Abstract
Mathematician/risk engineer Nassim Nicholas Taleb introduced himself to the world at large in 2007 with his book The Black Swan (Random House, 2007). Folklore had long held that all swans are white—until the day that a black one made its surprise appearance. Thus, the image of this graceful water fowl sporting black plumage, became a metaphor used to describe an event so unexpected as to be considered highly unlikely. With this background in improbability, author Taleb—greatly influenced in his work by IBM fellow mathematician Benoit Mandelbroit and Nobel-winning economist/psychologist Daniel Kahneman—calls himself an epistemologist of the random.
Nassim Nicholas Taleb, known to his friends as NNT, is one of the rare observers to have foreseen the economic crisis that emerged in 2007–2008 in a few countries and then spread to become a nearly global recession. Futurists will find him, partly in consequence of these events, critical of the two main schools of viewing the future. Strategists who exploit past experience as a basis for anticipating the future are anathema to NNT, but so are scenario projectors who simulate high, medium, and low probabilities of future occurrences or of dramatic changes in the environment.
Classical futurists will thus find NNT’s approach substantively different from the well-worn approaches to the future by extrapolation, history-based future projections, or scenario building. Instead, he favors what he terms the triad: Fragility–Robustness–Antifragility. From this last term comes the title of this book. Whether it be a system, design, product, or service, the author maintains, fragility is built-in, and must be anticipated: in other words, always expect the unlikely.
Carl von Clausewitz spoke of the fog of war three decades after Edward Gibbon affirmed, in The Decline and Fall of the Roman Empire, that foreseeing war events or explaining their results is nearly as difficult. All this is, in effect, analogous to the plight of contemporary war planners who complain that the best military planning founders once the first shot is fired.
The Unexpected in Its Various Forms
To account for our inability to foresee evolving events or conditions, NNT cites “The Extended Disorder Family (or Cluster)” as encompassing one or more of the following conditions:
uncertainty; variability; imperfect or incomplete knowledge; chance; chaos; volatility; disorder; entropy; time; the unknown; randomness; turmoil; stressors; error; dispersion of outcomes; and unknowledge.
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Why is time a fragilizing factor? The author explains that “if you can suffer limited harm and are antifragile to small errors, time brings the kind of errors (or reverse errors) that end up benefiting you.” This, he concludes, is simply what your grandmother called experience. “The fragile breaks with time.” (I am tempted to add to the above list inefficiency, especially when reflecting on the risks that investment specialists advised banks to take in the years before 2008.)
Trial-and-error as a method in planning and development assume, therefore, a key role in Taleb’s thesis. Yet, the randomness often inherent in trial and error “is not quite random, [because] if it is carried out rationally, using error [becomes] a source of information.” Indeed, one recalls the hundreds of different substances tried 150 years ago by Thomas Edison in his search for the optimal glowing element—to be used durably with inert gasses in an incandescent light-bulb—before he finally hit on tungsten. Try and try again.
Taleb, who was educated at Oxford University and the Wharton School (Pennsylvania) now teaches risk engineering at New York University’s Polytechnic Institute. He concerns himself with how best to make decisions “under opacity,” or “how we should live in a world we don’t understand.” But his views are far from humble. NNT does not hesitate to discredit the top–down role of government in innovation, or the theoretician who uses an “ I-have-no-practical-experience-in-the-real-world, but . . . ” doctrine of presupposition. NNT is fairly rough on academics, labeling theorists—repeatedly—as the “Harvard/Soviet” brand of planning and strategic dogma. Despite early education in his native Lebanon and a worldly exposure to at least a half-dozen languages, he writes fluently in the latest American vernacular. Disparagement is not a style that he avoids, but his colorful humor attenuates somewhat the criticism and entertains the reader throughout the text.
Coping with the Fragile
Is there anything to be done about fragility? NNT’s counsel is, in boxing terms, to roll with the punch.
For the economy, to be fragile and undergo what is called evolution, every single individual business must necessarily be fragile, exposed to breaking . . . in order to achieve improvement. Every time you use a coffeemaker for your morning cappuccino, you are benefiting from the fragility of the coffee making entrepreneur who failed. He failed in order to help put the superior merchandise on your kitchen counter.
Does delaying a decision help one find the best antifragility in a system or process? No, because if I defer writing a section, it must be eliminated. This is simple ethics: Why should I try to fool people about a subject for which I feel no natural drive? Using my ecological reasoning, someone who procrastinates is not irrational; it is his environment that is irrational. And the psychologist or economist calling him irrational is the one who is beyond irrational. In fact we humans are very bad at filtering information, particularly short-term information, and procrastination can be a way for us to filter better.
Corporate planners and their strategy consultants are a particular bête noire of business specialist Taleb.
Corporations are in love with the idea of the strategic plan. They need to pay to figure out where they are going. . . . Almost everything theoretical in management, from Taylorism to all productivity stories, upon empirical testing, has been exposed as pseudoscience—and like most economic theories, lives in a world parallel to the evidence.
To illustrate what he calls, business drift . . . Coca-Cola began as a pharmaceutical product, Tiffany & Co . . . started life as stationery store . . . Raytheon, which made the first missile-guidance system, was a refrigerator maker (one of [its] founders was no less than Vannevar Bush, who conceived the teleological linear model of science . . .).
The teleological or goal justification model Taleb refers to follows this progression: scientific research > innovative technology > marketable products > sales > profits. But this ideal is not borne out by optionality (i.e., the right to choice) in the chain science > technology > material gains. NNT continues, Nokia, who used to be the top mobile phone maker, began as a paper mill (at some stage they were into rubber shoes). Dupont, now famous for Teflon nonstick cooking pans, Corian countertops, and the durable Kevlar fabric, [began] as an explosives company.
These are all, indeed, noteworthy examples of business drift. Fragility is thereby nonlinear, and antifragility all the more so—yet responsive to the unexpected. Readers are likely to agree.
The Concave and the Convex
Author Taleb’s narrative is at times hard to follow, however, and readers should be prepared for instances of astonishing invective and even denigration. He uses these to dispatch conventional views of both economic theory and its application to the innovative mechanics of successful technical research. His descriptions of convexity and concavity in relation to Black Swan events, for example, are not easy to follow and demand considerable concentration.
Taleb closes his book with an amusing Epilogue, a practical Glossary, and most helpfully, Appendices that depict graphically some of the author’s key arguments. All in all, he has given the world a remarkable thesis (his work is currently available worldwide in about thirty-five languages), and his surprising conclusion—that things actually gain from being disordered—deserves to be considered carefully by anyone involved with planning for the future.