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An antifragile business is a business that not only survives, but thrives in uncertainty. Learn how to build such a business in our new post.
A pandemic, an economic crisis, and a complete overhaul in the way we work…
As an agency, you bore the brunt of it all.
Throughout it all, you believe that if you were resilient, you could survive.
But what if being resilient wasn’t enough? What if you could build an agency that doesn’t just survive, but thrives in uncertainty?
This is the ‘Antifragile Agency’ - a business that’s built for our ever-changing world.
In this post, I’ll explore the core ideas at the heart of the antifragile agency, and how you can incorporate them into your business.
Nicholas Nissim Taleb, explaining the idea of antifragility in a letter published in Nature magazine, wrote:
“Simply, antifragility is defined as a convex response to a stressor or source of harm (for some range of variation), leading to a positive sensitivity to increase in volatility”
Sounds like a mouthful, right?
If you break it down, however, it essentially means being willing to change when confronted with volatility.
Antifragility is different from resilience in that it focuses on adapting to volatility, rather than merely surviving it. A resilient organization withstands challenges and comes out unscathed; a resilient one comes out changed.
An antifragile business makes multiple bets, learning from the results, and changing its course quickly. If the external situation changes, the business is able to shift attention to winning bets.
An example would be a store that sells sports equipment. If this store only sells outdoor gear, it risks losing customers in bad weather. But if it adds indoor gaming equipment to its catalog as well, it can ensure a steady stream of customers regardless of the weather.
Antifragility is never accidental - especially in the context of creative agencies. It is a trait acquired through deliberate design.
In the next section, I’ll walk you through some of these foundational elements that can help you build a more antifragile agency.
Three Ideas for Antifragile Agencies
To understand what makes a business antifragile, you have to first understand the opposite: fragility.
Fragility is defined by two things:
- Rigidity, i.e., limited flexibility in response to volatile events
- Limited points of failure
The fashion industry is filled with examples of structurally fragile businesses. So many fashion brands ride trends and collapse catastrophically when the trend goes out of vogue. The collapse is often accelerated by their refusal (or inability) to adapt to new trends.
If you ever wore these jeans in the 1990s, you’d know what I’m talking about.
An antifragile business, by definition, would do the opposite. It would have widely distributed points of failure. And it would be constantly evolving to keep pace with changing trends.
Essentially, antifragile businesses share three core fundamentals:
1. Relentless Diversification
Diversification is the process of distributing points of failure. If you rely on a single supplier, a couple of high value clients, or a star worker to keep you afloat, your points of failure are highly concentrated. A single event - a client or worker leaving - can start a rapid collapse.
You, of course, know this already. A diverse order book, as we’ve emphasized in the past, makes your agency more robust.
What’s important, however, is how you diversify.
Diversification often fails because it tends to overlook sectoral risks. If your “diversified” assets/teams/clients fall within the same cohort, you still have limited points of failure.
We saw this at the start of the pandemic when companies had, on paper, diversified their supply chains by establishing multiple factories. But since all these factories were in the same country, lockdowns ruptured their supply chains all the same.
The right approach, thus, is to diversify and counter-diversify.
For example, your agency might have diversified by focusing on two tangential sectors - salons and tech startups. If there is a sudden downturn in the salon business (as it happened during the pandemic), your business would still be secure thanks to your tech startup clients.
However, this is not enough to completely eliminate risk. If all your tech clients are small businesses, any risk event that affects this cohort would affect your agency negatively as well.
Thus, your diversification exercise should always spread outside a dominant cohort.
Diversify not just across one segment but all the segment constituents as well
Spread risk across sectors. And within those sectors, spread risk across client size, project duration, area of focus, etc.
Your goal should be to minimize singular points of failure. The more you can do this, the more you’ll thrive in uncertainty.
2. Longevity and Novelty
In his book, Antifragile, Taleb notes a curious phenomenon: books that have been in print for a long time rarely, if ever, go out of print. Whereas new books might pop up and disappear in weeks.
Variations of this phenomenon can be found in every industry. Classic movies retain an enduring audience. Classic rock hits still bring in the crowds.
In other words, anything that has established demand will always be in demand.
This runs counter to the dominant idea of creating something “new”. While the pursuit of new is crucial - it helps you ride and create trends - it also blinds you to the massive opportunities in the ‘classics’.
In practical terms, this would mean focusing your attention on products and services with known demand. Don’t try to reinvent the wheel every time; just offer what’s already popular.
For an agency, this might be focusing on services with established demand: logos, UI/UX, web design, etc. You don’t have to always pursue the new and the cutting edge. Simply offering customers the tried and tested would be enough.
Does this mean you shouldn’t pursue novelty?
Of course not. Offering something “new” (AR/VR, data visualization, etc.) helps you ride emerging trends. It also helps you establish yourself in something that might, in the future, become a classic.
Like the Pareto Principle, your best approach is to split your attention 80:20.
Focus 80% of your attention on sectors, products, ideas that have established demand. The remaining 20% of the time, pursue something new.
3. Defining the “Not”
In an earlier article, we talked about the importance of specialization for agencies. In an industry where “full stack” is thrown around way too casually, specialization is often the secret to survival.
However, specialization, when pursued too aggressively, makes your business structurally fragile. If the product/area/skill you specialize in changes, it could tank your business overnight.
The antifragile approach to specialization is to define yourself by what you don’t do.
It might seem like a small difference, but the impact is immense.
Most businesses specialize by selection. They start off as generalists and pick up new specializations as they get new opportunities. This often leads to a situation where they have too many niche skills or products with little coordination between them.
You’ve likely seen this yourself in the agency world. Too many agencies pick up a smattering of clients across industries and market sizes simply because they were pursuing new opportunities.
When you focus on what you won’t do, you specialize through elimination. Instead of jumping onto whatever opportunity comes your way, you choose clients, projects, and products based on what you want to do.
The result is a business that’s a) more culturally cohesive, and b) more antifragile. Since there is cohesion and coordination across the business, your focus and skills aren’t spread thin.
Defining yourself by the “not” eventually makes you structurally stronger. And that’s a key ingredient for any antifragile business.
I know this has been a lot of theory, so in the next section, I’ll share some quick pointers on applying these ideas to your agency.
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Four Tips for Building an Antifragile Agency
Antifragile businesses are structurally robust, diversified, and spread risk across products and services.
But how exactly do you put these ideas into practice?
I’ll share a few tips below:
1. Pursue clients of different sizes
Successful agencies often have a motto: “no client too small”.
A diversified client portfolio means that you’re never too reliant on any one client or sector for your business. A large number of small clients, while tougher to manage, can counter the risk of having a handful of big clients.
Small, medium, large - fill up your order books with clients of every size. It will only make your business more robust.
2. Focus on what you don’t do
There’s a tendency among agencies to take on whatever project comes their way. The end result is an agency without any clear focus.
Instead, have a clear understanding of the kind of agency you want to build. Decide on what you want to do. And more importantly, what you don’t want to do.
While this will mean turning away potential clients, it will help you build a business that’s structurally way more cohesive.
3. Sell classics, showcase the new
The agency world pursues novelty and trends relentlessly. “Cutting edge” is thrown around so casually that every agency tries to outdo the other with its mastery of the “new”.
Most of your clients, however, still want the tried and tested services. Sure, a small part of your revenues might come from cutting edge work, but the “classics” - SEO, web design, video, etc. - will make up the bulk of your profits.
So while you should pursue new technologies and ideas - it's the foundation of our business - never ignore the staples. Showoff whatever exciting ideas you’ve been experimenting with. But at the same time, assure clients that you can do the boring stuff equally well.
4. Use remote work strategically
Remote work, as we’ve said in the past, is the future. Agencies that pursued it aggressively before and during the pandemic benefited greatly.
But going remote-only also exposes you to the risks associated with remote work - loneliness, productivity losses, attrition, morale issues, etc.
An antifragile approach to remote work would be to pursue it more strategically. Give people who want to come to the office an option to do so. Make remote-only available in business areas that can survive high attrition rates. And make sure that people always have an out.
This will diversify the risks associated with remote work and help you build a stronger agency.
Over to You
As complex as antifragility might sound, its fundamentals are something most businesses understand intuitively. By spreading risk and strategic positioning, you can make your agency much more robust.
Coming out of one of the toughest years for agencies, I believe these ideas are also more relevant than ever before.
Another way to make your agency stronger is to use better management software. Tools like Workamajig can fill in the gaps in your knowledge and help you make smarter decisions.
Try out Workamajig today - just tap the button below for a free demo!