Understanding the DNA of an antifragile business

Our world is invariably lurching from crisis to crisis. For a business to keep up in times of technological breakthroughs, wars, financial crisis and catastrophes, we need something that goes beyond robustness. Deloitte’s Shift Index shows that the average life expectancy of a Fortune 500 company has declined from around 75 years half a century ago to less than 15 years today.

Many top companies invest a considerable amount of time and money to research and to foresee how their business can overcome these events and to decide next steps for an organisation to thrive and not just survive. This is when one can say that a company is building its antifragility. The aim of making any business antifragile is to evolve and grow for generations to come. Here are some prerequisites that a business should have for being antifragile:

1. A business should have a buffer to absorb hardships and the gaps between expectations & reality
2. A business based on foundation that goes deeper than day to day will help develop a brand value and goodwill that helps company in the long run
3. Business model should be based on flexibility so that it can adjust and change focus according to the need of the hour

Depending on the nature and type of business, one can decide whether to have a resilient business model or an antifragile one. Not all businesses can be antifragile.

Businesses that deal in FMCG sectors are usually seen as antifragile and businesses that deal in the fashion industry are very fragile. It is also said that family run businesses are more antifragile than the normal ones as they have equipped themselves with being ready for a change. Start up companies are notoriously fragile.

Resilient companies are like rubber. They deform when subjected to stress, but bounce back once the stress is removed. Volkswagen is an example of a resilient company. Despite their bad PR, the company has managed to keep its sales and profits intact.

Antifragile companies are like muscle. Bodybuilders know that muscle tears under the right kind of stress, but it builds back up – stronger than before. Amazon is an antifragile company. Yes, Amazon has benefited from increased demand, but that radically increased demand could have easily broken a fragile company. Instead, Amazon has leveraged its diversified business portfolio and rapid adaptability to seize the moment and emerge stronger.

People respond to stress in very different ways. Some people amplify stress, making themselves fragile and vulnerable under the wrong circumstances. Others have trained themselves to turn stress into a catalyst for growth.

Similarly, companies react to stress in very different ways. Companies – knowingly or unknowingly – design themselves to be fragile or antifragile.

Antifragile companies share three design patterns:

1. They build diversified, synergistic businesses.
2. They prioritize capacity over efficiency.
3. They leverage human adaptability.

There are numerous companies that have these above mentioned patterns. Antifragile companies not only tap into the ingenuity of their workforce, they tap into the ingenuity of their customers. For e.g. Uber leveraged human adaptability by getting a cab through an app. Zoom saw a recent rise from 10M to 200M daily users when work from home was a norm. They then prioritized capacity building. Swiggy started delivering groceries and medicines apart from food. They diversified in the pandemic era. Antifragility is never accidental- one needs to take business decisions keeping in mind that the only thing constant is change.

Your organization too can incorporate the DNA of antifragile business by navigating change and dispersing risks and using them as opportunities to learn.