectively placing themselves on the side of their customers. The third component of antifragile awareness is the ability to identify concrete answers, based on the company's DNA and therefore capable of strengthening the competitive advantage over competitors.

Agility

Agility is the ability to act effectively in uncertainty. Indeed, the essence of agility consists in working for light experiments, which make the company and its products evolve in the desired direction. When uncertainty is high, experiments are particularly useful, because they allow you to proceed in small steps, verifying the results obtained, before deciding in which direction to proceed.

Agile businesses are thus able to be fast, reduce risk and often check and correct the direction in which they are going. In a very dynamic market these benefits outweigh the inefficiency of proceeding by successive iterations.

Agile companies necessarily have distributed decision and delegation mechanisms and efficient cross-cutting processes. They are also used to working in short, concrete cycles, each of which must lead to measurable improvements.

Essentiality

When in a hurry, anything unnecessary is harmful and must be abandoned . Becoming antifragile then often means taking away rather than adding. Simplify rather than standardize.

To achieve essentiality, companies must work towards objectives, managing priorities correctly. The company's processes must be continually reviewed to make them simpler and eliminate everything that is not directly functional to achieving the objectives. In the market, changes in objectives and priorities are inevitable, the antifragile essentiality must therefore not be rigid and closed to changes.

Antifragile companies have an excellent knowledge of the objectives to be achieved, widespread at all levels and are governed with flexible processes, which leave individuals the opportunity to use their intelligence to identify the best path from time to time.

Open organization

Being anti-frail also means being able to handle large variations in turnover . To be successful in an unstable market, one must know how to seize growth opportunities, protecting oneself from the risks of degrowth. It is therefore not convenient for companies to have all the skills and resources needed in their organization. On the other hand, it is important to build a network of partners capable of knowing how to collaborate promptly, on specific projects, intelligently integrating skills and production capacity.

Open companies therefore manage a network of “weak” relationships with external organizations and people, who can be quickly involved in specific projects. Internal collaborators are already used to working in open teams in which the logic of customer / supplier is overcome, to arrive at that of partners, who have common goals to achieve and openly share information on projects.

Modularity

A modular system (product, organization, supply chain,…) is composed of autonomous elements, which interact through defined interfaces. Modularity is a key concept in antifragility as modules can be separated and recombined to adapt to changes and to limit the effect of external perturbations. Modular organizations are able to create heterogeneous teams that collaborate across the board to achieve specific goals.

Modularity in products and services is the only "industrial" response to the search for customization by customers and the speed of product evolution. Modularity is achieved by designing a series of elementary bricks, which can be recombined in many different ways (like lego bricks). This makes it possible to make many different finished products, with a limited number of standard elementary components .

Creativity

In a rapidly changing market, being slow to change is definitely a failure strategy . Creativity is a skill necessary to face new situations, quickly identifying innovative, original and valuable answers.

Antifragile companies do not fear change, on the contrary they encourage creativity in their collaborators. Several studies show that we are all born creative, but then we lose this competence as our place in society is defined. Creative businesses therefore tend to be fluid and reward their collaborators' curiosity and desire to explore.

These six characteristics produce effects that combine with each other, strengthening each other. For example, creativity finds its natural outlet in the ability to work by experiments, which in turn works best when working in an essential way.

The future will be dominated by speed and uncertainty and only companies that can efficiently seize immediate and heterogeneous business opportunities will survive. Antifragile companies know that in a complex market the mere search for efficiency and standardization are no longer sufficient to guarantee the success of the company. It is also necessary to be able to take advantage of the competitive advantage of the ability to manage unexpected events and adapt to new situations.