Selective Insight: Anti-Fragile Companies

Nassim Taleb published a wonderful book titled “Anti-Fragile: Things that Gain from Disorder”.  It was a fascinating read and I highly recommend it to those with a curious mind.  Taleb begins the book by asking individuals, “What is the opposite of fragile?”  Most people think of something durable, or strong, since fragile would imply crumbling or being destroyed when subject to shock or change.  However, something durable or strong is not the opposite of fragile.  If fragile describes something that is destroyed when put under stress, then the opposite of fragile would be something that gets stronger when placed under stress.  Taleb defines it this way:

Anti-fragile is beyond resilience or robustness. The resilient resists shocks and stays the same; the anti-fragile gets better.
— Nassim Taleb

When I reflect on the business landscape it is evident to me that most businesses range somewhere between fragile and resilient.  Fragile companies are dramatically impacted by things like technological advances or changes in consumer preference.  Resilient companies are also negatively impacted by these types of exterior forces, but less so.

I believe that two of our Selective Companies - both Cognizant and Syntel - are very unique businesses.  They are anti-fragile.  Both companies are in the business of helping their clients deal with change.  Every time there is a new technological breakthrough, new forms of competition, new ways for consumers to interact with goods or services, clients lean on them for help.  In fact, if there was no change, neither business would be able to achieve meaningful growth.

An Anti-Fragile Journey

In 2006 these two outsourcing companies were helping clients build solutions to communicate with customers in the PC era.  They were helping solve problems surrounding on premise data centers, helping to scale web platforms for the Personal Computer, optimizing search engine placements, and more.  Then in 2007, with the advent of the smart phone, the mobile era began.  Much of the work previously performed was quickly becoming obsolete…however, clients now had to lean on them to build solutions for mobile.  The old work quickly faded away and the digital revolution began.  Both companies earned even more.  Today these two businesses are beginning to work on projects ranging from AI to autonomous vehicles to cloud application integrations.  As we move from era to era and breakthrough to breakthrough – the workload continues to increase, and each business in turns earns more.  Changes, shocks, and new horizons are the lifeblood of the industry.  We believe that this anti-fragile business model is one of the reasons that Cognizant and Syntel have posted record revenue in 36 out of the last 38 annual reporting periods.  As the world continues to change we anticipate that these two anti-fragile businesses will continue to thrive.


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