How supply chains – and other organizational systems – can move beyond resiliency and achieve true ‘antifragility’ in order to meet modern challenges and expectations.
The convergence of social and demographic trends, consumer behavior and new technologies like the blockchain, mobility and various facets of ‘the cloud’ are continually re-shaping mission-critical business areas across industries, and the supply chain is no exception.
“While historically successful supply chains have managed risk and were resilient when faced with adversity, the operational climate rife with innovation and disruption has changed and ‘rolling with the punches’ and adhering to the status quo is no longer viable; in fact, doing so is a death knell,” warns Bristlecone CEO Irfan A. Khan.
This ominous and stern warning from Khan is well-honed, given his pedigree as a marketplace change agent revered for driving business transformation and driving customer-centric turnaround growth strategies in a multitude of environments. Below, Khan provides deeper insight on ways companies can safeguard against inevitable future uncertainties.
“For starters, it’s important to understand that today’s marketplace disruption far beyond systems or technology; it’s an overarching paradigm shift … holistic, comprehensive changes that touch every single aspect of an operation – be it internal or external,” he notes. “To succeed in this volatile environment and even turn adversity into opportunity, turn to one key area that’s chronically overlooked: the supply chain. Not only do they need to be more resilient, modern supply chains need to be ‘antifragile’ in order to sustain evolving cash flows and ensure tomorrow’s revenues.”
Antifragility, a term coined by risk analyst Nassim Taleb, is the idea that rather than try to simply prevent or survive unexpected and unpredictable events – called black swans – organizations need to implement systems and strategies so they can benefit from these disruptions and in so doing, move ahead of the competition. Put another way, it’s not so much survival of the fittest as it is market-leading success for the cleverest.
According to Taleb, a black swan has three identifying attributes. “First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact…. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”
This covers everything from extreme weather events and environmental disasters to political upheaval and the economy suddenly tanking.
Expanding on Taleb’s notion of antifragility, Khan has actually introduced the extrapolated concept of “customer-centric antifragility” to better help organizations achieve the truest form of antifragility and, in turn, better ensure their organizations succeed.
Khan explains, “Systems are fragile when organizations are unprepared to handle changing conditions. We can’t predict these major shocks, but we can work to reduce the fragility within systems. Customer-centric Antifragility, specifically, will not only prepare your supply chain for when – not if – a disaster occurs, it will also prepare your supply chain for a future we know will inevitably be uncertain.”
“Customer-centric antifragility is the idea that, rather than simply preventing or surviving an unexpected and unpredictable event, companies need to implement systems and strategies that minimize the impact on its customers while enabling the business to actually benefit from those same disruptions,” Khan continued. “Doing so facilitates a deeper affinity with customers while also setting the business apart from its competition. If an organization maintains a customer-centric approach with its antifragile systems, the business will reap the rewards because there is no greater way to build and fortify a brand than through increased trust.”
Khan additionally provides strategies to help supply chain professionals and business leaders achieve true antifragility, founded on his belief that those who are the most proactive will stand the best chance reaching the kind of customer-centric antifragility that makes a real impact. “Instead of adopting a defensive posture or always being reactive, we need to stay on the offensive. It’s a daily race.” Here are five approaches he feels are crucial to developing an antifragile system and maintaining the mindset for success in supply chain innovation.
• Stop trying to achieve resilience; be resilient. It’s what sets leaders apart.
• See the certainty in complexity will provide clarity and focus.
• Compete against yourself; don’t worry about what your competitor are doing.
• Have evolving goals to keep up with ever-evolving technology, best practices, and operations. Don’t get stagnant.
• Only settle for perfection, which is as fleeting as it is elusive, so maintaining it requires constant effort, constant improvement, and constantly staying on the offensive.
The importance of designing antifragile systems that thrive in times of hardship are among the topics addressed at Bristlecone’s annual Pulse conferences held each October at MIT. AT this event, academics and top supply chain leaders discuss how innovation is shaping supply chains globally, share knowledge about the future of the supply chain, and confer about the platform and services transformation. Participating companies include Toshiba, Sleep Number, Varex, and Corning; MIT speakers include author Neil Gershenfeld (Third Digital Revolution), Ron Spangler, Suzanne Greene, and industry analyst, Pierre Mitchell.
In the spirit of ‘persistent proactivity’ as Khan advocates, his company has also developed and launched a new antifragility index that helps organizations measure and predict supply chain vulnerabilities and operational readiness.
“Instead of your system being exposed by disruptive events, by leveraging the A-Index, you can perform the analysis in advance, and be prepared for when the system shocks actually come.”
And, according to Khan, rest assured those shocks will come. However, the steps above will help lay the foundation for a value network that thrives during times of uncertainty. As Khan himself urges, the entire industry must remain proactive and vigilant to continually evolve supply chains in order to succeed in our unsure, ever-changing world.
By Merilee Kern, MBA