Airbnb's example shows how 'antifragile' firms can thrive in era of disruption: Darren Mead

Should companies increasingly consider adopting an antifragile approach to doing business therefore, as a way to not only weather future storms but actually gain competitive advantage?

People are familiar with the concept of being both fragile and robust but antifragility is essentially taking a step further on from being robust. From a business perspective, this means a company would position itself to actually gain from disruption and use mistakes to become stronger.

This requires a forward-looking mindset that very much focuses on the long game and may overlook short-term gains in favour of adaptive strategies that could help a business navigate future unforeseen challenges.

It also typically involves a collaborative and decentralised approach, where colleagues across a business are empowered to experiment with new ideas and be able to ’fail intelligently’ within a consistent risk management framework.

Antifragility is a multifaceted issue but at its core, it’s about the mindset with which a company approaches its current and future environment. It’s in line with the more familiar concept of having a growth mindset, that thrives on embracing challenges and is not afraid of failure, because this is where some of the biggest learnings lie.

Some simple steps a company can take towards antifragility are actively discussing failure and learning from it; building layered approaches with no single point of failure; experimenting small and often; removing organisational silos, decentralising decision making and always asking ‘And then what?’

If we look at the recent pandemic and resulting lockdowns as a prime example of exceptional disruption, antifragility is characterised by businesses that were able to not only survive but used this experience to evolve into something stronger and more resilient.

One example of a company that could have been decimated by lockdown was Airbnb, but in fact they successfully pivoted to being more of a lifestyle platform during the pandemic, with hosts offering online events on everything from cooking to songwriting and meditation.

These online experiences have remained part of their proposition and offer both diversification and future proofing. The transition to a net zero economy is another example of a major disruptive force that challenges many traditional ways of doing business.

Here, we can see how companies may equally benefit from having an antifragile approach, that accepts a likely downturn in short term earnings in return for looking ahead and investing in the long term value creation that is offered by a more sustainable way of doing business.

Businesses that shift their mindset to see volatility and disruption not as a threat but as a catalyst for becoming more innovative and adaptable will almost certainly gain competitive advantage therefore.

Companies traditionally look to create business resilience against shocks but by going a step further and looking at these events as a way to become better and more capable, they will be well positioned to thrive in uncertain times.

Darren Mead is Director of Risk at Progeny.