1CMO

Growth strategy | Advisory | Force multiplier

strategic planning

The VUCA Strategic Planning Framework

by

“In preparing for battle I have always found that plans are useless, but planning is indispensable.” – General Dwight D. Eisenhower

The last six months have proven the traditional approach to strategic planning is no longer effective.

We do not live in a static or predictable world. If a VUCA environment – with all its disruption and unpredictability – is the new normal, then organizations need to adopt a strategic planning process that is more robust and agile.

Organizations today need strategic plans designed to handle the accelerating pace of change, extreme unpredictability, and widespread VUCA disruptions across the global economy.

The VUCA Strategic Planning framework helps leaders and their teams develop comprehensive, yet flexible, plans that help determine the future of their organization.

The Need for Flexibility and Agility

To succeed in this new era, organizations need to be flexible and agile. Leaders and their teams must get out of the building and maintain the discipline of a bias to action!

As a result, organizations must also be flexible in their strategic planning and agile in their execution.

Yes, it still requires that we define why the organization exists and what we do. However, it also demands that we constantly question every assumption about the business, the market, and the environment, and make quick decisions based on what we find.

Leaders and their teams must constantly ask the question: “What if?…”

Instead of driving the bus by looking through the rear-view mirror, this agile approach to strategic planning demands that we steer by looking through the front windshield. We need to focus – gazing not just at the road ahead, but also far into the horizon, to an unknown future – so that we can better anticipate what might be coming up and react appropriately to any disruptive forces or changes that might hit us.

This flexible approach to strategy is a key ingredient to successful execution.

VUCA Strategic Planning Framework – Overview

The graphic below provides a visual overview of the VUCA Strategic Planning Framework.

There are four core phases in the process:

  • Planning Foundation – Where we define the Core Ideology (Mission, Values, Purpose) of the organization, the Envisioned Future (Vision, Long-term goals), and the Strategic Gap that separates them.
  • Strategy Development – Where we formulate the go-forward Strategy, and make a go/no-go Strategy Decision.
  • Plan Creation – Where we develop the VUCA Plan, and do Scenario Planning.
  • Management Cycle – Where we add in the Strategy Portfolio, and leverage the Management Cycle for effective execution.

The foundation to every effective VUCA Plan is robust Situational Awareness. This continuous process happens throughout the four phases of strategic plan development and execution, and represented by the parallel work stream running the length of the process.

There are also four phases to situational awareness, matching each of the strategic planning phases:

  • Perceiving – This phase is all about gaining clarity on the “as is” status of the organization through internal analysis and an external analysis of the marketplace or economy.
  • Understanding –By taking information from the first phase and interpreting it through a new or existing mental model, or strategic framework, we can be begin to make sense of the connections between the elements and stress-test possible approaches to reach “future state”.
  • Predicting – After reviewing the information and insights from the first two phases, we can leverage this knowledge to project forward and begin to predict potential future impacts or outcomes. This is an important element for Scenario Planning.
  • Reacting – During the execution phase leaders and their teams in the field must observe, interpret, and react to all the inputs they receive from the market. This is where we must react to VUCA forces and make decisions about whether to proceed, pivot, or stop!

VUCA Strategic Planning Framework – Details

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 strategic 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 is vital. Situational awareness involves knowing where you are (“current state”) and being aware of what is happening in your environment (internal and external perspective) to understand how information, external events, and one’s own actions might affect both immediate and future outcomes.

Once this planning foundation is 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 to do this:

  • 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.
  • Strategy Decision – Once formulated, leaders must then decide if the strategy is the best one 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 around that strategy.

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. Clarity on objectives, owners, and timelines will help ensure successful execution.

In addition to their primary VUCA Strategic Plan, leadership teams should also take several additional steps to help mitigate the potential 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/if a disruption happens.
  • Strategy Portfolio– Viable alternative, complementary, or even 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.

In the final stage of the VUCA strategic planning process the focus shifts from planning to execution. It is now time for leaders to delegate the responsibility for taking action and manage the outcomes.

  • Management Cycle – A circular workflow, where individuals or teams do the work of executing the strategic plan, review progress, and make course-correction decisions. The leaders of the organization manage this on a regular cadence until the objectives are either achieved, changed, or deleted.

To Your Continued Success

So, there you have it – the VUCA Strategic Planning framework – a comprehensive and integrated approach to strategic planning in times of change and disruption. It was  expressly designed to help leaders and their teams deal with a VUCA environment, effectively plan the future of their organization, and take action.

This agile and flexible approach to strategic planning, and execution, is the key to success for any organization.

I am looking forward to sharing additional tools, techniques, and best practices for each stage of the process. I would also welcome any feedback or suggestions on the framework as you work with it. If you would like to talk about how best to create a VUCA Plan for your organization, please feel free to reach out.

To your continued success.

-Onward

Getting From Vision to Results

by

“A vision and strategy aren’t enough. The long-term key to success is execution. Each day. Every day.” – Richard M Kovacevich

After developing a VUCA Strategic Plan for their organization, many leaders and their teams think the hard work is over.

Unfortunately, this is not the case. This is when the real work begins!

It is now time to transition the focus from planning to execution. This is when the work of accomplishing the objectives defined in the plan happens. This is where winning organizations demonstrate a bias to action and MFGSD, and begin to execute their plans.

The Management Cycle is the final, and arguably most important, element in the VUCA Strategic Planning framework. For leaders, this is the vital process whereby they effectively manage the execution of the VUCA Strategic Plan for their organization. For individuals and teams, this is when they execute strategy and tactics all the way through to the achievement of defined objectives.

The VUCA Strategic Planning Management Cycle

A comprehensive VUCA Strategic Plan will have clearly articulated details on three important elements:

  1. Long-term goals for the organization.
  2. The strategy for reaching them.
  3. Tactical objectives to achieve along the way.

Furthermore, these objectives (hopefully designed using the SMARTER framework!) will specify assigned resources (people and financial), timelines, and metrics.

The tactical objectives are the work outcomes which are delegated to individuals and teams, and help to define the success or failure of their roles in the organization.

Leaders of the organizations (who are the fiduciary “owners” of the strategic plan) must now do what they do best: lead their teams and manage the plan to successful completion! This element, called the Management Cycle in the VUCA Strategic Planning framework, is where the work of the organization happens.

The Management Cycle is not a static step in the planning process, but actually an on-going management activity. Rather than a linear path from beginning to end, it is better to think of it as a circular loop structured very much like the traditional PDCA total quality productivity loop (plan-do-check-act), as follows:

  • Start/Continue – Think of this as a stage-gate at the top of the loop. It is where the work effort towards achieving the objective begins. It is also where leaders make the decision to continue the effort during a regular progress update…
  • Action/Execution – This is the stage where the actual work or activity happens. At some pre-defined, or ad hoc, point in time the activity is reviewed…
  • Evaluation – In this stage, individuals or teams review their progress with leadership. Specific metrics (defined in the VUCA Plan) are evaluated, which leads to…
  • React/Pivot/Stop – Following evaluation, leaders must guide the individual or team in making any necessary course corrections. This can include reacting to things like market feedback, experiment results, sales success, etc. The decision could be to continue for another execution cycle, pivoting to a different approach, or stopping the activity.

This iterative pattern of activity continues until the objective is either successfully achieved, or the objective is modified, or the objective is removed from the plan.

The cadence of the Management Cycle is heavily dependent on the nature of the actual activity. Singular events, or short-duration tactical activities, might not allow time for anything other than a completion/failure evaluation at the end. Whereas, longer-term or more complex activities might have a series of regularly scheduled reviews on some calendar basis (daily, weekly, monthly, quarterly, etc.)

Many leading organizations (including Intel, Google, and LinkedIn) have enjoyed great success using a methodology called Objectives and Key Results (sometimes referred to as OKR) to manage the execution of their strategic plans. Future blog articles will go into greater depth on the OKR framework for managing the achievement of objectives.

Where Does the Management Cycle Fit into the VUCA Strategic Planning 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 to do this:

  • 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 formulated, leaders must then decide if the strategy is the best one 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 around that strategy 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 potential 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 even 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.

In the final stage of the VUCA strategic planning process the focus shifts from planning to execution. It is now time for leaders to delegate the responsibility for taking action and manage the outcomes.

  • Management Cycle – A circular workflow, where individuals or teams do the work of executing the strategic plan, review progress, and make course-correction decisions. The leaders of the organization manage this on a regular cadence until the objectives are either achieved, changed, or deleted.

Conclusion – Time to Execute

“Without strategy, execution is aimless. Without execution, strategy is useless.” – Morris Chang

In the world of business, having great ideas is much like having a strategic plan – many leaders and organizations have them, yet very few successfully get them done.

This failure to execute is what the Management Cycle element of the VUCA Strategic Planning framework prevents. By clearly defining expectations and ownership, and actively managing the work, leaders can make sure good outcomes happen.

Moving the organization from vision to results…

-Onward

The Value of a Strategy Portfolio

by

“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

by

“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…