VUCA as a concept has been in use since the early 2000s to describe the situation many businesses started encountering frequently. There were several disruptions due to geopolitical developments, technological advancements and changes in the global economic environment. As a result, we saw the introduction of new products and services, new ways of engaging with the stakeholders of a business. Age-old conventions were challenged; new variables started impacting a business. It was increasingly difficult to forecast the future prospects of a business. The changes were taking place at a pace that the world had not witnessed before. Some businesses were getting irrelevant while new business models were taking birth. Thus, volatility and uncertainty have become the native characteristics of a business. The methods have to be improvised accordingly.
Business planning cycle needs to change
Organisations typically carry out their strategic planning once a year with a view of 3 to 5 years. They identify their strengths, spot opportunities in the market, keep their sight on specific customer segments and make plans to match the needs of these segments with their strengths. They keep executing these plans through a period of 3 years or 5 years. However, given the uncertainties we live with, we need a different approach.
Each year, we need to revalidate the assumptions on which the plans were made last. Some industry sectors may need quarterly regrouping of their senior managers to review the changes taking place around them and make course-corrections in execution. Instead of making annual plans and tracking actual performance against annual targets, many companies have started looking at quarterly plans, tracking actual performance on a weekly and monthly basis to reach those quarterly targets.
Stakeholder management needs to change
We need everyone connected with the business to act quickly and make changes swiftly. The success of the business depends upon the actions of its stakeholders, namely employees, vendors, business partners, investors and government.
We have numerous moments of truth for each of our stakeholders. They need to understand what the organisation is facing, the levers it is operating and the results it is pursuing. They must know how they are contributing to these. The leadership team has an important role here in aligning the stakeholders with the reality of VUCA that the organisation lives with.
Right from the recruitment process to rewards and recognition, performance management to career progression and learning, we need to ensure enough agility to stay relevant all the time and adaptive to changing scenarios. We cannot limit our execution to adjustments in the practices followed in the past. We have to follow openness to change as a basic tenet of business in uncertain times. The leadership team has to openly talk about it consistently across the organisation.
We need creativity at its best
Airliners in their inflight passenger announcements remind them that the nearest exit gate for them could be behind them. The lesson here is to evaluate various options before one jumps into action rather than going by the popular and conventional method.
In uncertain times and slowdowns, many businesses try to reduce costs, freeze hiring and optimize stocks. However, some are creative and risk-takers. They are able to spot opportunities in the market and kick-off investments to grow stronger. They tend to acquire market share while the others are in a mode to cut down costs.
During these times, leadership teams are busy optimizing and running a tight ship. They could choose to innovate alternate methods available to them. They could build flexibility in different parts of their business – staffing, supply chain, manufacturing, services and many more. They could start investment cycles leading to future growth. They could choose to diversify and start something new; divest some of their weak links in terms of lines of business, people, vendors and locations. They could strike new partnerships for technology, manufacturing or some critical supplies.
One can creatively think of many possibilities to deal with uncertainties and make the business better and stronger.
Ref: https://www.huffpost.com/entry/uncertainty-in-business-h_b_12675416
https://www.entrepreneur.com/article/311996
https://www.business2community.com/strategy/4-ways-to-prepare-your-business-for-uncertainty-and-change-02063961
