So far, 2020 has been a year characterized by what appears to be a never-ending stream of volatility, uncertainty, complexity, and ambiguity (VUCA). There are many articles, blogs, and videos focusing on the best ways to respond to VUCA. Most of the ones I’ve read and watched agree that if you can adapt your business, pivot peoples’ mindset, and speed up innovation, you’re in a good position to take on this new world.
What I’d like to focus on is how digital enterprises can make businesses well-positioned to meet the VUCA world head-on rather than having to respond to new challenges as they appear. The mere nature of how business is done makes digital enterprises less susceptible, but certainly not immune, to changes in the marketplace. And, I believe this to be true whether you’re a small, medium, or large enterprise.
So, what is VUCA?
VUCA is used to describe the crazy world we’re living in right now. It is based on the leadership theories of Warren Bennis and Burt Nanus. Originally, they applied the concept to describe how increasing leadership comes with more intricate decision-making, which needs to be managed to secure success. In that sense, it isn’t much different from what today’s business leaders are facing. Perhaps that is one of the reasons why the VUCA principle continues to gain traction.
Luckily for us, each of the VUCA scenarios comes with a set of strategies that aid in overcoming the related challenges. In the following, I’ll briefly examine these scenarios and explain how a digital enterprise is well-equipped to respond to them.
Why does change happen so fast?
“V” stands for volatility. It represents the blazing speed at which change is happening in all parts of our society. We see it in technology, job roles, the anticipated switch from global to local manufacturing, and more. This puts a real strain on businesses as they need to be able and ready to respond very quickly to such changes.
In a digital enterprise, innovation is key. Business is being done far from usual. Digital enterprises look at the use of technology holistically rather than opportunistically. They challenge the status quo in all processes, embrace agile development, and focus on outcomes rather than evaluating how much is time spent completing a task. In order to be innovative, you need people with the right mindset; but what is the right mindset? I will cover that later in this blog.
Is data really the answer?
“U” stands for uncertainty about the future. It has always been challenging to predict the next great invention or fad. Today, when changes are happening faster than ever, uncertainty has become even more prevalent.
The way I see it, there are two ways to approach this: stay ahead of the curve by creating the future you want, or become so innovative and flexible that you can jump on the bandwagon as soon as the opportunity presents itself. Neither option is easy to accomplish, but one commonality is that both approaches require research to find new resources and intelligence.
Intelligence, aka data, is one of the very cornerstones of the digital enterprise. With a clear data acquisition strategy that answers the why, what, where, and how, the insights gained from data are what drive digital enterprises forward. By collecting and analyzing data, the resulting business insights can, to some extent, take uncertainty out of the equation and help drive the right decisions; and that is valuable to any company.
How can we make things simpler?
“C” stands for complexity and is characterized by how everything is interconnected. We see this in increased globalization, complex supply chains, and how the lines between personal and professional life are becoming more and more blurred. The proper response to complexity is to break things down into smaller, more tangible, easier-to-digest pieces. When it comes to complexity, less is more.
Digital enterprises that can turn their lofty digital visions into operational strategies are doing just that. Rather than looking at individual projects with their own specific timelines, resource allocations, budgets and return on investment, companies are taking a holistic approach to develop a digital roadmap by looking at the bigger picture first and then breaking it down into smaller pieces. This process can be quite multifaceted and time-consuming, but when the result is a coherent strategy with bite-size projects and a clear timeline, the effort is well worth it.
Are we allowed to fail?
The last scenario is ambiguity, which is the “A” in VUCA. It refers to a lack of clarity about how to interpret something because the information is missing or incomplete. The best way to respond to ambiguity is by way of experimentation. You simply test an idea, observe the response from the market, and make changes based on your observations. You then retest it and start the cycle all over again.
What makes this reiteration process so valuable, especially in a digital enterprise setting, is that it must occur within a very short period. Time is of the essence, so digital enterprises don’t spend years making sure that the results are perfect. The idea is to bring a minimally viable product to market within months or perhaps even weeks, then refine and optimize once there is feedback from real-world use. If any aspect of the idea does not work, you learn from it quickly and move on. This approach ties into innovation, which relates to the human element and having a digital mindset.
What does a growth mindset have to do with it?
For a digital enterprise to succeed or for a company to adapt to any of these VUCA scenarios, people need to be on board. During the early stages of the digital transformation conversation, it was all about technology. Too often, there was little focus on how the workforce would respond to the changes brought on by these technologies. It is becoming clear to me, however, that the winds are shifting. Today, there is much more focus on cultivating a digital growth mindset aimed at making people more comfortable with change, convincing them that it’s okay to fail (as long as you learn from it), and gaining an understanding of data insights as the new standard for operating any business.
And that’s a very good thing. Keep in mind that a successful mindset shift is a prerequisite for a successful transformation, digital enterprise, or response to a VUCA world, so make sure this is engrained into the corporate culture in such a way that everyone lives and breathes it.
How are you responding to the fast-paced changes in today’s world?
If you want to talk about how to become a digital enterprise, reach out to me or take the first step toward your transformation by taking this digital maturity assessment.