Tuesday, April 16, 2013

Actor Networks, Rare Events and Antifragility

In a recent blog I discuss some aspects of antifragility as suggested by Nassim Taleb’s recent book on Antifragility. Thinking a bit more about the nature of fragile and antifragile networks of relations could be of use in planning for rare events and their impacts. A well-aligned and well co-ordinated network of actors with a dense set of relations defining and binding their netowrk tightly may mean that the network is deeply embedded but this may be a disaster when a rare event hits. As I mentioned before, an event can illuminate the structure and relations in a network. A rare event, a major disruption, puts the spotlight on the fragility (or otherwise) of the web of relations. A well-aligned and co-ordinated network may function excellently for specific actants under ‘normal’ conditions, but in a rare, extreme event these relations may not be able to function. A dense network of relations may be too dense under these extreme conditions. The failure of one relation or the disappearance of one actant may produce a domino effect and trigger the unravelling of the whole web. A dense and highly focused actor network may be fragile to such disruption. A less dense and less well-aligned actor network may be at a disadvantage under ‘normal’ conditions but may have the flexibility to form new relations in disruptive events due to this weaker alignment and co-ordination of relations. Similarly, an actant with the flexibility to activate a different set of relations from the actor network it is usually associated with may be more able to survive and thrive in an disruptive event than a more specialist and network dependent actant or even a whole network.
If correct, then the above suggests that the density (and strength) of relations that define an actor network as well as the specialisation of actants will affect the fragility and antifragility of this network to rare events. Where an actor network has dormant relations, ones that are either unnoticed or unused during ‘normal’ periods, then there is a chance that the actor network could survive by activating these relations in times of crisis. The actor network that emerges, however, would be different from the one that entered the crisis. The dormant relations would now be known to the actants and be active rather than passive. The current banking crisis could be viewed in this light. When the crisis hit the usual sources of safety in the network failed. It was only when the dormant relationship between finance and the state was explicitly activated to prevent those ‘too big to fail’ from failing that some degree of stability was felt by the financial sector (OK oversimplifying like mad but you get the idea). But now that dormant relation is clear and present, everyone knows about it and the new financial network is being constructed with that relation in clear focus and all the issues of moral hazard and tax-payer bail-out that it brings.

There is an assumption in the above, however, that all rare events are the same. This is not necessarily the case as a recent paper by Lampel, Shamsie and Shapira (2009) in Organization Science (you need an account to access the journal). The paper ‘Experiencing the improbable: Rare event and organizational learning’ is a brief summary of the ideas in the special issue of papers on rare events and organizational learning. Importantly, they provide a four-fold classification of the types of learning that rare events produce in organizations based on the potential relevance of the event and the potential impact as in the table below.

                                                                       Potential Impact

Potential Relevance                                 High                          Low

High                                               Transformative              Reinterpretative

Low                                               Focusing                       Transitory

Table: Types of learning associated with rare events
Leaving aside the detail of the table (the subject of future blog!), the idea that a rare event has different affects depending upon the nature of the organization it impacts upon can be translated to actor networks as well. A rare event that is high on both criteria will have the potential to transform the nature of the network. In this case the points about relation density, dormant relations and actant characteristics are highly relevant. These are the rare events that can expose antifragility. A rare event with high potential relevance for a network but low potential impact (such as near-misses) can act as a means of forces reinterpretation of the current web of relations. The impetus to act on reinterpretation will, however, be determined by the interests of the actants and the ease with which the relations that define the network can be altered. Effort is required to overcome resistant to change in the absent of an event that causes transformation. If handled appropriately though this type of rare event could enable the actor network to alter and so improves its robustness or even atnifragiltiy to rare events without having to go through the pain of a transformative event. Drawing the lessons from such events and finding the will amongst key actants is however a major barrier as it is likely that no-one organziatino can affect such leanrign on its own - a sector-wide or even government-led inititative maybe required. A rare event that has high relevance but low potential impact for a network can, similarly, focuses attention on specific issues and problems within the network. Once again, however, change will depend upon who defines these problems and the willingness or ability of actants to alter the relations that define the network.

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