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Strategic planning

Survival of the Most Adaptable

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“It is not the strongest of the species that survive, nor the most intelligent, but the ones who are most responsive to change.” – Charles Darwin

You often hear Charles Darwin’s theory of evolution, first published in his book On the Origin of Species in 1859, summarized as “survival of the fittest.” It turns out this is not exactly the correct interpretation.

In reality, Darwin actually meant survival of the most adaptable to change.

This concept of adaptability applies perfectly to today’s chaotic VUCA environment. I believe those organizations (and leaders) who are best able to adapt to change will grow and thrive. Those who don’t, won’t!

VUCA is the New Normal

Let’s face it, 2020 has been one wild rollercoaster of a ride. Across industries, the global pandemic has accelerated many changes that were already in motion, and created a number of new ones.

This unprecedented pace of change and disruption is only going to continue. This new VUCA (volatile, uncertain, complex, ambiguous) environment is here to stay.

As a result, leaders of organizations have a simple choice to make:

  • Will they stand by and hope for things to revert?
  • Or, will they choose to adapt to the new environment?

When you step back and think about it, the correct answer is obvious.

Things are very unlikely to return to where they were. Ever.

The world has changed. As a result, leaders and their teams need to adapt. Quickly.

Adaptability is the Key to Survival and Growth

The key to survival and growth in times of disruption is your mindset, your preparation, and your willingness to embrace change.

Leaders, organizations, and industries who are operating in survival mode are in deep trouble. When survival instincts prevent movement from the status quo, then extinction is near.

Those leaders, and their teams, who are adaptable and operate with an empowered, strategic, and future-focused way of thinking will win. The ability to be flexible, make quick decisions, and then take action will help them out-wit, out-play, and out-last their competitors. This is the key to survival and growth in a VUCA world.

Leaders and their teams need to get out of the building. They must be ever vigilant, always prepared to act quickly and decisively when confronted with moments of need or opportunity, adversity or change.

VUCA Strategic Planning is Your Secret Weapon

Any battle-hardened leader will tell you that no plan survives its first contact with the market! Therefore, it is wise to have a robust, yet flexible, approach when making plans for the future.

The VUCA Strategic Planning framework provides a disciplined approach to planning and achieving the Envisioned Future of the organization, while maintaining flexibility the ability to pivot quickly when VUCA strikes.

We do not always see it immediately, but disruptions also bring opportunity. We need to be observant and open to the possibility. Be calm and clearheaded enough to recognize it and react appropriately.

Strategic organizations and brave leaders are even willing to disrupt themselves!

To win in a disruptive VUCA environment, you must win in your mind first! This begins with preparation, and a comprehensive strategic plan.

To survive and thrive, high performing leaders and their teams:

  • Know their purpose, their why.
  • Understand their long-term goals. Their what.
  • Know how they need to work together. Their strategy. Their how.
  • Have connection. Share common core values.
  • Have robust situational awareness, considering both internal and external perspectives and market forces.
  • Have a comprehensive plan. Everyone on the team has a role to play.
  • Have considered and planned for alternative scenarios. Leaders are constantly asking “what if?…”
  • Maintain an active strategy portfolio in case the primary one fails.
  • Actively manage the execution of the plan to monitor progress, control resources, and have the ability to make quick course-corrections.

Conclusion – Adapt or Risk Failure

This is both an exciting and nerve-wracking time to be a business leader.

Regardless of your industry, or the size of your organization, today’s business climate is chaotic, fluid, and changing rapidly. Every leader and their team will have a unique set of problems to solve and challenges to overcome, requiring new ways of thinking and different tactics than the past.

As our new VUCA world continues to unfold, I believe there will be unlimited opportunity to grow and thrive for those organizations who are best able to adapt.

I encourage all leaders and organizations to embrace change and build adaptability as a core competancy.

-Onward

Get Out of the Building

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“Strategy should evolve out of the mud of the marketplace, not in the antiseptic environment of an ivory tower.” – Al Ries

Leaders of organizations always have the best of intentions when they work with their teams to create strategic plans.

The objective should always be to design a plan that leads to the successful achievement of their long-term goals. Most leaders want to get the planning done quickly so their team can shift focus to executing. This bias to action is not a bad thing, but it can lead to sub-optimal (if not downright dangerous) outcomes if they are not careful during the planning phase.

Many leaders make a critical mistake during this process. They don’t spend enough time gathering and evaluating real-world data that could shape or positively impact the outcome of their strategic plan. Instead, they stay in the boardroom to complete the plan in isolation using old data or opinions instead of validated facts from the real world. As a result, they often are blindsided by unexpected impacts during the subsequent execution phase.

In the context of effective VUCA Strategic Planning the remedy for business leaders and their teams is very simple. To borrow a popular phrase from the world of startups, they need to get out of the building!

The “Get out of the building” Concept

Steve Blank, sometimes referred to as the godfather of modern entrepreneurial practice, popularized the mandate that startup teams must “get out of the building” to validate their ideas. He developed a formal process, called customer development, whereby teams first develop a hypothesis for a new product or service then gather feedback from the market before they build or develop anything.

Although some of this important work can be done using online tools or brainstorming with your team, customer development is primarily done outside the building in front of customers and partners and other stakeholders in the business. The goal is to rapidly test the hypotheses with a series of experiments in order to figure out whether it is correct or not. And, if incorrect, what types of iterations, small changes, or pivots to your business model do you need to make?

In addition to being very useful for validating startup product or service concepts, the same approach should also be used by other go-to-market functions in more established organizations. For example:

  • Marketing – Regular contact with prospects and customers is vital for marketing professionals. These conversations can help them to build and refine buyer personas, test and clarify value propositions, learn new problem/opportunity insights, developing new thought leadership content, create new advertising, etc.
  • Sales – By definition, sales professionals need to be outside the building, either literally or figuratively, having direct sales conversations with buyers. These interactions not only enable them to progress a sales cycle, but also provide insights on important topics like ideal client targeting, objection-response, and closing techniques.

Application to VUCA Strategic Planning

When it comes to developing a VUCA Strategic Plan for the organization, it is essential for leaders and their teams to have the best possible understanding of the market and the business environment they are competing in.

Getting out of the building is a vital path to gaining better data and market intelligence. By talking with prospects, clients, partners, analysts, and even competitors, leaders get gain valuable insights on the market, new trends, and potential VUCA forces that could influence their strategic plans.

In the VUCA Strategic Planning model, Situational Awareness is the process that forces market interaction and feedback to happen. It happens best when leaders and their teams get out of the building and into their operating environment.

A Few Simple Guidelines

When it comes to VUCA Strategic Planning, there are a few simple guidelines that help support the mandate to get out of the building:

  • VUCA Plans are built on a foundation of robust Situational Awareness and comprehensive Scenario Planning. Both are best gained by first-hand observation or conversation in the market.
  • An intelligent opinion is still just a guess. You want to base your plans on validated customer or market data.
  • The dumbest person with a fact trumps anyone, including the most intelligent and experienced person on the team, with an opinion. Get validated data.
  • There are no facts inside the building. Get out of the building!

Conclusion – Get Out of the Building!

Getting out of the building is core activity for startups to prevent them from spending limited time and resources on things the market doesn’t want or need.

The same concept applies to leaders of established organizations and their teams when they develop their VUCA Strategic Plans. It is dangerous to make assumptions, so get out of the building and gather valuable planning data and inputs from your market. Your plans will be the better for it!

-Onward

The Value of a Strategy Portfolio

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“Prediction is difficult – particularly when it involves the future.” – Mark Twain

It is exceptionally difficult to predict the future. If not impossible!

At its most basic level, strategic planning is about making a plan for the organization to achieve its long-term goals. All the unpredictable and disruptive VUCA forces in our world just make this effort even more challenging.

The VUCA Strategic Planning framework was designed to help leaders mitigate the risk factors of an uncertain future for their organizations. Two core elements of the model are robust Situational Awareness and Scenario Planning, both of which help reduce risk by forcing leaders and their teams to think holistically about the environment and making plans to accommodate potential disruptors.

Another important element of the model that helps mitigate risk for the organization is called Strategy Portfolio. It comes at the end of the strategic planning process because it is essentially an insurance policy – providing a portfolio of options that are ready in case the primary strategy and plan do not work out.

Strategy Portfolio Concept

The concept of a Strategy Portfolio is similar to asset management – where advisors seek to build a balanced investment portfolio holding a variety of different kinds of investments (for example: some stocks, bonds, T-bills, and real estate). The idea is that if one of the investments goes down in value, another one will go up, thereby balancing it out and helping to drive an overall gain in the portfolio. This diversification helps to mitigate risk by not having all your bets in one place and by having several initiatives always in play.

Strategy Portfolio management takes the same disciplined approach to managing multiple strategic initiatives within the organization. It is often used by larger organizations who want to reduce their risk exposure by making several alternative, complementary, or sometimes even competing strategic bets. It is also common to find this approach used in the startup world where organizations sometimes run multiple simultaneous experiments to see what gets the most traction.

The reason for having a Strategy Portfolio is to mitigate risk of primary plan failure. The basic idea is to have a fallback position in case the primary strategy and plan blows up or fails to materialize as planned.

Leaders should think of it as a portfolio of bets placed against the future, combined with a process for continually updating, re-prioritizing the portfolio as new information is obtained, or new opportunities emerge. In this way, the Strategy Portfolio becomes an extension of the primary strategy and plan.

Rather than being limited to a single direction, with this approach your VUCA Strategic Plan can focus on a core strategy surrounded by a number of side bets designed to provide strategic options in the event of surprises or failures. These smaller hedges can deviate from the primary strategy (for example: entering into joint ventures with competitors, new strategic alliances, developing new technology, experimenting in new markets, etc.) and provide a strategic springboard for the organization to slowly move towards, or pivot to quickly if required.

Where Does It Fit in the VUCA Framework?

In the VUCA Strategic Planning framework, 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 today. 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 its long-term goals. These elements explain the desired “future state” 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) to better understand how information, events, and one’s own actions might affect both immediate and future outcomes.

With this planning foundation in place, 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 is the mechanism:

  • 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 bridges the “gap” between where the organization is today and where it wants to be in the future.
  • Strategy Decision – Once a strategy has been formulated, leaders must then decide: Is it the best 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 successful execution.

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.

In addition to their primary VUCA Strategic Plan, leadership teams should also take several additional steps to help mitigate the risk of disruption or failure:

  • 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.
  • Strategy Portfolio – A list of viable alternative, complementary, or competing strategies that your organization will resource and your team will execute in addition to the primary strategy. Your Strategy Portfolio will develop from the strategy formulation phase, additional insights gained from situational awareness, and scenario planning that went into creating your VUCA Plan. This element mitigates risk and maximizes future opportunity for the organization.

The Value of Strategy Portfolio

Why should you embrace the Strategy Portfolio approach?

It is very common for established organizations to focus heavily on driving quarterly results with less attention paid to long-term growth. As the global pandemic has swiftly revealed, many of these companies have been swimming naked!

This short-term thinking means they have over-optimized and as a result are running so lean that they now do not have the time, resources or people required to make strategic investments. In organizations like this, it can often be career suicide to even talk about bold paradigm-breaking initiatives.

This protective mindset also helps explain why organizations are so often blindsided by industry disruption. They may feel it is coming, or even see signs firsthand, but they become paralyzed by the need to protect the next quarter’s profits. Therefore, nothing changes. And as a result, no strategic investments in the future are made.

On our upcoming road to economic recovery, I expect many leaders and boards of organizations will take a fresh look at their strategic plans. I hope that they will also reconsider their approach to risk management, and seek to build in more resiliency and agility in their strategic planning approach.

The old days of creating a rigid and fixed strategic plan, and defining a linear path to reach long-term goals, are long gone. In the modern business era this approach is problematic at best, fatal at worst.

Markets are shifting, consumer demands are growing, competition is increasing, technology is disrupting, suppliers are changing, and regulations are constantly in motion. Pick an industry and you will find the levels and speed of change are rapidly intensifying.

Today’s uncertain and disruptive VUCA environment dramatically exposes the weakness of an inflexible approach to strategy. To have any chance at success, leaders must develop resilient organizations, with agile teams, and strategic plans that can withstand and adapt to the increasing rate of change hitting almost every industry.

Strategy Portfolio is an enabler for this dynamic approach to strategic planning. Having a comprehensive, but realistic, set of strategic initiatives in motion at all times enables organizations to constantly test, refine, and optimize their thinking and approach to changing markets, innovation, and competition. If one initiative fails or shows signs of weakness, then there are other options to quickly pivot towards or invest more in.

In his book, Little Bets, author Peter Sims explains that making small side bets can often lead to bigger things.  “Small wins are like footholds or building blocks amid the inevitable uncertainty of moving forward.”

One important additional benefit: This approach also helps all your stakeholders – from frontline employees to the C-suite – understand how and where the organization might create more value in the future, and therefore how to prioritize investments in new future capabilities versus optimizing business as usual today. Ultimately, the Strategy Portfolio approach will help your organization to make decisions quickly and respond strategically, whatever the future is.

The Amazon Example

Amazon has an operating philosophy, called “Day 1”, that was inspired by their early startup days where they didn’t know what was going to work and were constantly experimenting.

Jeff Bezos, the founder and CEO of Amazon, is a great example of a leader who embraces the Strategy Portfolio approach. He wrote in a famous 2016 letter to shareholders, “Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight.”

Bezos observed that organizations who took many small risks, failing at many of them in the process, will ultimately find the one or two initiatives that enable their business to succeed. Those leaders who sharply limit their experiments, in contrast, will effectively bet the entire company on a single move. Often the wrong one. Bad move. Game over!             

Amazon’s online retail sales dominance; capabilities in supply chain and logistics; customer insights and preferences; web services; and technology platform innovation are all a result of building a Strategy Portfolio into their strategic plans. It works!

Something is Going to Happen

The future is impossible to predict. Nevertheless, we know “something” is going to happen. Therefore, we cannot avoid making plans for it. They just need to be flexible.

The VUCA Strategic Planning framework was carefully designed to help leaders embrace uncertainty about the future, and build a robust, resilient strategic plan for the organization.

By assembling a Strategy Portfolio of initiatives, leaders are able to respond quickly to different scenarios, and will always have viable strategy alternatives in motion if the primary strategy fails or is disrupted. By taking a dynamic approach to managing this portfolio, leaders can constantly rebalance and shift resources as needs require or opportunities arise.

Since nobody really knows how the rest of this year, let alone this decade, will play out, there is no time like the present to brainstorm with your team and plant a few additional strategy seeds for the future.

-Onward

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…

Creating Your VUCA Strategic Plan

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“Without goals and plans to reach them, you are like a ship that has set sail with no destination.” – Fitzhugh Dodson

Introduction

The first half of 2020 has certainly proven that we live in a fast-moving and extremely unpredictable world. For leaders of organizations it important to note that these characteristics are not going away, in fact they seem to be accelerating.

I have adopted the military term “VUCA” as the best description for this new operating environment – It is an acronym, standing for: Volatile, Uncertain, Complex, and Ambiguous. It is also the philosophical foundation for the VUCA Strategic Planning framework, which is designed to be an agile approach for strategic planning that not only accommodates uncertainty, but also embraces it.

In the context of managing organizations, leaders need to consider these uncertain VUCA internal and external factors when they set long-term goals and develop strategies to achieve them. This process culminates in the creation of a VUCA Strategic Plan for the organization.

Definition of a Strategic Plan

In simple terms, a plan can be defined as a diagram or list of steps, with details of timing and resources, that will be used to achieve an objective, overcome a challenge, or accomplish some specific task.

A VUCA Strategic Plan is a complete contingent plan of action that an organization uses to achieve its long-term goals in the market. It lists out the various possible situations a business is likely to find itself in and specifies the strategy and set of actions that it should take in each of the situations in order to achieve success.

I have heard it said that a strategic plan can be thought of as a very structured approach to problem solving. At a macro level, there are three vital components: (1) Thoughtful diagnosis that defines or explains the challenge or opportunity; (2) A guiding policy, or strategy, for dealing with the defined challenge; and (3) An action plan designed to carry out the strategy.

When done well, the strategic plan serves as a blueprint, which codifies the planning foundation and strategy decisions made by the leaders of the organization, and the roadmap for moving forward. In addition to summarizing the Core Ideology, Envisioned Future, Situational Awareness, and Strategy, it should detail a comprehensive action plan for the team that brings the organization closer to achieving its long-term goals. It is essentially articulating the “who” and “what” and “where” and “when” for the organization to take action.

It also serves as a vital decision-making framework for business leaders to evaluate options, consider alternatives, and select the best approach. These decisions, which occur daily throughout any organization, include everything from capital investments to operational priorities to marketing to hiring to sales approaches to how each individual manages their day. Without a strategic framework to guide these decisions, the organization will be unfocused and runs the risk of not achieving the desired results and creating confusion and dissention amongst the team.

It is important to call out that a VUCA Strategic Plan is not focused on choosing specific goals (that is the purview of leaders and boards of directors as part of the planning process) but only with how to achieve those goals once they have been identified.

VUCA Strategic Planning Framework

Here is a quick overview of the VUCA Strategic Planning framework: The Core Ideology of the organization is the planning filter that any strategy can be evaluated against, and the Envisioned Future is the definition for the desired future state. When combined with robust Situational Awareness, detailing the current state of the organization and its operating environment, your Core Ideology and Envisioned Future create the springboard for strategy development. Previous articles have described these three planning elements in much greater detail:

  • 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.

With this planning foundation in place, leaders are then ready to 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. This is where strategy comes into play.

  • 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.

In its simplest form, a well-crafted strategy should bridge the gap between “current state” and “future state” for the organization. The strategic planning process therefore 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.

Key Elements of a VUCA Strategic Plan

Developing a logical and realistic action plan is critical for success. It should detail the high-level actions the organization is capable of taking, and the required resources, that will result in overcoming the defined challenge or achieving the desired outcome.

Key elements of a VUCA Strategic Plan include:

  • Planning Foundation – It is important to document and reinforce the Core Ideology and Envisioned Future of the organization, and clearly identify the strategic gap. Also, document the key Situational Awareness elements and analysis, covering both the internal and external perspectives, and clearly articulate the chosen strategy.
  • Objectives – One of the key components of a VUCA Strategic Plan is to create short-term objectives which contribute and drive towards the attainment of the long-term goals articulated in the Envisioned Future of the organization. Objectives are delegated and resourced, and become key drivers of activity for the team. For maximum effectiveness, objectives should be defined using the SMARTER framework.
  • Resources – In the context of strategic planning, resources are the people, money, and assets required to execute each element of the plan. Effective resource planning not only ensures the successful execution of the plan, but also establishes ownership of each task.
  • Timelines – It is important to have an estimate of how long each element of the plan should take to complete. In addition, the plan should have anticipated starting points and deadlines, and often have interim check-points identified. This will help load balance and sequence the work, but also serves as a vital management KPI to ensure plan execution is on track.

Having all of this information documented in one coherent and easily shareable plan will not only help leaders to manage the activity, but also significantly improves the chances of gaining support and adoption from employees and stakeholders. This is a critical component of successfully executing your plan.

Next Steps

Once your core VUCA Strategic Plan is developed, there are three final elements in the VUCA Strategic Planning framework designed to ensure successful execution and the achievement of the defined long-term objectives for the organization:

  • Scenarios – As the COVID-19 pandemic has so clearly demonstrated, we should always prepare for the unexpected. In the Scenarios phase of the VUCA Strategic Planning process, we seek to do that by asking “what if” questions in order to identify potential VUCA impacts that could derail the strategy or impede our ability to achieve the defined objectives. Documenting these scenarios and your potential response(s) is a vital component of every VUCA Strategic Plan.
  • Portfolio – In addition to Scenario planning, there is another important risk mitigation mechanism built in the VUCA Strategic Planning framework. The concept of Portfolio management is often deployed by large organizations who want to reduce their risk exposure by making several competing strategic bets. It is also common to find it in the startup world where organizations sometimes run multiple simultaneous experiments to see what gets the most traction. The goal is to mitigate risk of primary plan failure. The basic concept is to have a fall back position in case the primary strategy and plan blows up.
  • Management Cycle – This is the final element of the VUCA Strategic Planning framework, and the most important. I like to call it the “action phase” of strategic planning, because once the plan has been delegated to the responsible individuals and teams, this is when they take action. Once execution begins, it is also where the leaders of the organization and their teams will spend most of their time monitoring progress and making important decisions and course corrections including the continuous loop of: deciding whether to start/continue, taking action, evaluating results/feedback/inputs, and deciding whether to pivot, or stop.

Much more on these final three elements in future articles.

-Onward