In boxing, the flinch reflex is everything. It allows you to anticipate a punch before it’s thrown. A boxer with well-trained eyes can recognize the small flare in the elbow of his or her opponent before they throw a jab. Well-trained eyes are critical because it’s the punch you don’t see that knocks you out.
Many organizations pursue or respond to a disruptive new market force without anticipating the impending “punch”. As Yogi Berra once said, “If you don’t know where you are going, you’ll end up someplace else.” Blockbuster, Kodak, Myspace … each had a plan but failed to adapt when the marketplace around them changed. In today’s business environment, the pace of disruption is rapidly increasing, and it’s not going to stop anytime soon. You’re either disrupting or being disrupted; there is no in between.
As the world continues to accelerate, business leaders will need a better strategic framework to respond to the inevitable – unpredictability and the unknown. They can look to what some might consider an unlikely, or unexpected, source – the military – for guidance on how to proceed. After all military leaders are experts when it comes to dealing with unpredictability and the unknown.
Here is a timeline of some of the major human advancements that changed the world:
Case in point: The end of the Cold War introduced a new, multilateral world characterized as being more volatile, uncertain, complex and ambiguous than ever before. In its wake, the U.S. Army War College developed a new strategic framework known as VUCA: Volatility, Uncertainty, Complexity and Ambiguity. VUCA was designed to establish a sense of order and direction when operating in an environment of rapid change and unpredictable events.
Today, VUCA can help business leaders build awareness and readiness based on volatility, uncertainty, complexity and ambiguity – conditions that can be easily identified in any environment. Among its proponents is Paul Polman, the CEO of consumer giant Unilever. The VUCA framework can help you devise a plan that best addresses the frustrations and challenges associated with each of those categories. It boils down to two questions:
- How much do you know about the current situation (situational awareness)?
- How well can you predict the outcome of your actions (certainty of the outcome)?
Your response will determine the VUCA category into which you fall.
Volatile situations don’t give us time to prepare, they appear instantly and require our immediate attention. In volatile environments, we know a lot about the current state and can reasonably predict future outcomes. The challenge is the rapid rate of change. Most organizations deal with volatile markets, price fluctuations or rapidly changing consumer demands.
So, what does volatility look like? Let’s say you show up to the office early to tackle a list of high-priority items but before you can take your first sip of coffee you start receiving urgent e-mails and calls that need your attention. You spend most of the day putting out fires and end up not accomplishing any of the tasks on your list. Instead you end up adding to it. Volatility can leave us feeling overwhelmed, alone, and utterly unprepared to lead effectively.
Strategies for Dealing with Volatile Situations / Environments:
- Allocate enough resources and slack to buffer the impact of volatility.
- Make sure the level of investment used to mitigate volatility appropriately matches the risk level.
- Build short-term plans that allow for better estimates and adjustments. Be agile!
- Plan for contingencies or rapid response if things don’t go as planned.
A rapid rate of change can also lead to uncertainty. In his book, Complications: A Surgeon’s Notes on an Imperfect Science, Atul Gawande describes a situation with a patient who comes in with a leg rash that is diagnosed as a simple skin infection. Despite treatment, the patient’s leg got rapidly get worse and left doctors perplexed. The symptoms were consistent with flesh-eating bacteria which is extremely rare but can kill a patient within hours if not immediately treated. The doctors had a decision to make – either assume the likely scenario that it’s just a resistant skin infection and continue with antibiotics or assume the worst and immediately take the patient to the OR to amputate the leg. This is an extreme example of uncertainty but illustrates a situation with high situational awareness but doubt around what to do. You may know a lot about your current situation, but be unsure about how to proceed or predict the outcome.
The true danger here is assuming you simply apply the same approach you have in the past to a similar situation. It’s human nature. Our minds are constantly applying lessons learned to understand the present and the future. It’s fine to draw from your past experiences, but overreliance on them can lead to flawed assumptions. As J Paul Getty once said, “In times of rapid change, experience could be your worst enemy.” A good way to keep a fresh perspective is to use a “red team” which is an independent team or leader that challenges ideas and pokes holes. They play the role of devil’s advocate to improve your plan’s effectiveness.
Strategies FOR DEALING WITH UNCERTAIN SITUATIONS / ENVIRONMENTS:
- Invest in information – collect, interpret and share it.
- Challenge any assumptions that are based on past experiences to get a fresh perspective.
- Become agile with your plan and approach. It is hard to change course when you’re already invested in.
- Be clear with what you want in your approach.
- Scan the environment constantly so you can anticipate, adapt and act upon disruptive trends.
With complexity, you can easily predict the outcome, getting to that outcome is what's difficult. Companies that operate in several different countries typically face complexity because their situations involve differing regulatory environments, tariffs and cultural norms. Leaders are often bombarded with many variables and interdependent concerns. Complexity can overwhelm the decision-making process, drain team members and cause burnout.
STRATEGIES FOR DEALING WITH COMPLEX SITUATIONS / ENVIRONMENTS:
- Restructure, outsource or develop in-house expertise to combat complexity with resources.
- Keep it simple. Breakdown projects and let specialists do their thing.
- Develop collaborative leaders. Think humble but smart enough to have an ego.
Ambiguity is that fuzzy feeling you get when you leave a meeting and don’t know if a decision was made.
It can lead to inefficiency and missed opportunities. Ambiguous situations present themselves when you have little to no information about the current situation and can’t predict what will happen with a given course of action. You might be introducing a new business model to the market that has never been tried before – entering an emerging market or introducing technologies outside of your core competencies, for example. Resolving ambiguity requires understanding the context in which the situation takes place.
STRATEGIES FOR DEALING WITH AMBIGUOUS SITUATIONS / ENVIRONMENTS:
- Treat the situation like an experiment and use the scientific method.
- Design your pilots so that lessons learned can be drawn from them and applied to future iterations.
- Leaders must provide clear direction and synchronize efforts of the team. Be the beacon.
VUCA is one of those frameworks that may seem simple – and it can be, but only if it is applied intentionally. The reality is that most situations involve more than one VUCA category – for example, one that is both uncertain and complex. Consider adopting the VUCA framework as part of your toolkit to quickly assess a situation and build out the best possible approach. Once applied, you will know what you’re up against and how to beat it, and allow you to better position your organization for the next disruption that will change the world.
Special Thanks to Propeller Consultant Beau Platte for contributing to this article.
For additional readings on VUCA and sources to for this article see Stories and Strategies From the VUCA World and Col. Eric G. Kail’s four-part VUCA series starting with Leading in a VUCA Environment: V is for Volatility.