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Traditionally, strategy is about making long-term plans and identifying the actions and resources that are needed for realizing those plans. Such a straightforward definition of strategy might have worked for a long time, but it doesn’t really work anymore in today’s volatile, uncertain, complex and ambiguous (VUCA) world. After all, how can you make reliable long-term plans if the world around you is changing at fast pace, increasingly unpredictable, impossible to analyze systematically and beyond accurate interpretation?
In two earlier articles I have clarified what VUCA means and have briefly assessed whether the world is indeed more VUCA than ever. In this article and the next three, I will explore what strategy should look like in order to be effective in a VUCA world. In other words, the main question guiding this short series of articles is which demands a VUCA world puts on your organization’s strategy making. This is an important question because it tells us what strategy should look like today and tomorrow so that it keeps on fulfilling its core functions for your organization.
I will start with the first element of VUCA, volatility. Volatility refers to the speed of change in your industry, market or the world in general. It is associated with fluctuations in demand, turbulence and short time to markets and it is well-documented in the literature on industry dynamism. The more volatile the world is, the more and faster things change. This can be summarized with the following picture:
A highly volatile environment asks for a strategy approach that allows you to quickly going through the strategy process in short cycles and that produces quick results. This means that ideas are quickly tested and that there is a short implementation and feedback loop so that plans are adjusted as soon as needed. Only in that case, a strategy approach is able to match the pace of an industry. It is this characteristic of the strategy process that is emphasized in approaches focusing on learning, agility, trial and error, experimentation, temporary advantages and adaptability.
At the same time though, strategy must also provide your organization with stability. One of the core functions of strategy is that it gives your organization a stable frame of reference that can be referred to and that guides action. An organization in constant flux or constant reorientation will drift, hardly get anything done and certainly not realize its full potential. Strategy is not meant as a rigid straightjacket. However, your organization needs some stable guidance – especially in turbulent times.
The metaphor of a tree is useful to capture this paradoxical demand. To weather a storm, a tree needs to be flexible and bend with the wind. However, it also needs firm roots that nourish it and that make sure that the tree does not get blown down.
The same applies to strategy. It needs to be flexible so that it can respond to the ever-changing VUCA circumstances. However, like a tree, strategy also needs to be firmly grounded so that it serves as a reliable foundation for building and growing the organization and for keeping the organization standing in the challenging circumstances of a VUCA world. Therefore, a first paradoxical demand for a strategy approach in a VUCA world is that it effectively combines stability with agility.
In later articles we shall see what meeting this demand means in more detail and how stability and agility can be effectively combined. First, though, we will move on to the other elements of VUCA and explore the demands they put on strategy. Up next: strategy in an uncertain world.
January 11, 2019 at 09:14AM
Forbes – Entrepreneurs