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Scooped by Deb Nystrom, REVELN
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Classic: The Rules of Antifragility: Learning to Love Volatility, Trial and Error over Research

Classic:  The Rules of Antifragility:  Learning to Love Volatility, Trial and Error over Research | Change Management Resources | Scoop.it

"Five rules that can help us to establish antifragility as a principle of our socioeconomic life."

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Antifragility…is a crucial property of life in general…in the evolution of all things, from cuisine, urbanization and legal systems to our own existence as a species on this planet.

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Rule 1: Think of the economy as being more like a cat than a washing machine.

…Natural or organic systems are antifragile: They need some dose of disorder in order to develop. Deprive your bones of stress and they become brittle. This denial of the antifragility of living or complex systems is the costliest mistake that we have made in modern times. …problems hide in the absence of stressors, and the resulting cumulative harm can take on tragic proportions.

   

…The state should be there for emergency-room surgery.   …In social policy, when we provide a safety net, it should be designed to help people take more entrepreneurial risks, not to turn them into dependents. This doesn't mean that we should be callous to the underprivileged. In the long run, bailing out people is less harmful to the system than bailing out firms…

   

Rule 2: Favor businesses that benefit from their own mistakes, not those whose mistakes percolate into the system.


Some businesses and political systems respond to stress better than others. The airline industry is set up in such a way as to make travel safer after every plane crash. A tragedy leads to the thorough examination and elimination of the cause of the problem. The same thing happens in the restaurant industry, where the quality of your next meal depends on the failure rate in the business—what kills some makes others stronger. Without the high failure rate in the restaurant business, you would be eating Soviet-style cafeteria food for your next meal out.

    

Rule 3: Small is beautiful, but it is also efficient.

…Great size in itself, when it exceeds a certain threshold, produces fragility and can eradicate all the gains from economies of scale.  ...So we need to distribute decisions and projects across as many units as possible, which reinforces the system by spreading errors across a wider range of sources. In fact, I have argued that government decentralization would help to lower public deficits. 

     

Rule 4: Trial and error beats academic knowledge.

Tinkering by trial and error has traditionally played a larger role than directed science in Western invention and innovation. Indeed, advances in theoretical science have most often emerged from technological development, which is closely tied to entrepreneurship. Just think of the number of famous college dropouts in the computer industry.

    

…There is a crucial requirement to achieve antifragility: The potential cost of errors needs to remain small; the potential gain should be large. It is the asymmetry between upside and downside that allows antifragile tinkering to benefit from disorder and uncertainty.

    

Rule 5: Decision makers must have skin in the game.

…The Romans forced engineers to sleep under a bridge once it was completed. …This rule would have saved us from the banking crisis, when bankers who loaded their balance sheets with exposures to small probability events collected bonuses during the quiet years and then transferred the harm to the taxpayer, keeping their own compensation.

   

Antifragility…is a crucial property of life in general, not just in economic life but in the evolution of all things, from cuisine, urbanization and legal systems to our own existence as a species on this planet.

   

Modernity has been obsessed with comfort and cosmetic stability, but by making ourselves too comfortable and eliminating all volatility from our lives, we do to our bodies and souls what Mr. Greenspan did to the U.S. economy: We make them fragile. We must instead learn to gain from disorder.

    

—Mr. Taleb, a former derivatives trader, is a professor of risk engineering at New York University's Polytechnic Institute. He is the author of "Antifragile: Things That Gain From Disorder" (Random House, 2012), from which this is adapted.

Deb’s related ScoopIt news and posts:

   

    

    

     

    

 

Deb Nystrom, REVELN's insight:

These antifragile rules from Taleb's 2012 instant classic book continue to raise awareness of the dangers of stability, size and comfort.  They are good reminders during any phase of business cycles as market reality meets with the natural complexities of change.  ~ Deb

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Richard Platt's curator insight, December 5, 2014 10:07 PM

Great book if you haven't read  it 

James Rigby's curator insight, March 2, 2016 9:39 AM

These antifragile rules from Taleb's 2012 instant classic book continue to raise awareness of the dangers of stability, size and comfort.  They are good reminders during any phase of business cycles as market reality meets with the natural complexities of change.  ~ Deb

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Nassim Taleb's 'Antifragile' Celebrates Randomness In People, Markets - Forbes

Nassim Taleb's 'Antifragile' Celebrates Randomness In People, Markets - Forbes | Change Management Resources | Scoop.it

'Antifragile' is a celebration of risk and randomness and a call to arms to recognize and embrace antifragility.

Many readers misunderstand Taleb’s core message.  They assume that because Taleb writes about unseen and improperly calculated risks, his objective must be to reduce or eliminate risk.  Nothing could be further from the truth. 


Antifragile is a celebration of risk and randomness and a call to arms to recognize and embrace antifragility. 


Rather than reduce risk, organize your life, your business or your society in such a way that it benefits from randomness and the occasional Black Swan event.


Taleb’s own life is a case in point.  He had the free time to write Fooled, The Black Swan and Antifragile because—in his own words—he made “F___ you money” during the greatest Black Swan event of our lifetimes, the 1987 stock market crash.  


...Taleb’s trading style is antifragile, had the 1987 crash never happened, Taleb would not have been materially hurt.  His trading style puts little at risk but allows for outsized returns.



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    Deb Nystrom, REVELN's insight:

    Taleb's coinage of "Antifragile" is compelling.  Change practitioners might find this a useful concept to understanding how to survive and thrive in a VUCA (Volatile, Uncertain, Complex, Ambiguous) world.  ~  Deb

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    Deb Nystrom, REVELN's comment, April 17, 2013 2:57 PM
    Anne, your layering encourages critical nuanced views beyond the book's "shiny new term" idea. Sometimes the first thing to do is "not do," as in, don't just do something, stand there. Doe we need an "intervention?" What are the other perspectives available, thinking systemically? Re: Iatrogenics: From the "Black Swan Report: "...the argument of Chapters 21 and 22 on the convexity of iatrogenics (only treat the VERY ill): Mortality is convex to blood pressure."
    Anne Caspari's comment, April 22, 2013 9:42 AM
    Hi Deb, thanks :-). I also reckon there are MANY fresh perspectives on how to handle different systems (or leave them alone), may they be health, financial, socio-political, ecological.... I love it and keep smiling to myself when I see the aha - moments on applied convexity/anti/fragility pop up in daily life, business and otherwise... compliments also on your scoops...
    Deb Nystrom, REVELN's comment, April 22, 2013 10:16 PM
    Thanks Anne. Systems and org. groupies a bit, maybe. ;-)
    Scooped by Deb Nystrom, REVELN
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    Beyond Resilience, Building AntiFragile Organizations, REVELN

    It is about resilience? Or is it about learning how to be Anti-Fragile, a term coined by Nassim Taleb to describe natural or organic systems, things that need some dose of disorder in order to develop.


    For example, deprive your bones of stress and they become brittle. Are our HR and organizational system destined to decline, are exist in a mediocre state due to their structure? 


    Other antifragile Scoops:


              


    Deb Nystrom, REVELN's insight:

    This is my own slide share for a recent presentation on change, adapting using both Nassim N. Taleb's "Anti-Fragile" concepts and Adam Grant's work on Givers, Matchers and Takers.   The full blog post here here:


    Thanks for visiting.  I'm curious on what you think of these combinations of concepts.  Comments welcome!  ~  Deb

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