Fragile Silos

tl;dr

Technological and knowledge silos can make an organization exceptionally “fragile” as defined by Taleb’s Incerto.

By isolating knowledge, limiting communication & creating rigid structures - silos make organizations more susceptible to shocks and less capable of adapting to change.

Over time, this fragility can lead to systemic failures, particularly in the face of unexpected challenges.

To build resilience - on the road to the holy grail of anti-fragility - organizations need to:

• Break silos
• Promote collaboration
• Foster adaptation

In this post we meet two wall street traders. Taleb & Dalio. We’ll see how their work on randomness, probability, and uncertainty can help us understand the nature of silos and how to build resilience.

act i - setup

Nassim Nicholas Taleb is a wall street trader known for his work on randomness, probability, and uncertainty. Born in Lebanon, Taleb has a rich background in finance and mathematics, which he leverages to explore how unforeseen events impact societies and economies. His books - “The Black Swan” and “Antifragile” delve into the nature of rare, unpredictable events and how systems can either succumb to or thrive amidst chaos.

Taleb introduces the concept of “fragility” to describe systems that are vulnerable to shocks and stressors. A fragile system is one that breaks or suffers significant harm when faced with unexpected events. In contrast, robust systems can withstand shocks without changing, and antifragile systems actually grow stronger from disorder and challenges.

He gives us a spectrum:

Fragile – breaks under stress. A porcelain cup.

Robust – survives stress unchanged. A rock.

Antifragile – grows stronger from stress. Your muscles after a workout.

Most organizations? Fragile.

Rigid hierarchies. Centralized decision-making. Information flowing strictly top-down. When something unexpected hits – market shift, crisis, new tech – they can’t adapt fast enough.

Think of a company where everything routes through a few key executives. What happens when those people are unavailable? Or when rapid decisions are needed outside their expertise? The whole thing seizes up.

act ii - conflict

So what makes organizations fragile? Silos.

Teams operating in isolation. Little communication. Everyone protecting their turf.

I’ve seen this play out. Here’s what happens:

Information hoarding. Teams don’t share. Critical data stays locked in one group’s head. Decisions get made on incomplete info. Strategic missteps follow.

Everything slows down. Coordinating across silos is painful. Teams duplicate work without knowing. Things fall through cracks because nobody owns them. By the time you respond to a threat, it’s too late.

Resistance to change. Each silo develops its own culture, its own priorities. When someone proposes something new, they see it as an attack on their autonomy. “That’s not how we do things here.” The org calcifies.

Innovation dies. No cross-pollination of ideas. The best solutions come from diverse perspectives colliding – but silos prevent that collision. You end up with the same people solving the same problems the same way.

Key person dependency. The dreaded bus factor of 1. All the knowledge lives in one person’s head. When they leave (or get hit by a bus), the org is screwed. Classic fragility.

act iii - resolution

Enter Ray Dalio.

He founded Bridgewater Associates – now one of the largest hedge funds in the world. His secret? Radical transparency. Everyone says what they think. Information flows freely. Mistakes are learning opportunities, not career-enders.

He wrote it all down in “Principles”. Worth a read.

So how does this fight fragility? It’s basically the inverse of act ii:

Information flows. When everyone shares, decision-makers actually have the full picture. No more flying blind. Fewer strategic missteps.

Things speed up. Open communication = faster coordination. People know what others are doing. Nothing falls through cracks.

Change becomes possible. When feedback is normal, new ideas don’t feel like attacks. The org can actually evolve.

Innovation returns. Diverse perspectives collide. Cross-functional teams form naturally. Ideas cross-pollinate.

Knowledge spreads. Cross-training happens. Multiple people understand critical systems. Bus factor goes up. The org becomes resilient.

Trust compounds. Leaders are open about challenges. Employees feel invested. Engagement goes up. It’s a virtuous cycle.

end

In a world where unpredictability is the norm, organizations must strive to become less fragile and more adaptable. Nassim Nicholas Taleb’s concept of fragility highlights the dangers of rigid structures and isolated systems. Silos within organizations exacerbate these risks by hindering communication, collaboration, and adaptability.

Ray Dalio’s advocacy for radical transparency offers a practical solution to these challenges. By fostering an open ethos, organizations can break down silos, enhance collaboration, and build resilience. Transparency empowers employees, encourages innovation, and allows organizations to respond swiftly to changing circumstances.

Integrating the principles of both Taleb and Dalio can help organizations not only survive but thrive amidst uncertainty. By embracing openness and challenging traditional hierarchies, companies can build strong, flexible structures capable of withstanding shocks and emerging stronger from them.