3 Steps to Optimize for an Increasingly VUCA World-EN

There is no doubt that this is possibly the most VUCA world that many of us have ever experienced. Yes, the 2008 recession was scary and life-changing for most of us but, fortunately, it wasn’t compounded by a life-threating virus.

Let me go back to VUCA for a minute and explain exactly what I am talking about. VUCA is an acronym used by the American Military when the Cold War ended to describe the volatile, uncertain, complex, and ambiguous multilateral world. Suddenly, there weren’t just two ‘super-powers’ wrestling for dominance; new ways of seeing and reacting to the world from the strategic leadership perspective were able to emerge.

VUCA stands for:

• V = Volatility: fast pace of change; fluctuations in demand and changing demands
• U = Uncertainty: can’t predict the future
• C = Complexity: interconnectivity of machine AND man (globalization)
• A = Ambiguity: lack of clarity on how to interpret information; hard to interpret

For many industries, there is massive disruption, even outside of the COVID19 pandemic. Traditional industries like banking, insurance, and retail have seen unexpected and very focused competition quickly emerge. These new companies’ rapid success is largely attributed to their size: they are small enough to make changes quickly as the market shifts.

Ali’s World
For the past two decades, I’ve been a partner in a small telecommunications expense management company. Because of our size, we have the ability to shift very quickly when a client needs new services. We had a client who asked us to help manage non-telecom utilities expenses and we responded quickly; within days we had a solution in place for the client. They were thrilled and commented that their previous (larger) vendor would have taken months to respond.

This kind of rapid shift is much harder to do in a large, complex organization. In my company, we basically have one operational system that runs our business. Large companies may have hundreds of intertwined information systems. On top of that, there are human systems – many people working in many different areas and sometimes without awareness of what other areas do. And on top of that, you may have antiquated policies and business rules that were put into place in a pre-VUCA world.

For years I’ve talked about the seven most expensive words in business: “That’s the way we’ve always done it”, and it’s even more true today. It takes an agile mindset to overcome this expensive thinking: How can we do it better? In a new way? Faster? Leaner? With less defects?

While I am no more certain about what lies ahead than anyone else in the world today, I’d like to share some insights that we’ve gained over our history of helping others overcome and manage change.

VUCA is most definitely relevant now more than ever, but awareness of it can be utilized to:

1. Anticipate the issues and their impact
2. Understand the consequences of issues and actions
3. Appreciate the interdependencies of variables
4. Prepare for alternative realities and challenges
5. Interpret and address relevant opportunities

VUCA is perhaps at the core of business agility – and if a business can embrace agility at this juncture, they might just have a fighting chance to come out on top of the COVID-19 crisis (or the next crisis). Consider this diagram.

1. Sense: listen for trends, innovate at the edge, track leading indicators, predictive analysis
2. Respond: rapid prototyping, decentralized decisioning, assess results and experiment
3. Adapt: reconfigure operations, scale or shrink on demand, continuous improvement

Let’s use this cycle as a guide.

1. Sense

Have your ear to the ground to listen for the trains coming. Ask these questions:

• What are the upcoming trends?
• What does the customer want and need?
• How can we deliver value to the customer?
• What innovation is going on around us?
• What are the leading indicators to point us in the right direction?
• How can we use predictive analysis to guide us?

Anticipating even a fraction of the disruptions can help you better pivot your organization if and when they come.

Also, build a good, transparent understanding of what your organization does.

• What are your core processes and capabilities? In one of my MBA classes a thousand years ago, one of the few things that stuck with me from a professor was to look for the raison d’être (reason for being).
• Why are we here?
• What is our mission?
• Why is that mission important?
• Who cares about it?

Once we understand these elements, they must be shared and believed in by the entire organization. Everyone must be one team committed to that mission.

Ali’s World
In my business, we are all committed to making sure our clients have the best services for their money and that they were being charged correctly for those services. Those two reasons for being give us our homing signal – when we have any doubts about priorities, changes to be made, or problems to tackle, our decisions are based on these reasons. Some things at the bottom of our backlog might never get done, but it probably won’t matter because they didn’t help us achieve our purpose as well as other things that we did decide to focus on.

2. Respond

Here’s where the rubber meets the road: the agile mindset and framework should be the guiding principles and processes to follow. What does that mean? Well, running ‘agile teams’ doesn’t make the organization agile. As the saying goes, “if I had a dollar for every time” that a client has said to me “of course we are agile, our development teams do Scrum (or some other agile framework)”. But when I ask what management does around agility, I get a blank look. Or “I just told you, we made our teams go agile”.

Real agility requires the entire organization to adopt the agile mindset, including and especially the C-suite (CEO, CIO, CFO, CTO… all the Cs). What is the mindset? The mindset means being agile, not just doing agile. We must quickly respond to what we discover from implementing the Sensing activities. How do we do that?

An example from the current COVID-19 crisis is the multitude of manufacturing companies that have pivoted quickly in their factories to produce masks and other PPE devices for the health care workers (our present-day heroes!). Many restaurants have pivoted quickly from dine-in only to providing takeout services. If you aren’t sure what to do, perhaps look for a company who is already optimized for the future and emulate them.

Or look internally to consider how to optimize. Think about running brainstorming sessions using innovation techniques like SCAMPER. See my recent article on this job aid: SCAMPER Technique – Reduce, Reuse, Recycle… or Reinvent!

Make sure you’re also delivering value incrementally: potentially delivering value to your customers in pieces. The faster the customer starts seeing results, the better chance you have of keeping them.

Ali’s World
My customers want us to be able to help them pay their vendors via multiple channels. We might start off with one channel, like check payments, then credit card payments, then progress next to p-cards (purchasing card), etc. We are incrementally providing more service with each solution. Our customers don’t have to wait for the entire set of solutions to start seeing value!

3. Adapt Your Response

Determine if your response is correct. Ask yourself:

• Are we delivering the value we anticipated?
• Are we meeting the need/solving the problem?
• What can we do even better if yes? Or what needs fixing if no?

Being (not just doing) agile continues to be important. That means:

• Deliver value iteratively. Constantly and continuously improve and enhance our products. Ask what your customers like and don’t like to figure out what needs improving, changing, or maybe even trashing.
• Continuous improvement is key. Without it, you will grow stale and get left behind by the competition. Experiment and test new, innovative ideas, then test the results and react accordingly.

Use the VUCA world to your advantage: Sense what’s going on. Respond to the events. Adapt your response by learning from how you responded and improving on what you’ve done. And then start all over again.

Nothing is certain in today’s world; change is happening on a minute-by-minute basis. Now more than ever, consider: “It is not the strongest species that survive, nor the most intelligent, but the most responsive to change.” – Charles Darwin

Stay safe and healthy.

— Ali