VUCA, standing for Volatile, Uncertain, Complex and Ambiguous, was an acronym based on the leadership theories of Warren Bennis and Burt Nanus (1985), coined towards the end of the Cold War by military strategists, to describe the planning landscape they were faced with as the prevailing order rapidly changed and new threats and opportunities emerged.
As many practitioners and business schools have noted, it’s not a bad way of describing the landscape many of us currently face as we look to plot a course for our organisations for growth, or simply for survival, through the next few years.
A legacy of Brexit, Covid19, the ongoing war in Ukraine and current political and economic instability in the UK have all contributed to this sense of VUCA, but it’s worth bearing in mind that these all happened (or are happening) against an existing backdrop of extraordinary technological change, changes in consumer and B2B buyer behaviour and emergence of other agendas, such as Environmental, Social and Governance (ESG), as significant considerations and disruptors affecting organisational strategy across all market sectors.
Traditionally, the development of a robust business strategy has been associated with the following:
- A data-heavy process – examination and extrapolation of past trends; financial analysis; primary research
- Periodic – because of the effort required to do it well and the level of certainty if was expected to create, a full review often conducted only every 3-5 years
- Closed shop – owned by the CEO; limited number of senior stakeholders involved in its development; outputs released in discrete parcels on a need to know basis
While some of these characteristics may still be appropriate in the event of some organisational change – the arrival of a new CEO for example – it is what organisations do with their strategy, how they maintain its relevance and value in the months and years following a major review that concerns us here. Sitting on the same beliefs about the external environment for 3-5 years doesn’t seem like a sensible option anymore.
It’s worth recapping some of the key practical benefits of a having a clear business strategy:
- Guide investment decisions – spend money, in a joined-up way, that will best support enterprise value.
- Shape tactical choices – prioritisation of projects; allocation of discretionary resource; commercial campaigns.
- Empower people – decision makers at all levels can exercise autonomy with confidence they’re pulling in the same direction.
As Peter Drucker famously said “plans are only good intentions unless they immediately degenerate into hard work” – so the practical requirement here is to find a way of ensuring that:
- Hard work is being done
- That the work being done is producing the expected, desired results
- That the work we intend to do in the future remains the best use of resource
The first two points are the subject of most management meetings in every organisation the world over. In a VUCA world, what can an organisation do to provide itself with ongoing assurance on the final point?
In Whitecap’s view the requirement is to strike a balance between an approach which is robust enough to provide assurance, but simple enough that it doesn’t become a drag on company resource. Based on our experience, we would usually recommend a form of quarterly review which tests the key assumptions about the external environment, on which the existing business strategy, and plans derived from the strategy, are based.
Some relatively light touch research and data-gathering is usually sufficient to inform structured discussion about whether the beliefs about the external environment, on which existing plans are based, have changed sufficiently to warrant some form of course correction.
To make this approach work, an organisation benefits from:
- A baseline – clarity on the markets it serves and wants to serve, its competitive position in those markets and the drivers of success.
- A documented assumption set – a summary of beliefs about customers, competitors, business model and PESTLE factors.
- A (high level) documented plan – who in the organisation is going to do what, by when.
The mind-set employed is one that acknowledges that plans cannot be cast in stone – Harold MacMillan’s description of the greatest challenge facing a Statesman “Events, dear boy, events” applies equally to the modern CEO.
In our view the appropriate response to VUCA is not to have no plan at all, but to make eyes-wide-open, deliberate course corrections to your baseline plan, in the light of new data.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Birmingham, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education, Manufacturing, Logistics and Professional Services, including Corporate Finance and PE.