In business, efficiency only goes so far - Business Works
BW brief

In business, efficiency only goes so far

by Tony Bendell, MD, Services Limited We live in very risky times. Even if we have seen the end of the recession, risk, to a large extent, unexpected risk, is larger than ever. All business leaders know that there has been a lot to be said for the truism that 'good judgement comes from experience, but experience comes from bad judgement', but no longer, maybe, can we afford to make mistakes. So says Tony Bendell, MD of Services Limited and Lead Trainer at the Anti-Fragility Academy.

Conventional wisdom says it's not strictly true of course. You don't have to have got something very wrong, for the world to deliver you, and your company, a crushing blow. You just have to have overlooked the possibility, however slight, that it might, or not taken it serious enough to do anything about it. So, unreasonable or not, maybe you are still to blame, for not being farsighted enough. Anyway, even if others forgive you, will you ever forgive yourself?

What is worse, is that we now live in a world of Black Swans; rare, hard-to-predict events of monumental consequences, like the Financial Crisis. Such events are almost entirely ignored by our conventional risk analyses, since these ignore everything that you cannot conceive of. When chaos happens, these days it's very often a new type of chaos. And it's happening with increasing frequency, diversity and impact to small as well as large organisations of all types.

So, what should we do? Doing nothing isn't really an option, not any more. Shareholders and stakeholders rightly expect more, or at least hold Directors to account when the unpredictable calls. Not everyone gets a second chance anymore. So, a reasonable start is to look at the failures of others, but that alone is far from enough. We need to be more systematic.

we need to be more systematic

Making your company Anti-fragile

What we need to do is make our organisations Anti-fragile. This is not just a new word for 'robust'. Nassim Taleb published a seminal book on the subject back in November 2012. Only thing was, it was pretty difficult to read. Realising its importance though, it took me a year to relate it practically to organisations in which I was involved, and work out what exactly we needed to do.

The difference between Anti-fragile and Robust is that the robust is just waiting for a big enough wave to overpower it, since you can never be sure you are robust enough. In contrast, the Anti-fragile gets stronger with every wave, every stress and every shock. To a very large extent, I`m Anti-fragile; I get stronger by exercising. So, how should you do the same for your company?

It's not actually rocket science, what you need to do is pretty simple, but does change the focus. First, you probably need to do a Fragility Audit. Bear in mind that frequently the more efficient your systems are, the more fragile they may be; just look at Heathrow Airport or a doctor's appointment system, for example; one major or mid-sized incident and it all falls over! When you know clearly where things are now, then, we need to consider mechanisms for enhancing Anti-fragility within your governance, strategy, people and culture, processes and operations, technology, supply chain and other key dimensions of your holistic organisation.

Of course, Rome wasn't built in a day, so we a practical prioritised action plan. Making each of the company's key dimensions Anti-fragile is potentially a real challenge, since one needs to, to an extent, borrow from good existing approaches, but steer around a lot of bad management doctrine peddled by consultants and the business schools. Efficiency being good in its own right is a case in point; it's naive at best. What we really want is for our organisation to be Anti-fragile, or at least robust, with good adequate –but not stupid, up to the line - efficiency. Similarly, much of the standard application of Six Sigma and Lean are also somewhat naive, as is so much else.

the world is a dangerous place and it's time to take stock

Anti-fragility is about learning, development and growth. It's about being prepared, being agile, taking precautions. Not about the company collectively forgetting to think, suffering from bad governance, or not being joined up, as so often happens in organisations that have been running on, without much change, for too long. The world is a dangerous place and it's time to take stock.

For more information, please visit:

Tweet article
BW on TwitterBW RSS feed