We like to think we are in full control our fate. However, the spate of significant earthquakes in Mexico and Japan over the past few days are yet another reminder that what we call “planning” is in reality “the act of preparing for the unexpected.” Fragile supply chains cannot react to unexpected events; agile supply chains adapt; antifragile supply chains thrive on change. In his upcoming book, “Antifragility”, Nasim Taleb, investor extraordinaire and author of “The Black Swan,” posits a framework for classifying systems based on how they react to shocks.
How Systems React to Shock
- Fragile entities are highly sensitive to shocks (i.e. most organic things including human beings, native shrubs, middle class, public debt),
- Antifragile entities actually thrive on disruption (art, writers, venture capital, rats), and,
- Robust entities are relatively stable and tolerate some change (redwood trees , aristocracy, public transit employees, private debt).
The challenge faced by global manufacturing executives in today’s highly volatile environment should not be how to survive, but rather how to thrive. In other words, how to create an antifragile business—one that reacts, responds and profits from the opportunities created by unforeseen change.
How to Thrive in Unpredictable Times
A recent example of an antifragile system, is China’s very dynamic automotive parts supply network. Prior to the Japanese Tsunami , Chinese suppliers were relegated to 3rd party status as non-OEM providers. However, some of these extraordinarily nimble and aggressive organizations moved quickly to capitalize on the instantaneous loss of critical Japanese auto parts suppliers. In the course of days and weeks they established partnerships with the very same automotive companies they had previously competed with and transformed their own supply chains. Quickly moving to improve the quality of their production processes and harnessing sophisticated Japanese materials and engineering processes, these small Chinese suppliers grew their business practically overnight. In other words, they proved themselves antifragile businesses.
How can your organization become antifragile?