March 19, 2014

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Random Innovation – the Only Game in Town

Some 2.4 million years ago, our Earth witnessed the reatest ecological disaster of all times. Nothing before or since matches the scale. This was bigger than the ecological disaster that wiped away the dinosaurs. More than 90% of the inhabitants vanished from the face of the Earth. Surprisingly, life emerged stronger for that.  But for that disaster the dinosaur wouldn’t have ruled the earth. Nor would mankind be around today.

Life is antifragile. Life does not merely mitigate risks. It is not just robust. It becomes stronger as disasters happen. That is what antifragile means. It is a term coined and popularized by Nassim Nicholas Taleb, who defines being antifragile as not just surviving a Black Swan Event but actually gaining and emerging stronger from it / because of it.

The fundamental principles of antifragile are as follows:

  1. It is futile to predict when Black Swan Events can occur
  2. It is possible to only predict what will happen if the Black Swan Event occurs.

Today Black Swans are a norm.

Economies nose dive more frequently than ever before and without warning.

New technologies disrupt totally.

Business models are made redundant overnight.

It is no longer sufficient for companies to be robust; it needs to be antifragile.

A company that wishes to establish its legacy needs not to just survive these tumultuous times but rather emerge stronger and grow.

So what is the mantra?

What is true for life is true for companies.

If we take the concept of antifragile from life, we can expect the solution to be hidden within life.

Random mutation is what happens in life.

Life invests energy in mutation.

The continual, random tinkering with the DNA structure helps at least some of the products of the mutation to survive drastic changes to the ecosystem.

It goes by another name – Evolution.

The key therefore is to evolve.

Companies need to evolve.

That, of course, begs the question – evolve in which direction?

Not surprisingly, however that is not a good question to ask; we already know that from our knowledge of antifragility.

Just as life cannot predict the vector (magnitude and direction) of change in its ecosystem, a company cannot be expected to predict the vector of changes – technology, business model, etc., - of its ecosystem.

What is mutation in life is innovation in a company.

The crux is *random*.

The mantra can now be summarized:

To become antifragile, companies must invest in a group of people who, disregarding the need for an ROI, randomly innovate. This group must ideate, experiment, tinker, fail, dream, conceptualize, persevere, develop, and wait for the day when a Black Swan Event occurs and one of their ideas take off, renewing the very DNA of the company.

And for those who are still curious to know what actually happened all those 2.4 million years ago: Oxygen happened. Free oxygen became available in the atmosphere and all the organisms that previously inhabited earth and breathed carbon dioxide were killed.

References:
[1] Antifragile: Things that Gain from Disorder by Nassim Nicholas Taleb.