Surfing the Shockwave: Developing Antifragility in an Age of Exogenous Disruptions
2020 has been a year so full of shocks that calling it unprecedented, unanticipated, or a year like no other is now a cliché. Globally it’s been an extraordinary time and the volatility is unlikely to stop any time soon. Indeed, the continued effects of managing the pandemic are in some regions jeopardizing effective responses to other global risks including natural disasters, economic disruption, civil unrest and political instability. Some of these we’ve already seen this year; some are still looming on the horizon, with big events such as the US elections and Brexit coming up.
When we first began writing our report on antifragility, we thought we were examining how businesses should respond to the worldwide disruption from COVID-19. What has emerged instead is a blueprint for creating options, then using the momentum of rapid response to any type of business shock in order to catalyze wider transformational changes within your business.
Figure 1 - The four trajectories when hit by a shock
Throughout the last several months, we’ve seen organizational change programmes that would normally take years implemented in months or weeks. Decision cycles have been shortened from weeks to hours. Inertia and resistance to change based on prior stability simply wasn’t relevant anymore. Rapid response units set up to ensure the safety of staff and continuity of operations – such as a COVID-19 project management office – in reality became the new operational driving force within the organization. But the COVID-19 PMO isn’t only relevant during the current crisis. Maintaining the transformational power of this unit in the long term will differentiate those businesses that merely survive from those that thrive.
Every organization that wants to survive a shock like the one we are experiencing through COVID-19 needs to develop options to drive mechanisms for wider resilience. Some organizations (such as Haier, Amazon, Samsung and Toyota) will be able to emerge even stronger than before: they will become antifragile. In fact, we believe that it is only possible to become antifragile through responding to a crisis. Antifragile organizations find their strength by deliberately seeking out volatility and introducing uncertainty in their everyday operations, so when external shocks appear, they’re ready to face them. Antifragile organizations:
- adapt through experimentation
- decentralize, diversify & duplicate
- trade to learn
We go into each of these strategies in depth in Stratagems for increasing resilience & antifragility in our report.
It’s not only the operational and scenario planning aspects of a business that prepare it for responding to a shock – infrastructure resilience and cultural robustness also have important roles to play. Overnight, IT departments responding to mass work-at-home orders became the corporate heroes keeping the ship afloat. Robust systems management has been critical to success during this extraordinarily volatile period. Accelerated, high-fidelity information flow is more critical than ever. Contemporary infrastructure design patterns like microservices architecture, and rethinks of basic systems access patterns to keep pace with a more distributed workforce, can ensure that disruption leads to a pattern of failing gracefully and coming back to full strength faster and more robustly.
With any shock, systems are critical, but people even more so: behaviour change to manage the shock is as fundamental as infrastructure management. Workforce resilience has become a new boardroom focus as companies learned to manage the initial shock, and adapted to the now-normal practice of increasingly distributed working. Many companies, contrary to expectations, experienced a rapid boost in productivity during the enforced working-from-home period that impacted half the earth’s population in the Spring. Some of this is perhaps a stress response – focusing on an aspect of life that can be controlled is a way of responding to circumstances that seem out of control. But as many companies continue to extend their distributed working plans, productivity continues to be high, with over 80 percent of employees across 313 companies in 61 countries saying their home environment allows them to work productively, according to the latest Leesman Index data. This suggests that we may be approaching a new balance in our expectations about how and where work gets done. Some might find the rapidity with which this shift took hold surprising, but it’s a powerful indicator of how adaptable people can be to changing circumstances when provided with the right tools – physical, virtual and psychological – to respond effectively to change.
Our report provides a comprehensive framework that can enhance scenario planning for CxOs looking to build their organizations’ capacity for resilience, and even aiming for the transformational power of antifragility.
Figure 2 - Two approaches to antifragility
We believe it’s vital to develop these skills now. Your organization must look beyond the horizon. We can’t predict what’s coming next, but we can say with some certainty that we expect continued volatility and new shocks. Organizations prepared to take on the scenario planning, infrastructure resilience and cultural adaptability challenges ahead stand a far better chance of surviving – and even thriving – in a continually shocking future.