Systems

Antifragility (Nassim Nicholas Taleb)

An antifragile system benefits from disorder

• Have options (instead of obligations)
• Create a situation with low downside and high upside
• Create systems with slack

Nonlinear events

• Convex: a smiling graph. More potential upside than downside (positive Black Swan)
• Concave: a frowning graph. More potential downside than upside (negative Black Swan)
• You are robust if doubling exposure doubles harm
• You are fragile if doubling exposure more than doubles harm
• A single 100 pound stone hurts more than 100 one pound stones

Example

Traffic is a function, which depends on the amount of cars. This function is nonlinear (concave), as the following two situations create different outputs:

• One hour of 8.000 cars, followed by one hour of 12.000 cars
• Two hours of 10.000 cars

Important: Don’t confuse x with f(x).

In general:

• A function is concave if the average function value is lower than the function of the average value
• A function is convex if the average function value is higher than the function of the average value

Meltdown (Chris Clearfield, András Tilcsik)

Why our systems fail and what we can do about it

Complexity and coupling increase the chance of big errors. In these systems, small problems and minor issues can accumulate into an unforeseen meltdown.

In the past, nuclear power plants were one of only a few systems which were both complex and highly coupled. Over the last years more and more systems entered this domain.

How to deal with these systems:

• Introduce slack
• Reduce moving parts
• Replace indirect feedback with direct feedback
  • Example of indirect feedback: An indicator light that shows that a valve was instructed to close
  • Example of direct feedback: An indicator light which shows the actual state (open/closed) of a valve

Techniques:

• Aviation and medical institutions use “near miss reports” to deal with small issues before they can spiral out of control
• Use hindsight bias by performing a premortem. Imagine that the project is completed and that it was a complete failure. What were the reasons why it failed?
• Subjective Probability Interval Estimates (SPIES): Estimate the probability of several outcomes

Lessons:

• Charm school (Everyone should be able to express concern)
  • Get attention
  • Express your concern
  • State the perceived problem
  • Propose a solution
  • Ask for agreement
• Soften power cues
  • This makes you more approachable, which can encourage people to speak their mind
• Leaders speak last
  • Encourage discussion about different solutions
  • Not encouraging a discussion can be compared to discouraging a discussion

Diverse groups are “better” because group members are more skeptical which in turn makes it more likely to catch small errors.

Cynefin Framework

• Chaotic: A crisis. Your best bet is to stabilize the situation
• Complex: (Creativity) You don’t know what you don’t know, so you have to try things out to understand your environment
  • Make the right system
• Complicated: (Skill) You kinda know what’s going on so you can engineer a solution
  • Make the system right
• Obvious: (Automation) You can automate these steps