“Everyone has a plan until they get punched in the mouth.” – Mike Tyson
The global pace of change was accelerating long before the current pandemic crisis hit us like an out of control freight train. For quite some time it has been clear that the new normal is now a confusing environment best described as volatile, uncertain, complex, and ambiguous (VUCA for short).
Both today, and into the foreseeable future, VUCA appears to be the only thing we can count on as business leaders and growth strategists. It will force us to reconsider many aspects of the world of work and, more importantly, how we develop strategy within it.
While VUCA may not have killed traditional strategic planning, it has definitely exposed some shortcomings…
The Pain of Today’s VUCA Environment
I was talking to a CEO last week about the impact COVID-19 was having on his 2020 business plan achievement. Up until the end of February his team had been very confident they would crush their growth targets for the year, and he was making investment plans to match. The economic and social tsunami of the pandemic has now completely decimated his business (topline revenue down more than 70%) and unfortunately, his confidence in planning for the future has been destroyed as well.
In a nod to Mike Tyson’s quote above, this certainly qualifies as bombshell punch to the mouth. The real question is whether my friend will absorb it, pivot his company’s plan and keep fighting, retreat to a corner, or be forced to throw in the towel. I think this question will apply to many business leaders and organizations in the upcoming months.
Another example comes from Brian Chesky, co-founder and CEO of Airbnb, who was recently quoted: “We had a plan, and all of a sudden the entire plan was not relevant anymore. The world changed.” In the interview he was talking about how they are taking bold and decisive actions in the face of coronavirus – with the objective of helping to weather the storm while also preparing for an inevitable new era of travel in the future. His leadership focus is to bring Airbnb back to its roots as a scrappy, resilient startup that can quickly adapt and evolve with changing market conditions.
As a recent HBR article highlights, there is a risk in weak and indecisive leadership in VUCA environments: “Strategic uncertainty can feel like slogging through mud. Leaders avoid investments. Decisions are deferred. Resources are frozen. Fear, uncertainty, and doubt drive bad behavior and personal agendas. Even so, companies often succeed or fail based on their managers’ ability to move the organization forward precisely at times when the path ahead is hazy.”
The Value of Having a Plan
In the world of startups and strategic planning, it has long been accepted gospel that no business plan survives first contact with the market (a huge shout out to Steve Blank for that timeless pearl of wisdom!). However, that doesn’t mean there is no value in having a plan.
Quite the opposite is true. There is enormous value in creating a strategic plan.
In fact, I would suggest that any organization aspiring to grow and thrive must have a plan.
Why? The act of strategic planning requires business stakeholders to think about why the organization exists, and how they will get from wherever they are today to where they want to be in the future. This level of thought forces them to quantify human and financial capital requirements, and more importantly evaluate the tradeoffs that investment decisions often require since both people and money are limited resources.
Without a strategic plan, an organization is like a rudderless ship, in stormy seas, on a journey to some unknown destination. Not a good place to be, and it guarantees a very low probability of success.
The Shortcomings of Traditional Strategic Planning
The challenge with traditional strategic planning is that markets, economies, and global climates are not static. They are dynamic – always in motion. The path to growth is almost never linear…it can have many twists, turns, detours, and dead-ends…and that complexity is at the core of why traditional strategic planning often fails. It fails to think through the complexities that a VUCA environment introduces.
The reality is we don’t know exactly what’s going to happen, or how quickly it will unfold. However, what we do know, as a good friend once told me, is that “something will happen!”
Today, your business needs to be prepared to respond quickly to disruptive new threats, often from completely unanticipated directions. Therefore, your strategy needs to be agile and robust. It requires enough breadth and flexibility to accommodate known challenges plus whatever is lurking around the corner. Traditional frameworks like SWOT, PEST or Porter’s Five Forces have some utility but are also limited because they are relatively static models of history or a snapshot of the current state. While they do bring historical events, current trends, known competitors, and trending developments into the planning picture, that is simply not enough.
The risk is that you optimize the current business model, instead of challenging the status quo and evolving. Ultimately, you risk spending scarce resources to strengthen your current business advantages only to discover that the market has changed and no longer values what you offer. You wake up one day to discover the rules have changed, you’ve been left behind and more nimble competitors have stolen your market share.
Moving Forward
The essence of great strategy is making decisions. Deciding where the organization should go and what to do, and by default where not to go and what not to do.
The essence of great leadership is the ability to quickly make decisions between competing choices with less than perfect information, and then taking action.
This is where the value of a VUCA plan comes in to play.
As business leaders, it is very easy for us to spend much of our time worrying about a future that is unknown and largely unpredictable. It is also impossible to anticipate every possible disruptive change. The risk in being caught between these two forces is that we freeze in our tracks and therefore fail to make any meaningful progress.
A better approach is to be agile, to create flexible strategic plans that incorporate our most up-to-date data points and insights, but also leave latitude for the unknown. This frees us up to focus primarily on those things you can control and do right now! By addressing your fixable risks today, and building as much flexibility into your plans as possible, you will be in the best position to thrive in the future. No matter what it brings!
In the next article, I will introduce the concept of a VUCA plan, and why you need one.
-Onward