The VUCA Business Strategy

The VUCA Business Strategy

Creating a strategy for a volatile, uncertain, complex and ambiguous environment.

It is a tough world, one that is changing fast, getting more competitive, plagued with disasters - can you navigate through it? By creating, testing and developing a VUCA strategy, you can ensure survival and sustainability in an otherwise complicated business environment.

VUCA is a military acronym for the volatility, uncertainty, complexity and ambiguity of situations or environments. Each of these elements is necessary to review within a business context in order to view current and future states of an organization. I believe there are core elements which can transform your business strategy into a resistant, VUCA strategy.

VUCA enhances the picture of a situation or environment, by identifying possibilities and gaining foresight/insight to enhance a strategy. Let me explain the VUCA analysis elements:

• Volatility: These are the eruptive, unstable or unsettled dynamics and nature of change. This is ever present in any condition or environment.
• Uncertainty: This is the unpredictable or indefinite nature of events or situations which causes any hesitation or ambivalence in actions.
• Complexity: The multiplex of all powers in a scenario, the intricacies and complications which create chaos in a situation.
• Ambiguity: This is the vague, unclear, equivocal nature of the environment which has the possibility for deception, misinterpretation and haziness in the actual situation.

Viewing these elements in a strategic situation, allows an organization to make a decision in which the current and possible future state is recognized by creating boundaries and conditions for planning, decision making, change management, risk management and more. Transferring from a military to business application an article published by Satish, Usha and Streufert called “Strategic Management Simulations to Prepare for VUCAD Terrorism” created a learning model. The model transfers the VUCA framework (adding D – Delayed Feedback) into the actionable process of: preparedness, anticipation, evolution and intervention. There some specific ways which I have seen to be efficient in preparing and integrating a VUCA strategy and it lies in how well you can predict the results of your actions and how much you know about any given situation countering each VUCA element.

Create a SMARTER Vision:

The weakness of volatility is clear objectives. In order to find a path to counter any turbulence that your business might face, one must create a SMARTER goal to continually motivate and strive towards. A SMARTER goal is: specific, measureable, achievable, relevant, time-bound, evaluated, revisable. To aid in defining that objective, it is important to create and develop specialists and resources to address the specific nature of the instabilities present. “Ineffective strategies, systems, and cultures are bigger barriers to achievement than the talents of people. Recruiting and training are top priorities…” stated Bob McDonald, former CEO/Chairman at Proctor & Gamble, “Organizations must continually renew themselves in order to stay relevant.”

Key Questions: Do you have a vision for the future state of the organization? Can anyone, anywhere align and relate to the goal? Do you foster and reward for a VUCA implementable strategy environment?

Invest in Information:

The counter to uncertainty is in clarity. If a business is to address the unpredictable and indefinite nature of a situation, it must invest in collecting, analyzing and sharing information within the organization. This mining and distribution of information can be as simple as a general forum on an internal website or as complicated as full information analysis networks. Additionally, clarity can come in fostering an environment to build relationships. Through these relationships there will be a spread of information, best practices, insights, knowledge and situations which prepare and develop each individual.

Key Question: How do you determine when you need to gather more information before a decision is made?

Experiment:

The key to decoding complexity is to create an understanding. Through targeted studies and tests, an organization can understand the cause and effect of situations. The gaining of this knowledge will roll up into how to prepare or strategically plan for future possibilities. When experimenting, it is necessary to ensure that the study allows for a broad application of learning. Having a broad application based, ensures that the organization as a whole can benefit from the knowledge obtained from a certain region, vertical, competitor, consumer or otherwise and help plan for it. Additionally, to get the most out of the studies experimentation should be fast, as situations are ever changing and need to be analyzed and applied quickly for full effectiveness.

Key Questions: For the change or decision being made, do you know the reaction from the market? Competitors? Other business groups? Suppliers? Consumers? Other key stake holders?

Create Organizational Agility:

To overcome situational ambiguity, you must create an agile organizational environment. This essentially boils down to having “just in case” scenarios in place. The extent of these backups and precautions must match the risk of a particular situation. These backups could be having safety stock, having a deep talent pool, having multiple pathways for a key input and more. If you are a typical lean organization, some of those goals won’t work for you, which is where a plan must be developed for quick changes or alternatives to ensure revenue streams. Diversification is also essentially in overcoming ambiguity. Diversification of global regions, verticals, products, technologies, manufacturing locations, materials, suppliers or any key elements identified in your business. This diversification will aid in combating the equivocal nature of every situation.

Key Questions: What are the keys to your business performance (materials, manufacturing, services, customers, etc.)? How have you ensured that you can still perform if they are altered in any way?

In questioning, reviewing and creating a VUCA business strategy, your business will be better prepared to adapt to the unknowing nature in which your business operates. How can your organization breakdown? How do you protect your profitability, revenue streams or competitive edge? Are there any storms coming in your business – environmental, competitive or otherwise?  With the entropy of the business environment nobody can prepare for every possible situation, but we can build an adaptable VUCA business strategy to be prepared for many situations.

-thePonderingNick