I read a lot of great books in 2012*. Antifragile by Nassim Taleb spurred the most thought. In Antifragile, Taleb manages the exceedingly difficult task of outdoing his previous book, The Black Swan**.
Antifragile describes a system that not only survive stress and volatility, but that actually thrives and strengthens. A glass is fragile. If you drop the glass, it will likely shatter. A rock is robust. If you drop the rock, it might chip, but it will likely survive it intact. But the rock isn’t antifragile, it’s merely robust. Human muscles are antifragile. The act of physical exertion tears up our muscles, but they don’t merely grow back. They grow back stronger.
I found antifragility so compelling because I seek it personally. I want it in my life. I want it professionally. I want to design my company as a system that reacts in this way. In a world of extreme volatility and uncertainty, the killer advantage would be to benefit from embracing the unknown and not just trying to avoid or survive it.
Which brings me to Uber. Uber is an on-demand transportation company. You press a button on your phone, a car comes and delivers you to your destination, and your fare is automatically calculated using GPS and paid through stored CC info. The service has been a huge success first in SF, then sweeping the nation, and now the globe. However, during peak times of demand (say, New Years Eve) the service experienced extreme stress and people couldn’t get a ride. In reaction to this, the company launched “Surge Pricing” last year. The ride’s fare rises in proportion to the demand for rides at that time. This has two effects: 1, those who weren’t willing to pay the higher price would not request a ride and prices would rise until supply cleared demand. 2, the increased fares to be made by drivers would add to the supply, serving to lower fares. It’s antifragile.
Uber took a lot of shit last year when they rolled this out. They did a poor job communicating about Surge Pricing, and people were apparently caught by surprise at their $100 rides to go just a few miles. This year, they did a much better job warning folks that this was happening, counseling them on the best off-peak times to ride on NYE, and even adding in a little sobriety test in the app. Yet, still Uber seemed to come under blistering attack. Those complaining leveled charges of “artificial inflation” and wanted a simpler structure (2X the fee or some other static system). Yet, I believe Uber has done exactly the right thing. They chose to make their system antifragile.
Increasing levels of stress on the system (people requesting rides) will produce an increasing response (drivers coming online to work) due to the drivers opportunity cost (as their potential income from working increases, they will choose to vs taking the day off). Increasing pricing by a fixed amount — say 2X – would likely bring on more supply (drivers) but it would be a static increase vs a dynamic amount based on inventory. It’s a great example of an antifragile operational supply chain.
I’ve found Antifragile to be incredibly stimulating. It’s a powerful book for business. It’s a powerful book for life, too. I’ve long sought to improve my resiliency – my ability to bounce back from setbacks. However, antifragile has expanded my mind to think bigger. I now ask myself how I can cultivate the personal systems that allow me to get better and stronger when faced with adversity. Look at Michael Jordan. Legend is after being cut from his high school basketball team, he reacted by practicing harder than ever. When faced with a shock, he strengthened. Throughout his professional playing career he constantly looked for personal slights and signs of disrespect and used them as motivation to focus even more intently. He’d seek out “shocks” so that he could strengthen himself even more. While Jordan probably took this to sociopathic levels, I love this notion. The worse things get, the better you become.
*Katherine Boo’s Behind the Beautiful Forevers and RA Dickey’s Wherever I Windup were both fantastic and deeply moving. They read like fiction, but almost impossibly are true stories. Highly recommended.
** Black Swan introduced this concept of massively impactful events (either positive or negative) that no one sees coming because it is seen as ridiculously improbably. So named, because everyone has seen a white swan, and because we have not (yet) seen a black swan, we assume this is because they do not exist.