“If you do not expect the unexpected, you will not recognize it when it arrives.” – Heraclitus
Everything was going so well. Until it wasn’t.
Although the global pandemic unfolded over the period of several months, it sure feels like the world changed overnight.
We now live in a VUCA world (defined by the characteristics of volatility, uncertainty, complexity, ambiguity).
In this new and disruptive environment, change seems to be the only constant and we have little ability to predict what is coming next.
With this new reality, it has become clear that the traditional approach to strategic planning is inadequate. We need a better approach, one that embraces VUCA instead of ignoring it.
We need the VUCA strategic plan.
VUCA History Lesson
The US Army created the concept of “VUCA” after the fall of the Berlin Wall and the subsequent changing of the geo-political order. They needed a new doctrine and procedures to deal with the uncertain and unpredictable post-cold-war environment.
The Army had spent the decades following WWII with a primary focus on deterring and, if necessary, defeating, a military threat from the Soviet Union. The fall of the Soviet Union created a new and dangerous dynamic, and exposed our vulnerability.
With growing uncertainty about potential threats, the modern military had to be ready for a full spectrum of scenarios, from low-intensity conflicts to nuclear war. In response, the Army moved from a threat-based force to a capability-based force, prepared to go anywhere in the world, with the right resources at the right time. This new approach would enable the Army to quickly mix and match forces and adapt to a more complex and uncertain operational environment.
This same model has great application to the current business climate.
VUCA Definition
The Army described this new environment as VUCA, an acronym standing for:
- Volatility – The tendency for things to change quickly and unpredictably, typically for the worse. These challenges are unexpected or unstable, and may be of unknown duration. However, they are not necessarily hard to understand – knowledge about them is often available. The more volatile the world is, the more change there is and the faster that change occurs.
- Uncertainty – Situations where there is imperfect or unknown information. It applies to predictions of future events, to physical measurements, or to the unknown. Despite a lack of other information, the disruptive event’s basic cause and effect are known. Change is possible, but not a given. Uncertainty refers to the extent to which we can confidently predict the future, therefore the more uncertain the world is, the harder it is to predict.
- Complexity – Refers to the number of factors that we need to take into account, their variety and the relationships between them. The more factors, the greater their variety and the more they are interconnected, the more complex an environment is. Some information is available, or can be predicted, but the volume or nature of it can be overwhelming to process. The more complex the world is, the harder it is to analyze and come to rational conclusions.
- Ambiguity – A lack of clarity about how to interpret something. Situations where information is incomplete, contradicting or too inaccurate to draw clear conclusions. More generally, it refers to fuzziness and vagueness in ideas and terminology. The more ambiguous the world is, the harder it is to interpret. The causal relationships are completely unclear. No precedents exist and you often face many “unknown unknowns.”
Like most conceptual models, interpreting the elements of a VUCA environment is much more complicated in real life than it is in theory – the four components are very much interrelated and hardly ever live in isolation. For example, the more complex and volatile an industry is, the harder to predict and therefore more uncertain it will be.
Regardless of the difficulty, there is still a lot of value in understanding each component because all four represent distinct elements that make our environment – the world, a market, an industry – harder to comprehend and control.
Why a Flexible Approach to Strategy is Key
In this VUCA world, it is critical to stay as flexible as possible in all aspects of the business. Not only in tactical terms of people, capital, process, and technology, but more importantly in terms of strategy.
Strategy is vital to keeping the organization aligned, focused on what is most important, executing to win in the marketplace, and prepared for anything that tries to knock us off balance. The flexibility of your strategy should directly correlate with the level of VUCA uncertainty you face in the market.
The more we expect and plan for the unexpected, the better prepared we are to effectively deal with anything that happens.
Traditional Strategic Planning Versus VUCA Planning
In an earlier article, I wrote that effective strategic planning in a VUCA environment needs to be more agile than the traditional strategic planning approach.
Yes, strategic planning still requires the classic strategic definition of why the organization exists and what it does, but it also demands that we question every assumption about the business, the market, and the environment. Furthermore, we need to make it more robust, you could call it “VUCA-proof,” by stress testing our ability to counter known and unknown threats effectively.
Instead of driving the bus by looking through the rear-view mirror, we should endeavor to steer by looking through the front windshield – gazing not just at the road ahead, but also far into the horizon so that we can better anticipate what might be up ahead and can react appropriately to any disruptive forces or changes that come at us.
To illustrate this paradigm shift, and offer some insight on the path to a better strategic planning methodology, here’s a simple comparison of some key elements and assumptions in a traditional strategic planning model versus a VUCA strategic planning model:
| Traditional Strategic Planning | VUCA Strategic Planning | |
| Environment | Static | Dynamic |
| Outcomes | Predictive | Speculative |
| Progression | Linear | Non-linear |
| Structure | Hierarchical | Matrixed |
| Approach | Fixed | Flexible |
| Field of view | Narrow | Wide 360 degree |
| Perspective | Inside-out | Bi-directional |
| Assets | Protect known | Expose hidden or new |
Key Elements for VUCA Planning Success
In upcoming articles, I’ll share some foundational concepts and critical elements for success in designing and managing a VUCA strategic plan, including:
- Tactical remedies that business leaders and growth strategists can use to counter each of the VUCA elements (volatility, uncertainty, complexity, ambiguity)
- The vital importance of mission clarity for leaders, and their teams
- The incredible value in gaining situational awareness
- How a scenario-driven approach to building a VUCA plan empowers you and your leadership team to consider a range of possible future conditions before they hit you
- Why taking a portfolio-based approach to strategy is the smartest thing leaders can do to keep moving forward while preserving strategic flexibility
All of this leading up to sharing a proven framework for creating a highly effective VUCA strategic plan.
-Onward