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Growth strategy | Advisory | Force multiplier

Disruption

Scenario Planning in a VUCA World

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“I try to follow this advice: Anticipate as many problems as you can so that when a crisis does occur, you are able to deal with it calmly and rationally.” – Tom Steyer

It is a common mistake for leadership teams to view strategic plans as a linear path to a defined future, with the expectation of no distractions or complications along the way.

We all know that is simply not how life, or business, works.

As the famous German General, Helmuth von Moltke, said: “No battle plan survives contact with the enemy.”

My business corollary: No strategic plan survives contact with the market.

Once you have established the vision and long-term goals for your organization, and chosen a strategy, you need to develop a strategic plan to guide your team in getting it done. There is one important additional step, which many leaders neglect – you should consider a range of potential future conditions, and your possible responses, so that you are prepared to act quickly if something disruptive hits you.

This consideration and preparation for potential future contingencies is called scenario planning.

It is the human condition to want to control our present, and one way to do that is to try to predict the future. Scenario planning is not intended to predict the future, but rather to future-proof your strategic plans. Scenario planning enhances your VUCA Strategic Plan so that you have back-up plans and a playbook to take quick and decisive action when confronted with VUCA forces. The concept is to prepare enough in advance that you are not completely blindsided and rendered helpless, no matter what is thrown at you.

Defining Scenario Planning

Scenario planning (also known as scenario thinking or scenario analysis) is a strategic planning method that organizations can use to deal with uncertainty, and to make their long-term plans more flexible and robust.

It is definitely not a new concept.

The great Roman Stoic philosopher, Seneca, popularized the idea over 2,000 years ago. He called it premeditatio malorum (or, “premeditation of evils”), and regularly employed the technique to optimize his own life. For example, before taking a trip Seneca would consider everything that could possibly go wrong or prevent him from reaching his destination – the ship might hit a reef, encounter a storm, be delayed in some port, or the captain might get sick – and then he would think about his possible reactions to each situation. By regularly doing this exercise, he was always prepared for any disruption.

Scenario planning is the formal process of asking and answering “what if” questions in order to identify alternative scenarios, and then planning your response to the potential VUCA disruptions that could derail your strategy or impede your ability to achieve your intended objectives.

In practical terms, scenario planning simply means taking the time to think through everything that could impact a particular plan. This is most often in the form of what could wrong, or negative impacts, but to be fair it should also consider the potential response to positive impacts.

This methodical level of inquiry and planning is very common in the specialized branches of the military, such as Special Forces and the US Air Force, where they conduct “what if?” drills before every mission to ensure understanding of potential threats and corresponding reactions.

NASA astronaut, Captain Scott Kelly, when asked about the planning that goes into space exploration, and how he deals with potential risks, explained that one strategy for mitigating crises is to think like an engineer – Even during high-stress times, always consider and plan for worst-case scenarios. He said NASA taught him to constantly ask and think about, “What’s the next worst thing that can happen? And, then, what is the next worst thing that could happen after that?”

Where Scenarios Fit in the VUCA Strategic Planning Framework

In the VUCA Strategic Planning framework, your Core Ideology and Envisioned Future, combined with robust Situational Awareness detailing the current state of the organization and its operating environment, create the springboard for strategy development:

  • Core Ideology – Defining the mission, values, and purpose of the organization. These elements describe why the organization exists and what it stands for. They form the “true North” guideposts for making strategic decisions and are the foundation for any VUCA plan.
  • Envisioned Future – Defining a clear vision of what the organization aspires to become or achieve and your long-term goals. These elements explain the desired “future state” of the organization, and the long-term goals you and your team are working towards achieving in order to get there.
  • Situational Awareness – A thorough analysis of the environment in which the organization operates. Situational awareness involves knowing where you are (“current state”) and being aware of what is happening in your environment (internal and external perspective) in order to better understand how information, events, and one’s own actions will impact both immediate and future outcomes.

Next, leaders should consider strategic options that will enable the organization to bridge the gap between the current state and the desired future state while factoring in the operating environment as revealed by the situational analysis:

  • Strategy – Defining the approach that will guide individuals and teams on “how” to achieve the short-term objectives that move the organization from its starting point towards achieving its long-term goals. Strategy plays a vital role in VUCA strategic planning. It is quite literally the vehicle that will help the organization bridge the “gap” between where it is today (its current state) and where it wants to be in the future (desired future state).
  • Strategy Decision – Once a strategy has been formulated, leaders must then decide: Is it the right strategy to help the organization achieve its long-term goals? If the decision is to move ahead with executing a chosen strategy then it is time to commit, and proceed with creating a complete Strategic Plan designed to ensure the successful execution of it.

The strategic planning process culminates in the creation of a VUCA Strategic Plan:

  • VUCA Strategic Plan – A clear time and resource based plan, that details the strategy and actions by which the organization intends to reach its Envisioned Future.

As a vital enhancement to their VUCA Strategic Plan, leadership teams should also do scenario planning:

  • Scenario Planning – Identify the potential VUCA impacts that could derail your primary strategy or impede your ability to achieve the defined objectives, and action plan your response to them. Because almost no plan goes as expected, by answering “what if” across a comprehensive set of possible future scenarios your team will be better prepared to quickly react and make decisions when a disruption happens.

Relevance and Value for Leaders

In this new world full of VUCA uncertainty, strategy (and strategic plans) should not be considered as “locked” or etched in stone. You, your team, and your organization must always be ready to pivot quickly as internal or external conditions change. This agile approach to strategy development and execution is the best way to grow your organization and succeed in the marketplace. Therefore, your scenarios should reflect a wide range of probabilities, from highly possible to very remote.

Why is this so important to do as part of the VUCA Strategic Planning process? Because the best time to think about a potential impact, and your ideal response, is before it hits. Not after.

In the words of noted venture capitalist, Bill Gurley, “It’s always better to make decisions calmly and with plenty of forethought than to be forced into critically difficult decisions very quickly.”

Two additional benefits leaders can gain from scenario planning:

  • Scenario planning can help organizations fight the common biases of overconfidence and tunnel vision that often surface in strategic planning and decision-making. How? Assembling a comprehensive set of scenarios can provide clues about what trends or uncertainties might be important drivers for change in the future, and how those drivers might impact the organization. Leaders who choose to use their imaginations and expand their worldview will see a wider range of possible futures and thus much better prepared to take advantage of the unexpected opportunities, or deal with unexpected setbacks, that will come along.
  • The exercise of thinking about future scenarios, and putting contingency plans together, helps to reduce some of the common fear and uncertainty around change. As your leadership team gets more comfortable with a potential future that looks different from today, they will be more open to talking about it and seeking data/information that might support or challenge it instead of burying their heads in the sands of denial.

Best Practices

I will cover more detail on scenario planning and a formalized process to do it, in future articles, but here are a few best practices to get started:

  • Develop a range of scenarios, from highly possible to very remote. As recent history has proven, complete wild-card scenarios, like COVID-19, can happen. They are low probability, but high impact events. And when they surface, they hit very quickly with devastating effect if you are not prepared.
  • A common format to consider using when compiling your potential scenarios is to plot them along two axis: Probability vs Potential Impact. You want to spend proportionally more time considering the high probability and high potential impact scenarios.
  • How many scenarios should you develop? Well, the honest answer is “it depends!” – There is no right answer, and it should be whatever it takes to cover your most realistic set of scenarios, with the bookends of best and worst case. At a minimum, I always counsel clients to have at least 3 scenarios: realistic, best case, worst case.
  • It is useful to give each scenario a descriptive and memorable name. In the heat of the moment, this will help the team in the field to recognize and remember the salient points of each.
  • As you are developing your scenarios, identify the “early warning signals” for each one. This will enable you, and your team, to clearly recognize when events in specific scenarios are taking place, and then take the appropriate action.
  • When updating your VUCA Strategic Plan with scenarios, try to identify strategies that are useful across most if not all possible scenarios, given what you know about how the future might develop.
  • Scenario planning should not be a one-time, static exercise. It is a core component of your on-going Situational Awareness process, where you should be constantly scanning your operating environment for new or changed factors, and considering their potential to disrupt your strategic plans.

Conclusion

Today’s uncertain and unpredictable business environment is not a time for over-optimism or pessimism. It is a time to be realistic.

Strategy used to be about predicting a desired future, then planning for that future. Now it requires considering a range of possible future conditions, and how they might potentially positively or negatively impact the organization’s strategic plan.

Because almost no plan develops as expected, we must always plan for contingencies. For leaders of organizations in this new VUCA environment that means preparing for a very wide range of potential scenarios, and more importantly, having specific action plans for each. This includes contemplating what will happen if your primary strategic plan turns out to be completely wrong and you need to quickly pivot.

Scenario planning ensures that leadership teams are prepared for failure and ready for success – No matter what VUCA forces they encounter.

-Onward…

Disrupt Your Organization Today!

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“Innovation is the ability to see change as an opportunity – not a threat.” – Steve Jobs

In January 2020, the World Economic Forum published a survey revealing the top five predicted major risks for economic disruption this year:

1. Extreme weather
2. Climate action failure
3. Major natural disasters
4. Biodiversity loss
5. Human made environmental damage

With the benefit of hindsight, it is now terribly obvious that they might have forgotten one!

We are just past the halfway mark of 2020, and have to acknowledge that a global pandemic can do an unbelievably effective job of disrupting pretty much everything and bringing the world to a near standstill. In just a few months, we’ve witnessed unprecedented challenges to our global supply chains, along with economic and social disruption across every industry.

Despite all this negativity, I’m beginning to think there might be something positive in it as well. For those leaders who are paying attention and willing to do some hard work, now is an excellent time to be thinking about how to innovate and transform your organization for the future.

In effect, disrupt your organization before someone (or something) does it for you.

Be the Fire and Wish For the Wind

Disrupting your organization is not an easy concept to embrace. It is a bit like cutting off the proverbial limb you are sitting on!

The opening section of the exceptional book, Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb, is titled “How to love the wind.” It begins by comparing our desire for stability to that of a candle. We want to protect the candle’s flame from the wind, to prevent it from being extinguished. Yet, a fire uses the same wind to fan its flames and grow stronger in the process.

“Wind extinguishes a candle and energizes fire.”

He then makes an analogy to VUCA forces, “Likewise with randomness, uncertainty, chaos; you want to use them, not hide from them. You want to be the fire and wish for the wind. This summarizes this author’s non-meek attitude to randomness and uncertainty.”

So what is the takeaway?

The immediate, pragmatic, and safe response to getting hit with a crisis like the global pandemic, is to protect the candle. Our natural inclination is to save ourselves, our loved ones, our organizations, from the overwhelming risk and danger.

However, the VUCA forces in the environment are not going away. Not today. Not ever. If anything, they are only going to become stronger. Therefore, it makes logical sense to embrace the uncertainty and volatility, to make it the new telescope that we view the world through, and use it to sharpen our strategic plans for the future of the organization.

Embracing Change

In the business world, change is the only constant.

Strategic leaders must be receptive to change. Look for it. Embrace it.

Whether it is AI and machine learning, or robotics, or the gig economy, or the pandemic…almost every organization in every industry faces severely disruptive, if not existential, threats every day.

The dynamic forces of free markets don’t grant immunity to any individual, or any organization. Therefore, the best solution is to embrace it.

Here is a great data point that demonstrate the level of market disruption, churning, and creative destruction in the global economy: Only 52 of the original Fortune 500 companies are still in existence today. Driven by technology, innovative new business models, and VUCA market forces nearly 9 out of every 10 Fortune 500 companies that were on the list in 1955 are gone, merged, or contracted.

If you need some extra motivation, here’s a great example from recent business history: Kodak.

Kodak was at one time the dominant global provider of camera film, photo paper, and cameras with over a 90% market share. Then complacency (and a healthy dose of corporate hubris) set it. Their leadership refused to acknowledge the existential threat of digital photography. After seeking bankruptcy protection in 2012, the company has had to go down a long and painful road of reinventing itself in the face of the digital revolution. Today it is a mere shell of its former self.

The kicker to this story? Kodak actually invented the digital camera in 1975 but did not commercialize it out of fear of cannibalizing their core business. Ouch!

Strategic Suggestions

Are you a leader of an organization facing disruption from marketplace competitors and contemplating the potential impact of VUCA forces in your business environment?

Here are a few strategic suggestions for how best to navigate through it:

  • Focus on the customer. At the end of the day, if you don’t have a customer, then you don’t have a business. Therefore, it makes a lot of sense to listen to them. Understand their needs, wants, desires. Get to know customers so well that you can begin to anticipate the future and provide them what they don’t even know they need, want, or desire yet!
  • Study the market. Markets for every industry are crowded and complex. Technology innovation is only making it more cloudy and confusing for buyers and sellers in the ecosystem. The solution is two-fold: Get crystal clarity on your ideal client, so that you truly understand their wants and needs. Then, you need to nail your positioning and value proposition so that your organization is so clearly differentiated that only you can provide the solution they need.
  • Think like a startup. Startups usually begin with nothing but an idea. They have no clients or products to protect. No corporate hierarchy or political backstabbing to battle. Just a blank sheet of paper and a passion for developing something new or improved, and then bringing it to the market. This mindset, and way of working, is something that established organizations would benefit from.
  • Question everything. This suggestion is closely related to the previous bullet on thinking like a startup. Many organizations are not willing to revisit their business models, operating assumptions, or other “sacred cows.” This myopic thinking creates huge strategic blind spots. The answer? Be inquisitive. Question everything. Don’t assume history will repeat, or that you know all the answers. Most big companies are often good at fostering “sustaining” innovations – ones that incrementally improve their positions in established markets – yet they are incapable of dealing with innovations that completely disrupt those very same markets. Why? They are too focused on protecting what they have today, instead of building something new for tomorrow. A bird in the hand is worth two in the bush!
  • Open communication channels. To enable the suggestions listed above you need to make sure you have open, honest, and collaborative communications channels across your organization. This is not only vital for establishing robust Situational Awareness, but also for making sure you have a diverse set of ideas and experiences to consider in your strategic decision-making.Don’t stop with just listening to your customers. Listen to your prospects. Listen to your employees. Listen to your partners. Listen to your critics. Not everything they say will be accurate, or strategically relevant, but the truth is always in the middle – some of it will be useful!
  • Build resilience. I’ve written before that I think many organizations are guilty of “swimming naked”, or over-optimizing their businesses, thereby reducing their ability to quickly pivot and change direction when confronted with adversity. The pandemic crisis has exposed just how fragile many supply chains and manufacturing processes are, and the vulnerability of huge global industries like airlines, retail, and hospitality to VUCA shocks. Leaders should seek to build more resilience into their organizations, which could manifest itself in many ways: flexible workforce, more technology, redundancy, better analytics, extra inventory, etc.
  • Become more agile. This global crisis should inspire more leaders to re-think the balance between efficiency and the need for resilience. Those leaders, and organizations, who embrace the VUCA Strategic planning process, will gain agility. By thinking through and planning for alternative scenarios, and taking a portfolio approach to managing the organization, they will be able to act quickly, and decisively, when confronted with new disruptions.

The Time to Act is Now

This is a perilous and uncertain time for business leaders. We are truly in uncharted waters. We know that most industries are likely going to experience significant fundamental changes as we emerge from the initial tactical responses to the pandemic. We also know that organizations will need to change their strategies to prepare for the new environment.

However, most won’t act. Why?

Most organizations don’t innovate very well or attempt to disrupt their own business. Driven by the desire to show the public markets consistent quarterly growth they are trapped in the historical way of doing business and searching for “safe” incremental gains.

There are a few notable exceptions to this type of thinking: Amazon, Alphabet (Google), and Tesla come to mind. They have mastered a delicate balance to optimize for maximizing short-term gains, while also building strength and resiliency, and innovating to capture long-term growth and profit from new markets.

In times past, leaders would be very reluctant to shift their direction or strategy out of fear of alienating the market, or shareholders, or employees. Ironically, the unprecedented current level of VUCA uncertainty and fear in the global economy has given leaders a huge and rare gift. It is not quite a clean slate, but it is a once-in-a-lifetime opportunity to make transformational changes with less risk.

Most organizations, regardless of their industry or current strategy, will likely find themselves in a new industry structure and competitive landscape post-pandemic. If they don’t make significant adjustments today, they will likely lose market share to more agile competitors. They will also find themselves with even fewer strategic options in the future as shareholders seek to recoup losses and workers move on to organizations with better growth opportunities.

Strategic leaders should consider that the best use of their limited time and organizational resources might not be in fixing the current business, but rather inventing the future one. By leveraging some of the suggestions above, strategic leaders will listen carefully to the market, build resiliency and agility, and develop new strategies.

Even though now is the perfect time to disrupt your organization and begin a transformation, most leaders won’t dare to do it.

That’s a huge missed opportunity. Perhaps a fatal one…

Conclusion

Although the timing is still uncertain, I have confidence that the public/private partnership will be successful, and that we will find successful treatments and a vaccine for COVID-19. When this pandemic crisis is over, I believe we will witness one of the greatest periods of innovation and business acceleration in the history of humankind.

This means that right now, today, is a once-in-a-lifetime opportunity for progressive leaders to take a step backwards, pause, and think about how their organization should transform in order to be better positioned in the future.

Seek out the opportunities to disrupt and disintermediate your organization in the market. When you find them, embrace them, and figure out how to make them part of your VUCA Strategic Plan.

If you don’t take these steps and act with some urgency, then some other company likely will. In fact, they are probably already making plans to do so…

-Onward

Have We All Been Swimming Naked?

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“You only learn who has been swimming naked when the tide goes out…” – Warren Buffett

This is one of my favorite quotes. Yes, it is a bit folksy, but the underlying truth it reveals is very powerful when you think about it.

It applies perfectly to the current pandemic crisis, which has exposed a number of vulnerabilities in our global and local economies:

  • For many individual workers it has revealed significant issues like the lack of job security, access to affordable healthcare, and not having enough personal savings to survive any gaps in income. I hope in the upcoming post-COVID environment that our politicians, government agencies, and business leaders work together to find solutions for better job protection and security, universal healthcare, and “living” wages for workers that line up with the actual cost of living.
  • For many organizations, it has revealed issues like weak business models, undercapitalization, and foundational flaws in global supply chains…which is the topic of this article.

Caveat: Before sharing the rest of this article with you, and in full disclosure – I am not a supply chain professional. However, I have had a lot of exposure to the “procurement” function in my career…as a buyer, a supplier, partner, collaborator, and consultant. In addition, I have many procurement professionals as friends and business colleagues…hopefully I don’t embarrass myself too much by swimming outside of my lane!

We Have Over-Optimized

Here is my thesis: across almost all categories of spend I believe we have “over-optimized” most supply chains for goods and services, in both direct and indirect categories.

What do I mean? In our relentless push to drive efficiency in delivery, and shave every marginal cent in cost we have inadvertently gone too far. The result: we have created at-risk and unhealthy supply chains that are unable to absorb a shock and still deliver goods and services when and where organizations (and consumers!) need them.

This didn’t happen overnight.

In the years following the financial crisis of 2008/09 we have been moving closer and closer to the edge, pushing the boundaries of business prudence in the name of growth and investment returns. In a never-ending quest for greater efficiency, we have cut too deep. Empowered by technology driven efficiencies, we didn’t think enough about external disruptions. Our emphasis on instant gratification and short-term gains means we have not paid enough attention to mitigating long-term risks. Companies thrived and stock markets soared to new heights – with no thought about how we had undermined the resiliency of our economy or companies, no thought about “what if” we were hit with a significant global crisis.

We have been short-sighted: The disruption caused by the pandemic crisis has exposed us as swimming naked.

VUCA Disruption

When a VUCA shock like COVID-19 hit us, global supply chains were caught flat-footed, too slow or unable to respond appropriately. This is not a failure of markets, but rather a failure to account for VUCA forces in our never-ending game of optimizing the balance between supply and demand.

Profit maximized and stable markets just don’t work very well in times of crisis.

Despite our best intentions, the “system” does not have enough slack to survive a shock like the one we have just experienced. It is too complex, and not agile or resilient enough, to pivot quickly. In addition, many suppliers of both goods and services have seen their margins ground so finely over the years that they are not financially able to invest in excess capacity or inventory in case of an emergency. Hence shortages of toilet paper, face masks, and testing swabs.

As we are now learning the hard way. It turns out that redundancy, security and resilience are pretty good things to have when times are really bad.

Complexity and Crisis-induced Changes in Behavior

The global economy, and all its constituent supply chains, is a complex beast. Unfortunately, accommodating a shock wave like COVID-19, and the eventual restart, are not going to be as simple as flipping a switch.

There are a huge number of organizations, workers, and consumers within each industry and each market. Because all these entities are not perfectly aligned, each has its own supply and demand curves, and shut-downs or ramp-ups won’t be coordinated, the result will be chaotic. This state of flux will likely go on for a significant period of time, perhaps the next several years.

This also applies to the human capital supply chain: Organizations across many industries that had staffed up for the never-ending boom, have had to quickly cut their workforces to line up with demand that has fallen off a cliff.

Changed consumer behavior will dramatically complicate any recovery. Coming out of this crisis, where every industry has been disrupted and over 30 million US workers have lost their jobs, there is no way we will revert to how things were before. There will be many fundamental changes, for example: More workers will be working remotely, traveling less, eating out less often, spending less on non-essential goods and services, and hopefully saving more.

This will have a profound impact on our economy. In addition, it will result in extremely volatile and unpredictable supply and demand patterns across every industry and market.

Supply chains that have been optimized to be “lean” in a stable economy are now at risk. Quick cycle times, low reserve inventories, and just-in-time delivery work great when you have predictable data on supply and demand. With the VUCA uncertainty and disruption in the marketplace now, that advantage is gone. Likely forever.

A Challenge for Procurement (and Business) Leaders

So where do we go from here?

This crisis has shown us that rapid and significant changes to supply or demand can jeopardize the viability of an organization. A radical shock like COVID has severely tested and exposed many continuity plans.

All the marginal dollars that were saved in grueling price negotiations don’t mean much if you can’t keep the business open. Perfectly tuned just-in-time supply chains don’t mean a thing if demand drops to zero.

If you are a supply chain strategist, procurement professional, or any business leader for that matter, it is a great time to re-think how your business operates in a VUCA world. There are many strategic questions to consider, including:

  • How can you optimize your supply chain, while still leaving enough slack to handle surprises?
  • What demand-side changes should you consider in your planning?
  • How much redundancy and excess capacity should you have?
  • Are you investing enough in collaborating with your suppliers as true business partners?
  • What services should you outsource, versus insource?
  • What does your workforce of the future look like? Is there a better, more flexible and agile mix of employees and contractors?
  • Do you have enough cash reserves to weather a significant storm?

Conclusion

If we agree that VUCA disruption is likely the new normal, then procurement leaders will need to collaborate better with their suppliers and internal business stakeholders to build more agility and flexibility into their sourcing strategies for all goods and services. This will ensure healthy supply chains that are better able to meet rapidly changing and unpredictable demands.

We Now Live in a VUCA World

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“There is nothing more certain and unchanging than uncertainty and change” – John F. Kennedy

For the foreseeable future, volatility and uncertainty appear to be the only two things we can count on.

As our government and business leaders begin contemplating how to restart the economy without further stoking the pandemic, we must also begin looking for new strategic planning frameworks that can help us navigate and succeed in this uncharted territory.

The past several months have illustrated something the US military has known and grappled with for over three decades: we live in a dangerous and unpredictable world, and yet we must be prepared to handle every scenario thrown at us.

Attempting to solve the dichotomy between unpredictability and the need for planning gets to the heart of a framework the U.S. Army developed in early 1990s. They coined the acronym VUCA to describe the new post-Cold War environment that we found ourselves in after the fall of the Berlin Wall:

  • Volatile – The accelerating rate of change, without a clear or predictable trend or pattern
  • Uncertain – The lack of predictability, frequently disruptive changes with unknown outcomes
  • Complex – The interconnection and dependencies of many cause-and-effect forces
  • Ambiguous – The strong potential for misreads, little clarity about what is “real” or “true”

With this description of their “new normal” VUCA operational environment, they developed frameworks and playbooks to allowed military leaders to plan for and effectively respond to any threats, with the right force, anywhere in the world. This new flexible approach to planning has enabled the Army to rapidly mix and match forces and adapt to a more complex and uncertain operational environment.

It should come as no surprise that this concept of VUCA has great non-military application as well.

If we add COVID-19 to the other significant drivers that exist in today’s global economy (including the transformational growth and impact of technology, globalization, and environmental change) you get a massive VUCA environment. When you consider that all these drivers are accelerating and converging simultaneously our challenge becomes clear.

We now live in a VUCA world, and no leader, organization, or industry is immune.

Volatility, uncertainty, complexity and ambiguity all play a role in how business leaders must make decisions, solve problems, lead teams, mitigate risks, and innovate for change. They can also provide a strategic framework for leaders and businesses to plan, and make decisions.

If you embrace this basic VUCA framework, a playbook for turning VUCA to your advantage begins to emerge:

  1. We can counter volatility with vision.
  2. We can meet uncertainty with understanding.
  3. We can react to complexity with clarity.
  4. We can fight ambiguity with agility.

The biggest risk of a VUCA environment is that it can lead to inaction. People can become confused and overwhelmed by the turmoil and, as a result, rendered immobile. In a warfighting scenario those who sit still usually end up dead. To succeed we must take action.

In upcoming articles we’ll dig further into VUCA and how leaders can build out and execute the basic playbook above.

-Onward

Crisis Can Lead to Opportunity

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“Never let a good crisis go to waste” – Winston Churchill

There are two Kanji characters used in both Chinese and Japanese to spell the word ‘crisis’, the first symbolizes ‘danger’ and the second ‘opportunity.’ I can’t think of a more appropriate analogy for today’s unsettled COVID-19 world.

The global pandemic has proven to be a dangerous crisis. But it can also lead us to opportunity. If we look.

The quote from Winston Churchill alludes to the phenomenon that a crisis can provide the opportunity for real lasting change to take place. The crisis acts as the catalyst. From there we have to look for the opportunity, and then take action.

Why is this? The fear, uncertainty, and constraints created by a crisis trigger a primordial human fight or flight response. We essentially have two options: We can try to run or hide from the challenge. Or, we can embrace it. In either case, we have to recognize it and take some action.

This process of confronting a crisis, and getting inspired to take action requires focused thought and problem-solving creativity. The shocking and disruptive forces of a crisis like COVID-19 can expose cracks and weaknesses in business and political structures, beginning the process of breaking down barriers and eliminating roadblocks to change.

If we recognize and embrace them this phenomenon can accelerate change and lead to real innovation.

While it would be an absolute lie to say that I’m thankful for this crisis, I do appreciate the opportunities it will provide. Again, I categorically detest COVID-19, but as a business strategist and eternal optimist, I am choosing to see that some good might come from it also.

Let me explain.

In the short-term we are likely to remain in a business environment where there will only be room for “must haves” versus “nice to haves.” Due to reductions in financial and human capital, most business leaders will limit themselves to operating with a survivalist mindset of protecting the core.

However, truly strategic business leaders will also have their eye on the future. Growth strategists will realize that there has never been a better time in history to challenge assumptions. Every business in every industry is at some risk of disruption.

Long-term, everything is up for grabs. Business models will change. Industries will transform. Some organizations will grow, others won’t ever come back…

My counsel is to embrace this year as a strange gift. If you are a brave business leader, or in marketing or strategy, it is a chance to be a pioneer. A rare opportunity to transform your business, industry, and career.

Entrepreneurial change agents will seize this moment as an opportunity to think about “what should we do differently” instead of “how do we get back to where we were” and, as a result, position their organization for growth as we emerge out the other side of this crisis.

If your organization was in good shape before, use this crisis to get even stronger and grow market share. Don’t be afraid to challenge assumptions and make improvements that will help to future-proof your business. If you were weak, or threatened, it is an invitation to double-down and blow up your business model. While not quite a free “do-over” it is a great chance to “re-set.” Take it!

Now ask yourself, what trends will this crisis accelerate in your industry? How will you compete and thrive in a post-COVID economy?

More to come on these questions in upcoming articles…

-Onward