complexity and failure

Complex structures that are built slowly over time via evolutionary processes (e.g. economies, companies, buildings, species, reputations, software) tend to be robust, but when they collapse, they do so instantly.

In the literature, this asymmetry is called the Seneca Effect, after the ancient Roman Stoic Philosopher Lucius Annaeus Seneca who said "Fortune is of sluggish growth, but ruin is rapid".

Some remarks:

  • That is why only highly educated people can be spectacularly wrong. Only with education can one construct contrived highly complex arguments of the type which can fail on several different levels and lead to a spectacular failure. (Remember, the most outrageous crimes in history were carried out in the name of complex ideologies.)

  • That is also why good product designers think hard before beginning a design process that is sure to complexify over time. Complex designs collapse in entirety and are very difficult to salvage or undo. Similarly, good businessmen think hard before opening a new business since the decision to close one later is a much harder process.

  • Once entrepreneurs start building a business, they immediately start to suffer from sunk cost and negativity biases, which are specific manifestations of the much more general asymmetry between construction and destruction. We tend to be conservative with respect to complex structures because they are hard to build but easy to destruct. (Unsurprisingly, these psychological biases look surprising to the theoretical economists who have never really built anything complex and prone-to-failure in their lives.)