The Principle of Fragility

The following equation, which we call the Principle of Fragility, has been coined by Ontonix in early 2005 and indicates why complexity management is a form of risk management:

Complexity X Uncertainty = Fragility 

In order to understand the Principle of Fragility let us borrow Fourier’s idea of variable separation and create a useful parallel. Let us assume, without loss of generality, that the term “Complexity” is specific to a certain system, e.g. a corporation, while  the term “Uncertainty” concentrates the degree of turbulence (entropy) in the environment in which the system operates, e.g. a market. The equation assumes the following form:

Csystem  X Uenvironment = Fragility

or, in the case of a business,

Cbusiness model X Umarket = Fragility

What the equation states is that in a market of given turbulence a more complex business model will be more fragile (exposed). In practical terms, the equation may be seen as a mathematical version of Ockham’s razor: with all things being equal a less complex compromise is preferable.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s