Businesses should attempt to become “anti fragile” in their approach to dealing with risk, a conference was told.
Alan Barnard, CEO of Goldratt Research Labs, said anti fragility meant using techniques to achieve positive outcomes from market volatility.
Speaking at the CIPS Pan Africa Conference in Johannesburg, South Africa, Barnard said people were either fragile, robust or anti fragile in response to adverse situations, such as job loss or divorce. The fragile ended up worse off, the robust returned to normal, but those who were anti fragile actually improved their lives afterwards.
In business terms he said the way to become anti fragile was to increase flexibility, such as buying simple, low cost parts “that you are willing to sacrifice”, rather than building large inventories of expensive, specialist components.
Barnard advised firms review policies and practices to ensure they helped the supply chain rather than harming it.
“Any system based on forecasting is fragile,” he said. “When you buy in small quantities frequently, you are more robust.”
Barnard suggested developing simple models “to see how downturns and upturns impact your organisation”.
“Develop mechanisms to limit pain during a downturn while enabling you to fully capitalise when things go in your favour,” he said.