Countless articles are being published every day highlighting how Volatile, Uncertain, Complex and Ambiguous (VUCA) the world has become. In 2008, the financial crisis shook the fundamentals for a long period, and many even agree that things will never be the same again. Early in 2015, when the Swiss National Bank decided to do away with its cap of CHF 1.20 on the exchange rate to the Euro, it caught everyone unprepared both inside and outside the country. The price of oil is constantly exposed to technical, geopolitical and regulatory changes, causing unexpected effects with impacts beyond individual economies. We could mention numerous other events.
At the same time, many established businesses are facing challenges from technological evolutions. New companies come to life and offer services that were non-existent just a few years back and completely modify the business landscape; think about Airbnb founded in 2008, or Uber founded in 2009. Firms or business models that were previously undisputed suddenly find themselves in survival mode. They have to engage in transformation journeys that may go as far as overturning their historical identity. Who would have imagined that TAG HEUER, the traditional watch brand, would partner with Google and Intel?
Under these conditions, can managers still think about strategy in the same way as before?
Since change is no longer the exception but has almost become the rule, we also need to adapt the way we think about strategy and implementation. The conventional “set the goal - plan - execute the approved plan” approach clearly does not work anymore. We need to put the factors that impact the execution of our critical initiatives (which I call stakefactors) at the center of our strategic thinking and embrace a “context-mindful” framework.
As well as modifying how we approach the execution of strategic initiatives, VUCA brings two additional consequences:
1] Strategic thinking becomes an imperative:
By acknowledging the impact of stakefactors on our courses of action, we are pushed to make more decisions. There is one caveat: Being context-mindful does not mean continually changing strategy. But it does mean recognizing that the pertinence of the strategy needs to be reassessed more frequently
2] Leadership becomes crucial: The profile of the leader needs to evolve. Stakefactors, because of their number and the uncertainty of their impact, contain the gene of stress and indecisiveness. So the leader’s aptitude to break the pattern by taking a thoughtful position and articulating an agile strategy is crucial.
For the full article (re-edited in March 2016) on IMD click here