Antifragility in an SMB: How to Thrive Amidst Market Uncertainty
No business path is ever completely smooth sailing 100 percent of the time. Any business—small or large—will undoubtedly face challenges: tight profit margins, supply chain issues, decreases in customer spend, and fierce competition, just to name a few of the countless crises that could arise.
So, what is the key to establishing a business that is guaranteed to withstand an unpredictable future? The answer lies in the idea of antifragility. A concept developed by Nassim Nicholas Taleb, antifragility describes something that not only survives things like volatility, randomness, disorder, and stressors but even thrives on such distress. While Taleb’s theory may be rooted in a technical, scientific context, its implications can be extremely relevant in the business world.
Here’s how applying the concept of antifragility in your SMB will enable you to use disruptions to your advantage to not only withstand challenges but come out on top.
Fragility, Resilience, and Antifragility
To understand this concept a little deeper, let’s dive into the differences between fragility, resilience, and antifragility.
Fragility, like glass, entails something that is easily broken. For instance, if a business faces heavy competition and immediately plummets, that business would be considered highly fragile.
An improvement on fragility would be resilience. Think of this one like a rubber band—a business that can bounce back quickly from a failure. Let’s say, for example, that due to supply chain issues, a business’s profit margin narrows for a time. However, the business leaders are able to make some process adjustments, address the issues, and get the profit margin back to where it was. This is acceptable in the short term, but it is not the best possible result.
The ideal result is rooted in antifragility, which can be compared to exercising a muscle. Muscles, when pushed to their limits, become worn out for a brief period, but then they come back stronger. Not only do they withstand stress, but they grow in ways they couldn’t have without the stress. We’ll take a look at how this can be done in the next section.
How to Make Your SMB Antifragile
What’s the secret to cultivating this kind of agility in an organization? Here are key strategies you can implement to thrive in an unpredictable business environment.
Diversify: Taleb’s theory explains that more complex systems, rather than linear cause-and-effect relationships, are better able to thrive in uncertainty. This is because one change may merely impact a small piece of the big puzzle rather than sabotaging the whole process. Likewise, companies should avoid relying on any one single product or strategy; instead, they should diversify their products, services, and approaches so as to not be affected by an unexpected event.
Adapt: Business environments are in constant motion, so a company that cannot adapt is set up for failure. You can ensure your organization is more adaptable by:
- hiring versatile people with creativity and problem-solving skills;
- encouraging upskilling and growth of team members;
- communicating well with the team about changes;
- continually evaluating market conditions and focusing on being relevant;
- continually evaluating the weaknesses of your organization and the need for improvement; and
- being open-minded and adopting an agile mindset.
By fostering these qualities in your SMB at all times, you will be prepared to weather any business storm.
Keep it simple: Taking large risks can have exciting potential, but it can also backfire. To ensure antifragility, it is better to focus on a number of smaller risks than larger ones. That way, if something goes awry, it won’t severely damage your business. Antifragility entails making moves that prioritize the financial health and stability of your company.
Keep it human: The human element is one aspect of a business that keeps it fluid and dynamic. Better than any fixed strategy, humans have the capacity to learn, grow, adapt, and—most importantly—use challenges to improve the business. SMBs should prioritize preparing their people for the unknown. Focus on developing a team with transferable skill sets and capabilities rather than single-stack learning. Then, when challenges and crises emerge, the team can respond quickly and ride the wave of uncertainty.
Plan: Doing what is needed today is important, but preparing for a better tomorrow is critical. Business isn’t slowing down; it’s speeding up. Smart planning requires looking ahead several years so that you can build a solid path now that lays the groundwork for smooth transitions in the future.
Innovate: Now, more than ever, it is essential to stay abreast of digital and market trends in order to foster antifragility. In the case of manufacturing, for example, enterprise resource planning (ERP) software enables companies to manage day-to-day business activities and keep all their information in one place so that it can be easily accessed and used at any time. Thus, companies can move forward without skipping a beat in the face of unexpected challenges. The right ERP for a manufacturer can help to establish a winning foundation for growth, no matter what gets thrown at you.
In an ever-changing and uncertain environment, challenges for your SMB are inevitable. These crises, however, don’t have to break your business—they can make your business better. The way for this to happen is to instill an antifragility mindset in your organization. Apply these strategies if you want to build an antifragile business that is not only resilient to adversity but feeds off of it. Once antifragility is cultivated, your company’s growth will be unstoppable.
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