Nassim Nicholas Taleb and Antifragility

At the Royal Society on Thursday I saw Nassim Nicholas Taleb (Distinguished Professor of Risk Engineering at Polytechnic Institute of New York University) in conversation with Rohan Silva (Senior Policy Advisor to the Prime Minister) and Matthew Taylor (Chief Executive of the RSA).

The subject was Taleb’s latest book – Antifragility – which he hopes isn’t as simplified as his previous book (he seemed to dislike the fact that The Black Swan was bought and read in airports by people who subsequently misinterpreted it). I think he has succeeded, as at times I struggled to grasp his arguments.

Nevertheless, I’ll have a go at summarising it. The images below are taken from his slides, available alongside the audio of the event, at the RSA website.

I believe Antifragility draws on Prospect Theory (incidentally, Michael Lewis has recently written about Daniel Kahneman – one of the main proponents of the theory – in Vanity Fair). The thesis is that organic entities are fragile, and that potential harm is non-linear to the size of the event (see below). In fragile systems, potential losses outweigh gains.

Antifragility is the opposite of fragility – where gains outweigh losses (robust is something different). The parallel Taleb drew was:

  • Fragile – Sword of Damocles (risk of fall)
  • Anti-fragile – Heidegger Hydra (cut one head off and get two back)
  • Robust – Phoenix (stays stable)

To give an example, it is more harmful to jump once from 100m than 100 times from 1m.


This means that the unpredictability of Black Swan effects costs more when the size of the event is large.

Black Swan event

This means (I think) that risk is concave, and there is more pain than gain in an event. For instance, traffic is concave – it is fine to the point of over-leverage, when the cost of travel will suddenly massively increase.

Antifragile events are convex. Taleb believes that bottom-up structures are convex, while top-down dictated structures are concave. We cannot effectively design systems as we cannot fully understand them, and so there will always be more harm than good.

The result of this theory is that large events, large organisations and large governments should be avoided. “Too big to fail” is catastrophic, and Taleb is firmly in favour of smaller organisations – on a moral level (it smaller societies you are close to the result of your decisions and so may feel shame) and an economic level (the cost of liquidating one large bank is far more than the cost of liquidating ten banks one tenth of the size of the large bank).

Uncertainty makes mistakes costly, and thus both businesses and governments should remain small. Taleb suggested that if Tesco suddenly ran into difficulties then the government would have to bail out a supermarket. He feels the government should only intervene in things that can’t organise organically, and is thus advising the government on how to make its institutions smaller (such as splitting the NHS into localised, autonomous units).

Taleb also talked a bit about risk management, and said that the models were flawed as they don’t combine risk and growth –  to get rich you must survive. He feels slow and steady growth is preferable to high growth that cuts corners, since that will ultimately crash. He pointed out that perfect growth is Madoff, and that Greenspan and Brown’s attempts to end boom and bust have led to where we are now (he claimed that Brown was more dangerous than Blair as Brown thought he understood the world).

He also mentioned that within small systems, stresses can be positive. For instance, we fast to kill cancer calls. In exercise, we should combine slow and steady exercise (such as walking) with the occasional intense burst (such as lifting weights at the gym). Up to a point, what doesn’t kill you makes you stronger.

Taleb doesn’t see big as permanent – Google could quite easily disappear tomorrow. To get around organisations growing in size, he recommends a contract saying that if a business wants to have the option to be bailed out then they can never pay out bonuses. Since people will want bonuses, they will intentionally keep their business small in size to not require bail-outs.

He closed by saying organic organisations are perishable and that each day they exist their life expectancy drops by a day. Whereas non-perishable entities – such as ideas – increase their life expectancy each day. For instance, if an idea has existed for 25 years then it will exist for 25 more.

Ultimately, the talk was very thought-provoking but I’m not sure whether I agree with it or not. On the one hand, I can see the diseconomies of scale of large organisations, but on the other hand businesses will have become large through success. That success might have been random and unwarranted, but they nevertheless survived and so must have done a few things correct. Taleb appears to advocate limiting them in order to protect against the possibility of them failing and causing problems for the economy. This risk aversion and diversification may be prudent, but I’m not sure how fragile this system really is (particularly if it made up of bottom-up organisations).



The future of mobile at the RSA

I’m a big fan of the RSA, and should really attend their excellent events more often than I do. However, I did attend the Future of Mobile event last night.

Sadly, it was the least interesting event I’ve attended (though the standard is exceptionally high). The keynote – billed as an insight into what the next few years may bring in terms of new products and practices, new opportunities for creativity, collaboration and economic growth, the role of new communications in shaping social norms and behaviours, and the effect this will have on individuals, organisations and societies was little more than a corporate sales pitch. However, I did make some notes and the event was, on balance, worth attending.

The Keynote

The keynote speaker was Lee Epting (Director of Content Services at Vodafone). In her talk she referenced three Vodafone initiatives in the developing world, namely

  • M-Pesa – the mobile banking/money transfer service set up in Kenya
  • An M-Health initiative
  • Future Agenda – driving towards sustainability, such as machine to machine communications around load capacities or metering of utilities

Each initiative had its own uplifting video. Perhaps I’m being an overly sensitive Western liberal apologist, but I found the tone of the videos quite patronising and demeaning. The African people in the video may well have independently said things like “I feel like a real businessman now” or “And now I even know the real medical terms”, but they didn’t need to be included. If the video were on Western initiatives, they would have focused on the tangible benefits, not on trying to give us a warm fuzzy feeling about helping those less fortunate.

The majority of the talk was based upon initiatives in the developing world (which makes sense, since Vodafone and mobiles can bypass computers there, while in the developed nations they run the risk of commodisation into “dumb pipes”), but Lee Epting did finish on a few trends visible in our society

  • People tracking – she claimed that acceptance of this is accelerating. This may be true, but accelerating from a very small base. A minority may opt into location-based services, and ticketless transport may prove popular, but I’d say it would infiltrate by stealth. She also mentioned vehicle tracking and how it will help pricing for toll roads
  • Choice editors – we are becoming reliable news sources, so it is about curation as much as consumption

The responses

The speech was followed by two responses. The second was from Ralph Simon (CEO of The Mobilium International Advisory Group), who I’d previously criticised when he chaired the Harold Evans lecture on innovation. He’s much better as a panelist, since he basically just tells loosely connected anecdotes. He also has excellent enunciation. In his brief response he talked about Couch Surfing and how communications can amplify lives, but also shared clutter and how we need curators to navigate it.

A longer response was from Christian Lindholm, (Partner and Director at the convergence design agency Fjord) who made some fascinating provocations and was by far the best thing about the event.

  • Choice quotes include “The future is always here and now but someone we ignore it” and how “Humans are obsessed with objects”
  • He believes the Nokia 2110 simplified the phone and became the first hit phone, and that the iPad is the Nokia 2110 of computing. The iPad gives a power of mobility that the IT department can’t control. There is also a significant difference between the Wifi and 3G models. The Wifi comes from the pc industry and drains the battery. The 3G is energy-efficient and gives ubiquitous communications
  • A big thing in future will be the digitisation of the wallet. It needs a big disruption as elastic process innovation – adding chips to everything – won’t work since proper digitisation requires screens, profiles etc. The current “two-handed” analogue wallet is “retarded” but it makes sense for incumbent companies who are invested in producing cheap thin strips of plastic. In the question and answer session, he speculated Amazon might make a play in this area
  • He sees the next megabrand as Foursquare, what with every classroom at Harvard Business School already mapped onto it.
  • We need a new vocabulary for next generation communications. It is not multimedia, video, smart or other industry jargon but come from the users. This seems to be “facebooking”, which is aggregating all forms of content and creating an internet of people.
  • An internet of people means everyone will be on Facebook, since everyone will want to communicate. He sees Facebook negotiating privacy in the same way Google negotiates copyright – move the boundaries two steps forward, apologise and take one step back and gradually monetise it. He sees the openness of the web as the counterweight to Facebook or Google dominance and should be preserved.

Due to a late start, there was little time for questions. In the introduction to the questions, the chair Luke Johnson made a barbed comment about people playing on their mobile devices rather than listening to the speakers, and rather unfairly picked out one person in the front row. Personally, I was on Twitter throughout (don’t RSA hashtags encourage this sort of thing?) and the general tone of chat was similar to my thoughts – mild disappointment.

Final thoughts

Christian Lindholm and Ralph Simon both seemed to disagree with Luke Johnson’s contention about split attention being a bad thing. Simon quoted Brian Eno by saying the genius is being replaced by scenius. Though as Steven Johnson has recently written, perhaps the idea of a lone genius is a myth.

We may end up doing things less well than if we concentrated solely, but split attention and mass collaboration provide other benefits such as broader scope and more rounded influences. Technological advancement has got to the point where it is almost impossible for a single person to know everything about a particular topic – we need specialists and teams working together. I’m in favour of our new hyperlinked working practices – those arguing against are analogous to Socrates hating the written word, since he thought it reduced quality of discourse and dialogue.

So, in summary, it wasn’t an unmissable event and there wasn’t a whole lot on the future of mobile and its effects on society (at least in areas directly relevant to my job or my interests), but there were a couple of interesting nuggets I took away.

However, if you are interested in hearing more, an audio recording of the event is available here.


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