WE LIVE IN A VUCA WORLD. YOU CAN THRIVE WITH 1 SIMPLE PRINCIPLE THE ARMY APPLIES

EXECUTIVE SUMMARY- VUCA = Volatility, Uncertainty, Complexity, Ambiguity

• VUCA reigns in a digitally transforming world because change is now a constant. 65% of CEOs at successfully digitally transforming corporations have adopted a new strategy model because of the VUCA world. But that is from a small base of 30% of corporate leaders who have recognized that constant change is central to the digital world and only 20% of corporations are thriving digitally because they have worked out how to lean in and benefit from all the changes this VUCA world generates.
• CEOs of the G2K fear the FANG brands. 65% of CEOs at successfully digitally transforming corporations have adopted a new strategy model. Because digital makes the esoteric normal. This means anything should be a possible and that brings inherent complexity to the forefront of planning to keep customers happy and production sane. Even the way we now collect and assess data is driven by an instant and varying need. VUCA dominates how we need to adapt with it to thrive.
• One very solid principle sits at the heart of those digitally thriving leaders who lean into the VUCA world so successfully, they push an idea the US Army has perfected, pushing authority to act to the moment and not waiting for central controls.
• The US Army concept it very appealing and there are five core components we have researched this summer with Forbes Insights that give clear signals for how to do it to thrive digitally in a VUCA world. It is called driving authority to the moment

You can’t fit a laptop into your pocket

You cannot handle a new idea with an old framework. For example, cars need paved roads, while horses used dirt paths. That is why the whole highway system was invented. Today, the internet is mostly consumed on mobile devices, not laptops. Yes, laptops have been getting smaller, but they will not fit into your pocket. So, no matter how much you twist form and function, that device is less and less relevant than before. The world has always shown its ability to adapt but the speed, dimensions and the magnitude of changes right now can seem very scary.

VUCA Defines where we are for the next decade.

VUCA is short for volatility, uncertainty, complexity, and ambiguity. Originally, it was a concept used by U.S. Army War College to depict the uncertain conditions after the Cold War that did not comply with traditionally war game scenarios. But today, it is more relevant than ever as it is increasingly being used to describe the upheaval in our current environment across society, government and business. 

Think about the VUCA concept for enterprises facing the need for the right forms of digital transformation:

o  There is volatility everywhere in business and our society. 55% of CEOs in the Global 2000 told us that they worry about the FANG brands and what they might do to their businesses in less than two years. What drives competitive differentiation is changing away from Theodore Levitt’s classic 4 P’s (product, promotion, pricing, placement).

o  We have immense uncertainty at all levels. Ideas such as physical retail and owning cars that were staples of our life for decades are in question and changing right in front of us. This has led to 65% of the most successful digitally transforming executives deploying a one-step ahead strategy model. This is a far cry from the classic MBA, Michael Porter strategy models of long-term focus we all learned and used for decades. It is nearly impossible rely on traditional frameworks when the speed and direction of change is so difficult to comprehend.

o  Michael Schrage of MIT told us in our Wall Street Journal bestseller, The Digital Helix, that “digital makes the esoteric normal.” This means complexity and almost infinite choice are inevitable for corporations that have been historically are used to neat and tidy combinations of offerings or features. Leaders need to think about how to handle this new reality using a set of working principles and frameworks that don’t choke choice or end up putting pressures on supply and servicing. This is a key paradox that needs to be solved.

o  We have vast arrays of data from IoT and digital and need to work out what matters when, where and how. This can be a very ambiguous thing and is one of the toughest elements of The Digital Helix (audio version here) model for corporations to adapt to. Leaders in the Global 2000 showed us there are two distinctive patterns for managing new themes and streams of data. In the potentially big IoT industries such as energy, healthcare, construction and transportation, less than 10% of the corporations digitally thriving were leading the way in managing these new data streams. In other industries, digital thrivers were up to 75% of the leading corporations in utilizing new data and sources for success. The world is splitting in how it is taking advantage of the new data worlds.

VUCA is the new norm

Change is constant. If you believe and leverage thia idea, then you are likely to be crushing your own digital transformation. Along with Forbes Insight, we asked executives and leaders in major corporations about how important the idea of constant change is to them? Below, are their answers by industry and the finding are shocking. 

1. Except in healthcare and pharma, you can see that generally less than 1 in 3 organizations believed that change is constant. It is pretty scary so few corporate leaders understand this truth and are changing how they think, design and act for success. 
2. The far-right column in the chart shows the percent of the corporations that get that change is a constant in their industry. These are the organizations that are leveraging this upheaval for their benefit. Also, in all but three sectors, more than half of that small number paying attention to this idea (the left column) were digital transformation thrivers. In this analysis on average 65%+ of those leaning in to the idea of constant change are digital thrivers. 

There is a two in three chance you are crushing it with your own digital transformation, if you believe change is constant and you are leveraging it.  

Traditional thinking is the illusion of permanence

Read this great visual piece by Bennett and Lemoine in HBR about what VUCA really means. One thing that should stick out very clearly is that the article talks about stockpiling inventory or talent as a way to solve a particular challenge. Who thinks about stockpiling anything with pay as you go being the norm today? In a VUCA world, we have to avoid looking towards old world norms to solve new world paradigms.  

Thrive on VUCA by doing what the US Army does. Driving authority to the moment

It is often said all plans disappear the moment a battle commences. That doesn’t mean you let panic reign. In our book and current research, you can find specifics of how to thrive with your own digital transformation. Also, think about how to re-skill your people to handle the constant change. There are 5 simple guidelines that will help you achieve VUCA success:

1.    The power of immediate hindsight only works in the moment. Can you use immediate information to make decisions on the spot? You should not need a complex centralized filter.  You should be able to make decisions in the moment as the US Army does now to empowers it forces. While we all expect instant gratification in a digital economy, we still need to enable immediate decisions in the moments that matter for the business and the customer. No matter the area or choice, we need to make sure our teams have the right frameworks to decide on the spot.

2.    Themes and streams of data demand power to the moment. In the old world, we accumulated data and cultivated it for progressive learning and value creation. Now, that is no longer the case. There are many instances where we might have huge and instant value from data and then throw it away. This has made successful brands data locusts that consume in the moment across any number of ways. Getting teams to be sensitive to these new forms and types of data needs training and support.

3.    Strategy is always only one step ahead. Being stubborn and flexible is one of the comments we quote from Jeff Bezos in our book. While it sounds like a contradiction, it isn’t. As he said, “if you’re not stubborn, you’ll give up on experiments too soon. And if you’re not flexible, you’ll pound your head against the wall and you won’t see a different solution to a problem you’re trying to solve.”

4.    People must be constantly responsible to each other in the moment. Being actively connected across layers and roles and functions is essential in a VUCA world. People being responsible to each other is one of the 7 Digital Helix components and is the most common high performing variable from our framework. This process and culture change creates a sense of permanent collective responsibility and has an 89% correlation with having digital transformation success.

5.    People need to be radically re-skilled to handle all this change. You can’t thrive in a VUCA world on old world skills. A digital thriver re-skills their people differently and invest more than their industry peers in 37 of 77 scenarios we tested across 11 industry sectors. They see human capital as a secret weapon in a VUCA world.

Take a moment

Think about your own digital transformation journeys?

Have you embraced the idea that change is constant and that this idea could be turned into an asset not a liability for you? Use this simple root and branch chart to plot where you are. This is about preparing you and your organizations for a thriving future with VUCA. If you want to get ahead of the game, one of our workshops on digital transformation can help your organization get a jump on the competition and see where you can go next.