The benefits of the GFC for retail entrepreneurs

Imagine you are tasked with finding out how to make something better. (Aren’t we all?). As part of this process you have figure out whether a particular piece of steel is good for the product.

You apply pressure to it and discover that the beam remains intact (i.e. it successfully performs) at tension level 8. You learn from success.

You repeat the exercise. This time you discover it breaks at level 8.1. You learn from failure.

Which piece of information is more useful?

Obviously it is more useful to appreciate what makes something fail rather than what makes  it succeed.

And when we have learned that, we tend to seek more of that.

But this is the difference between real, sustainable success and terminal failure: Your real challenge is to seek the solution that will benefit under pressure.

Taleb has coined a term for this: Antifragile.

Something that breaks under stress is fragile - drop a glass vase on the ground.

Something that does not break easily under some stress is robust - drop a plastic vase.

Robustness is not the opposite of fragility. Robust is simply less fragile.

But what if there is something that actually benefits (grows stronger) from stress?

When you get a flu shot, you get a dose of germs that will make you stronger.

When you exercise, you stress your muscles but it makes you stronger.

When a child eats dirt, it strengthens their immune system.

When your father throws you against the fence for not hitting the tennis ball properly, you learn to play shots under pressure.

It is counter-intuitive to seek out stressors to get stronger in our business, but we seem happy accept that Botox is a good thing. (It works on the same principle.)

Some time ago the concept of a ‘burning platform’ was popular in management literature. (Here is a post by Harvard Business Review on the topic.)

This idea has been bundled into obscurity by sexier, more current jargon; and few practitioners actively use it.

Knowing what succeeds is not as useful as knowing what fails. But knowing what fails is not nearly as useful as knowing what improves under stress. And the only way to find out is to put your business under stress – inject some botox or set fire to the rig.

Then again; the environment will provide enough shocks to our economic system to foster the antifragility needed to prosper. (GFC anyone?)

What matters is whether you use this as an opportunity to become antifragile. As hard as that may be…

PS: I wrote a post in April 2009 predicting that we will regret our response to the GFC. I still stand by that view.


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TOMORROW'S POST:

How the internet transformed the world (VIDEO)