How Today’s Crisis Can Create a Future Proofed Company

A few years ago, I read Antifragile by Nassim Nicholas Taleb. While the author’s tone and style may not strike the right chord with all readers, I’m reminded once again of this fascinating and controversial book. His contrarian view on the business world was interesting reading then, but today, in light of the COVID-19 crisis, it can be considered a timely business philosophy to ponder. This book follows his earlier, best-known work, Black Swan.

Mr. Taleb’s premise is that when a business undergoes significant stress and disorder, when the chaos is taken in the right light, it is more likely to survive and ultimately flourish. Rather than being fatally harmed by the chaos, the business will grow stronger when it successfully deals with chaotic conditions. The business will become antifragile, which, in Mr. Taleb’s view, is far better than becoming just resilient. While a resilient business will learn how to resist the stressors but basically stay the same, the antifragile business will grow better and better as it learns to deal with the stresses that come.

As someone who deals with companies every day and currently sees grave concerns expressed by nearly all businesses working with our Orange County accounting firm, Mr. Taleb’s views are somewhat reassuring. I’ve been fascinated by both Black Swan and Antifragile for quite some time, but today, as we all grapple with the utter chaos and disorder of COVID-19, this philosophy seems to be tailor-made for today’s tremendously unsettled business arena.

The author cites examples of companies, and even industries, that have endured one crisis after another, and rather than being defeated, they learn from the crises and are stronger at the end of each situation. In effect, they are “future proofing” their companies, making them able to withstand and even thrive when they encounter adversities that lie ahead. No one likes feeling fragile and vulnerable in their business, and we usually take steps to avoid these situations. But chaotic and disruptive environments, such as our current coronavirus situation, actually may help businesspeople future proof their companies.

Taking just one industry, the airline industry, Mr. Taleb cites examples of how airlines have found themselves extremely vulnerable and on the verge of catastrophic failure. Sometimes it’s an individual airline in trouble, such as a largescale crash, or it can be the industry overall, such as the days, months and even years, following 9/11. For the individual airline disaster, the future proofing aspect comes in, for example, when investigators study the “black box” recovered from the crash site and learn clues about how to avoid accidents like this in the future. For the overall industry, it’s learning ways of cutting costs to survive – which may be disliked by the flying public, but in recent years has returned the airlines to a thriving industry.

The current crisis is putting many industries in chaos. We are still early-stage and we don’t know how it ultimately will play out. But experiences from past economic downturns or natural disasters will be drawn upon to survive COVID-19. This crisis is unlike others we all have experienced, as we will constantly be going through the disaster response cycle, giving us the opportunity to put this antifragile concept to the test daily. I am hopeful each of us will find that their responses to the crisis will make them stronger each day and in the future.

If you have questions or concerns, please contact our Orange County accounting firm to speak to one of our experts today.