35st International Conference of the

TOC Practitioners Alliance - TOCPA

www.tocpractice.com 9-10 November, 2017 – Vilnius, Lithuania

The Challenge of Antifragility

An effective way to manage organizations in
complex and uncertain environments

Dr. Andrea Zattoni, Antifragility, Italy

9th November, 2017
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Andrea Zattoni

• Business Consultant, TOC Expert

• CEO of Antifragility s.a.s.
• Professional background as manager and
Board Member in a big production company and
Contract Professor at the University of Bologna.
• Speaker at conferences, lecturer in courses and
seminars on the applications of Theory of
Constraints.
• Certified by TOCICO and Goldratt Schools.
• Focused on helping business owners and
managers to transform their enterprises into
Ever-Flourishing Companies and spreading the
www.antifragility.it
antifragility concepts and practical applications
among companies of the private sector. info@antifragility.it

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Presentation Topics

Part 1 – The Problem

• What is the primary challenge about managing in a complex and
uncertain environment?
• Why is a paradigm shift in Risk Management required?
• What is antifragility?
• Why antifragility is important today?

Part 2 – The Direction of the Solution

• How can we move from the concept of antifragility to the practical
applications?
• Why the Theory of Constraints can provide a company with the mindset,
the tools and the processes to become more and more antifragile?

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The Challenge

Managers and business owners are expected to keep alive their

companies and to deliver predictable, better and better results, in
spite of complexity, variability, uncertainty and the availability of
limited resources.

How should a human based organization be

managed in order to improve its chances to
survive and thrive?

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The Challenge

Irreversibility of the damage

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The Challenge

Managers and business owners are expected to keep alive their

companies and to deliver predictable, better and better results, in
spite of complexity, variability, uncertainty and the availability of
limited resources.

The common reaction is:

Trying to improve what they know how to improve (instead of

what must be improved).

Forcing simplicity into a complex environment (by dissecting

a system into subsystems).

Getting the illusion of certainty on uncertain situations (by

detailed forecasting, planning and budgeting).

Implementing sophisticated Risk Management methodologies.

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The Black Swan

Event with three characteristics:

1. Highly unpredictable
2. Major impact
3. Rationalized by hindsight

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 Reversing the approach to Your logo

Risk Management

Instead of…

performing calculations and predictions about what can

go wrong (and cause a damage),

switch to…

focusing on how systems (organizations, people) are

impacted by stressors and how to improve this response.

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 How systems are impacted Your logo

by volatility
FRAGILE ROBUST (or RESILIENT) ANTIFRAGILE

Myth: The Sword of Damocles Myth: The Phoenix Myth: The Hydra
• Negatively impacted by • Not impacted by volatility (up to • Positively impacted by volatility
volatility a limit) • More upside than downside
• More downside than upside • Able to resist (or to adapt) to from volatility
from volatility stressors
f(x) f(x) f(x)
Gain
Gain
Gain
Pain x
Pain x
Pain x

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Antifragility - Definition

Antifragility: property owned by systems that

improve their conditions and their performances
when they are subjected to volatility.

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 Diving Inside the Concept Your logo

of Antifragility

Antifragility is a feature of living organisms and human based systems.

If a system improves when submitted to stress factors, it may be

damaged when these factors are removed.

Stress factors = carriers of information.

A system with an antifragile response may be damaged by stress

factors, but only to a limited extent.

Test of asymmetry: anything that has more upside than downside from
random events is antifragile; the reverse is fragile.

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 Diving Inside the Concept Your logo

of Antifragility
It is not possible to predict events that may endanger the survival of a
system,
but
it is unacceptable to build and manage a system in a way that makes it
fragile to impactful events.

Prevention: building a system with features that allow it not to be

severely damaged by negative stress factors and to benefit from positive
stress factors.

“Prediction is very difficult,

especially about the future.”

Niels Bohr

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 Some Common Mistakes Your logo

about Antifragility

1st Mistake - The “Absolute Antifragile State” is achievable.

2nd Mistake - All the potentially fatal stress factors are identifiable.

Economic
crisis
Market
shrinkage
Market
expansion
Technological
breakthrough …..
3rd Mistake - To become antifragile, learn from the “antifragile companies”.

XYZ Ltd.

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 Why is Antifragility Your logo

important today?
The average lifespan of the companies is decreasing.

Risk Management is not the solution.

Robustness (or Resilience) is not enough.

The increasing search for local optimization leads to increasing fragility.

Growing interdependencies (globalization, Internet of Things, Industry 4.0, etc.)
make the Black Swans more and more frequent and significant.

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What are the basic principles of

Antifragility
and
how can we translate them into
practical applications?

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Antifragility Principles

1. Stressors Acceptance
Essence: Uncertainty, unpredictability, interdependencies, variability and mistakes are
facts of life. Don’t try to eliminate them (fragilista behaviour), but learn how to benefit
from them.
2. Asymmetric Optionality (+ Rationality)
Essence: Create conditions where you have more to gain than to lose from volatility, so
that you are not obliged to be right all the times (you can lose something, sometimes).
3. Redundancy
Essence: You must have more than what you strictly need to respond to predictable
stress factors.
4. Via Negativa
Essence: Stop doing bad things (bad behaviours, bad initiatives, bad metrics, etc.), say
“no” very often…
5. “Skin in the Game”
Essence: Create conditions where every interested parts have something to lose as a
consequence of their decisions or actions.

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 Antifragility Principles vs. Your logo

Practical Applications

ANTIFRAGILITY PRACTICAL
PRINCIPLES APPLICATIONS

1. Stressors Acceptance • TOC logistic solutions (DBR,

CCPM, Pull Replenishment)
• Learning From Experience
Process (LFE)
• Build, Capitalize and Sustain a
Decisive Competitive Edge
• Strategy & Tactic
Implementation Audit Process
• Decision Making under
Uncertainty (Eli Schragenheim)
• …..

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 Antifragility Principles vs. Your logo

Practical Applications

ANTIFRAGILITY PRACTICAL
PRINCIPLES APPLICATIONS

• Capacity Buffer
• TOC Thinking Processes
2. Asymmetric Optionality • Throughput Accounting
(+ Rationality) • Decision Making under
Uncertainty
• …..

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 Antifragility Principles vs. Your logo

Practical Applications

ANTIFRAGILITY PRACTICAL
PRINCIPLES APPLICATIONS

• Buffer
• Buffer Management and
Dynamic Buffer Management
• Learning from Emergencies
(“Isn’t it obvious?”)
• …..
3. Redundancy

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 Antifragility Principles vs. Your logo

Practical Applications

ANTIFRAGILITY PRACTICAL
PRINCIPLES APPLICATIONS

• Stop doing what should not be

done (bad behaviours, bad
initiatives, Golden Traps)
• 5 Focusing Steps
• …..

4. Via Negativa

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Practical Applications

ANTIFRAGILITY PRACTICAL
PRINCIPLES APPLICATIONS

• Win-win solutions
• UnRefusable Offers
• Buy-in process
• …..

5. “Skin in the Game”

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Pillar of TOC
EVERY SITUATION CAN
INHERENT EVERY CONFLICT PEOPLE ARE BE SUBSTANTIALLY
SIMPLICITY CAN BE REMOVED GOOD IMPROVED

OVERCOME THE DON’T ACCEPT CONFLICTS AVOID BLAMING NEVER SAY “I KNOW”
PERCEPTION OF REALITY AS GIVEN
AS COMPLEX
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Pillar of TOC

What I don’t know is

much more (and more
Never say “I know”
impactful) than what I
know

1. Create the conditions to continuously expand

the boundaries of our knowledge of reality and
benefit from this. “Even the sky is
not a limit.”

2. Be prepared for the unknown and the unpredictable.

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Conclusions

Set your goal: becoming Antifragile (more and

more).

Integrate the principles of Antifragility into the

organization’s culture.

Do not start initiatives that violate the principles

of Antifragility (unless the organization’s survival
is at stake).

Do not wait for the impact of the next Black Swan:

it may be too late!

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THANK YOU

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