Cascading Failures and the Importance of Diversity

A cascading failure is a process in a system of interconnected parts where the failure of one or a few parts can trigger the failure of other parts in a chain reaction that leads to the system shutting down or collapsing.

The first step in a cascading failure is typically an unexpected breakdown in one component of the system – this can be due to chance, human oversight, a black swan event, or any number of random reasons. Once this happens, other parts of the system must then compensate for the failed component. This in turn overloads these nodes, causing them to fail as well, prompting additional nodes to fail one after another. This is the textbook definition of a cascading failure.

While such failures can occur in nature, they are most often associated with manmade structures such as power transmission networks, computer networks, the world of international finance, and transportation systems to name a few well known and well publicized examples.

The reason that cascading failures are less common in naturally occurring systems is usually attributed to one overriding factor: Nature, in its literally infinite wisdom provides a seemingly redundant amount of richness and biodiversity embedded into its creations. In a normal evolutionary environment there’s enough diversity to cushion the system when something catastrophic happens. There is an abundance of compensatory pathways that can step in to rebalance the system.

Manmade systems, on the other hand, are different. In book two of the science fiction series The Expanse by James S. A. Corey, the scientist Praxideke Meng who is trying to create a farming ecosystem on Jupiter’s moon Ganymede says, “Nothing we can build has the depth of a natural ecosystem. It’s a simple complex system. Because it is simple, it is prone to cascades. Because it is complex, you can’t predict what’s going to fail. Or how.”

There are tons of implications of this, especially in today’s world where humans are willingly and knowingly destroying significant parts of the biodiversity that nature has generously given us over billions of years of evolution.

There are also very interesting parallels and insights for founders building an organization from scratch in the start-up world. Like building a farming ecosystem on a Jovian moon, creating a new company with a new product in new market is not easy. It is complex. But because of the limited resources the entrepreneur has available to them it also by definition has to be simple: You may want five different go to market strategies and dozens of sales partnerships, but in reality, you may be stuck with only a few. You may not want people to know it, but eighty percent of your revenue may be riding on one successful salesperson or one amazing sales partnership you managed to sign up.

Matt Damon made growing potatoes on Mars look easy in The Martian – starting a new business in a new industry can be just as hard

The key implication of all this for entrepreneurs is this: In a world where a diversity of sales channels and an abundance of resources are already scarce it is even more important to cherish and promote diversity wherever you may find it.

And the most important place to promote diversity is among the people of an organization and their way of thinking. After all, if the cascade starts happening, you will only have the people you have surrounded yourself with to help you stop it.

So at every chance possible, founders should try to promote a diverse culture with a richness of backgrounds and skills. When the time comes, it may be this richness and diversity that is the only thing standing between you and the cascade.

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