Do you embrace variability?

[Extract from “Risky Strategy” to be published in 2016]

As we have seen, variability is at the heart of risk.  We also know that the world would be a dull place without variability.  And we are somehow conditioned to want to do something about that variability – to work with it and at the same time against it.

Imagine a game of tennis where the ball bounced in exactly the same place and to the same height before you hit it.  So you would master the game very quickly by playing pretty much the same shot every time. You might become very good at it, but how interesting would it be.  Why don’t they make golf courses with all the holes the same length, in a straight line with same size greens, and the hole in the same spot on each of them.  You can see the point. We enjoy the variety, and at the same time, we are honing our skills to try and counteract that variability;  that we hit the same quality of tennis shot regardless of where it bounces and how high;  that the golf ball heads towards the green regardless of the distance we are away and what type of ground surface we are hitting it off.

Its as though life is designed to create risk, and then deal with it, either by going with it, or working to counteract it  … and that is part of how we enjoy life.

I am reminded of one of John Cleese’s Video Arts humorous training videos which were popular in the 1980s – the one on time management. Most of the film was about being ruthless with time-wasting activities.  Then there is a shot of John Cleese sitting at his desk when the phone rings several times, without him answering it. The voiceover asks him something like: “Why aren’t you answering it?”, to which Cleese responds that it would be just another distraction that would waste his time. The voiceover then says: “No, wrong. You need to answer it. That’s your job calling!”

While the elephant mindset is, to some extent, that variability is an annoying distraction,  for tigers it’s their job calling.  In fact, tigers are naturally anti-fragile, according to Taleb’s view of risk. (Taleb N. N., Antifragile – How to Live in a World We Don’t Understand, 2012). His proposition is that we as individuals and organisations are naturally fragile within the uncertain world in which we live.  The market can change due to new technology; our lives can change due to an unexpected illness or accident.  And we tend to respond by doing things to compensate for this fragility by trying to create robustness.  We diversify by investing in other products with other technologies in other markets.  We cut costs to save money for that unforeseen event, and we take out expensive insurance to cover eventualities of various kinds. And somehow it doesn’t seem to bring the peace we seek.

Taleb proposes an alternative model – anti-fragility. It’s a kind of working with the variability and risk, rather than against it.  He takes part of his cue from nature.  Plants work through a process of death being the source of new life. Part of the fruit or flower of the plant, a seed, is  deliberately disconnected from the plant and is buried – and this is what creates new life. Or the cutting of a branch through pruning creates an environment for even more vigorous growth than was there before.

“The best way to verify that you are alive is by checking if you like variations …. Food would not taste if not for hunger; results are meaningless without effort, joy without sadness, convictions without uncertainty;  and an ethical life isn’t so when stripped of personal risks”  [Taleb N. N]

Our human bodies are built to be anti-fragile – clearly designed to deal at least as much with the consequences of risk as to be able to avoid it.  Wounds heal themselves with relatively minimal outside help, and white blood corpuscles fight off unwelcome bugs which are part of the risky external environment that our bodies inhabit.   Our health systems seek to create robustness which is a pale comparison to the anti-fragility that is part of our human make-up.

Taleb’s arguments apply the lessons of organisms such as plants and the human body, to human organisations.  Those that try to create systems to constrain risk, by having checks and balances at every corner, will never be as effective as anti-fragile organisations that work with risk, where every part of that organisation is designed and motivated to take a risk situation and do something better as a result of it.

Organisational leaders could benefit so much from learning how to get more from their people in their natural capability to deal with risk and variability.