Strategies for a VUCA World - Part 1 - Is VUCA bearing down on you?

Speculative fiction author William Gibson is famous for saying "The future is already here – it's just not evenly distributed" and this is a great reminder that while the world overall has changed, maybe your part hasn't.

In June Gibson posted a list, from a 1997 Wired article, of ten scenarios that might show the future wouldn't be as bright as people thought. He notes the list was seen by many as "perversely pessimistic" at the time. As you read through the list ( see graphic further down ) it becomes apparent that in 2022 we are very much living in a VUCA world.

Similarly, in my conversations with Indy Neogy VUCA has come up often, what it means, and how we advise people and organisations to manage it. So much so that we've co-written this piece, that distils our advice.

The term VUCA was coined by the US military, at the start of the 21st century, to describe the more Volatile, Uncertain, Complex and Ambiguous world perceived as resulting from the end of the Cold War. In more general usage it is commonly used to describe the increased unpredictability of the world to us today. Within this piece we use it to indicate when the volatility, uncertainty, complexity, or ambiguity of a situation exceed the ability to plan within that situation. It is not an absolute term, but is relative to available capabilities.

(If you're not familiar with VUCA, this article provides a good summary.)

Does the list Gibson cited, shown below, feel "perversely pessimistic" now? Or just realistic?

Are you in a VUCA context?

In our experience organisations often do not have a clear answer to this question. Considering the possible answers we can place an organisation within a “VUCA Context/Assessment Quadrant”, as shown below, which gives four possible states:

The combination of these two factors gives you these four possible states, which we match up to the quadrants in the diagram:

• You are NOT in a VUCA context and you have assessed this correctly
• You are NOT in a VUCA context but you have NOT assessed this correctly
• You are in a VUCA context but you have assessed this correctly
• You are in a VUCA context and you have NOT assessed this correctly

Which quadrant are you in as a business? And how did you come to that conclusion? What should you do? Initial answers to that last question match up to the quadrant as follows:

Why do organisations misread their context? VUCA should be seen as a relative term, about the ability of a person or organisation to comprehend the context they’re in and how that context may change. Therefore two different organisations can be within the same business context, and yet for one the context can be defined as VUCA, yet for the other it is not. In other words, the answer isn't purely about what is going on around you, it also depends on your capacities. On the one hand your processing capacity may be overloaded, and the context is VUCA for you, but this can be hard to admit. On the other, you may be overestimating how much the business context is changing for your organisation, because the wider world is in so much flux. What we do know is that the number of companies finding it difficult to read their context is increasing.

Is VUCA bearing down on you?

To help you answer the question for your organisation, we will use Boyd's OODA loop. This concept of how action happens has 4 stages:

( Circle Arrow Vectors by Vecteezy )

Observe - In this stage you gather information about the context you’re in.

Orient - Here you make meaning of the information and match the understanding to your goals to create choices.

Decide - Choose a course of action.

Act - Execute the course of action.

For example:

You Observe a new market opportunity in your business area. Maybe an unexpected group of new customers is using your product in an innovative way - your subscription service for “lo-fi” tunes to study to, turns out to be good at helping babies fall asleep. Examining your online subscriptions to marketing and streaming services, the cost of targeting a new demographic of new parents falls within existing budgets, and additional subscribers for streaming will generate more income than cost.

You Orient yourself in this context - looking at the financial projections for existing subscribers compared to the budget required, is this an effort you can sustain? Will anything about the new perception of the service adversely affect your existing customer base? What is different about your new user base of restless babies will be much younger than your existing customer base and their requirements - the option for the Pomodoro Technique will be unnecessary, maybe animation to the soothing visuals might be required.

( a deeper analysis of the cultural context, and underlying assumptions, could illustrate existing biases towards separating “students” and “parents” into two separate groups might have been incorrect - and might why you missed this market opportunity in the first place - but that’s a wider discussion )

You Decide what you’re going to do. You leave the Pomodoro Technique option in, and the soothing visuals too - maybe your students will appreciate that, and it keeps the code base simpler. This decision includes how many resources to commit to the effort, how many resources you devote to monitoring progress, and when you will revisit it.

You Act ?on your decision, the purchase orders are issued, the developers are tasked, the project managers are assigned. And you begin the Observe state again…

( If you’re interested in John Boyd’s work, do look at the John Boyd library. )

A full discussion of OODA belongs elsewhere, but for our purpose right now, the focus is on the way a VUCA context is always in flux. Maybe you regularly experience that you're acting too late. Maybe you're just getting a handle on things and then boom, another thing happens.and it feels relentless. These are some signs that given your capacity, the context is VUCA for you.

If your context isn't VUCA, the question you face is: Given the state of the world, how long until it is? We'll explore that further in future articles. Meanwhile if your context is VUCA, what do you do?

We have some options…

What To Do?

Decide between Plans and Strategies

( checklist courtesy of Vecteezy )

In a more predictable world, your plan is how you organise your work. You take a look at the state of your world, at the landscape around you, and then your internal resources; and you write a plan that says "this is what we are going to do this year to create more value." An organised list of what you’re doing when, maybe with subsequent actions taking place after an earlier one is complete. Simple to understand, simple to execute. Plans only work in predictable worlds…

( selection of strategies courtesy of Vecteezy )

Strategies must be adaptable to changes in the world, containing ideas about what might change and therefore how you might react. At best they are a set of plans to choose from, depending on how your context changes, and a concept of which plan to choose for which context. And you need to build a strategy that reflects the variety of circumstances you may find yourself in, with all the complexity that entails.

Increase OODA Capacity - OODATOC

( The withered OODA loop is a modified Vecteezy image )

We introduce here (partly for fun) a new acronym - OODATOC. We apply the Theory of Constraints to the simplest understanding of the OODA loop.. We’ve suggested that what makes a context VUCA is a comparison of the degree of change in your context with the capacity of your organisation to process it. A simple way to view how to improve that capacity is to look at each of the steps: Observe, Orient, Decide and Act, and see how your setups might be improved for greater effectiveness. What the Theory of Constraints brings is the understanding that one of these activities is probably the key constraint and should be the focus of improvement. One probably represents a bottleneck and improvements in the others may be irrelevant without looking at that one first.?

Clock speed

( Image of a metronome from the ever useful Pixabay )

Where capacity (above) relates to how well you execute each step, another aspect of the OODA framework is the speed at which an organisation can traverse the “OODA loop.”? This is how quickly you can go from Observation to Orientation to Decision to Action. In a VUCA world, your clock speed allows you to react to changes and also to start to feedback results from your actions into new observations. As with capacity the TOC suggests finding and addressing any weak links or bottlenecks first.

Mindset

( cropped image from Pixabay )

Transitioning towards Strategy from Planning, committing to moving regularly and with determination from Observation through to Action requires a development of mindset. Crucially, old notions of efficiency need to be retooled. A job done doesn’t stay done. The way we did it last time might not be the way we need to do it next time. As the world becomes less certain, we have to commit to working through Observe and Orient before we Decide what to do next. Working in this way is a new mindset and it takes work to adopt it.

Which quadrant are you in? What will you do next?

How has this article resonated with you? What will you do? What will you do first? Regardless of the context you’re in, resolve to take that action today.

In future articles we will be explaining in more detail how you can effectively respond to the situation you’re in, and also providing examples of where we think well known brands are located in our “VUCA Context/Assessment Quadrant” above.

And thank you to John Lanza ( https://themoneymammals.com/meetjohn/ ) , Elizabeth Michael ( https://twitter.com/kwinlizzy ), and Christine Cauthen ( https://twitter.com/Cccchristine21 ), of the Foster Community, for their edits, advice, and interest in this piece.