How to Thrive in Turbulent Times.

Hey friends 👋, 

As the saying goes “the only two certainties in life are death and taxes” - Benjamin Franklin.

15 years after the last global recession and 3 years into our post-Covid world, it's safe to say uncertainty is here to stay.

Big tech is laying off thousands of people, inflation has taken off, and supply chains continue to be under pressure. Is it any wonder we're exhausted from the pace of change.

And, this pace of change is something that we're not fully prepared or trained for.

The IMF has been tracking uncertainty since the '60's and it's never been so high as it it now.

“If I had to identify a theme at the outset of the new decade it would be increasing uncertainty.” Kristalina Georgieva, Managing Director of the IMF.

Although the graph only charts until 2019, you can imagine where we sit now after the last 3 years.

And, in my view, the world is fundamentally different.

But, having knowledge about the current situation is one thing, navigating it is another.

Today's issue, provides high-level thinking and practical strategies to adapt to a VUCA world and transform, innovate or reinvent.

Let's go!

A Brief Outline of VUCA and Strategy

Sometimes the reaction to VUCA (volatile, uncertain, complex and ambiguous) situations is to do think that there is little that can be done.

However, rather than solely using analytical tools such as Pestle, SWOT, Porter’s 5 Forces and VRIO. Strategy these days is best viewed as a set of choices based on the intersection of analytical thinking and intuitive thinking.

Roger Martin's choice cascade model is a way of strategically navigating the design of business, innovation or problem-solving using both of the ways of thinking.

Some VUCA scenarios and responses are presented below. As you can see, the less predictable and less that you know about a situation requires more sense-making, testing and iterating.

The interesting thing is, the VUCA concept has been prominent for about 15 years. 

Yet, we still act the same. Even though 75% of transformation projects fail (BCG).

To me the question we need to answer is no longer "how do we make it through until things stabilise and go back to normal?"

It's, "how might we thrive in constant change?"

For that to happen, we need to move from solely prescribing strategy to incorporating emergent strategy.

Thinking in 3 Horizons

Two weeks ago, we talked about the average lifespan of an S&P corporation being cut down to only 15 years from 60 years only a few decades ago.

With that in mind, it's useful to consider the lifecycle of innovation over three business development horizons.

To remain competitive a business needs to innovate or reinvent every 18 months.

Therefore, there needs to be a continual pipeline of future thinking, blue sky ideas, promising products and services that are tested and enter the market to eventually become core business.

Capabilities to Thrive in VUCA Environments

There are numerous capabilities needed to thrive in VUCA environments. 

I like to think about the capabilities using Dr. Nadya Zhexembayeva's 3 buckets:

• Anticipating change
• Designing change
• Implementing change

Anticipating Change

Anticipating change (disruption) might include signals that are financial, customers, employees, legislative, technological, competitors and more.

For example, you might notice:

• Sales dropping
• Loss of staff or customers
• Cashflow difficulties
• Customer complaints
• New entrants

By staying on top of the financials, remaining close to the market, trends and environment and so on, you'll often receive indications that on the surface may seem insignificant. But, closer inspection could forewarn challenges.

One critical area that will help you sense change is customer experience.

Recently, I helped New Zealand Young Farmers deeply understand their customers and the customer journey to inform their strategic transformation.

These two articles will help you with your customer journey work:

• Get Better Insights From User Interviews in 3 Simple Steps
• How Lynda Gained Clarity and Confidence by Deeply Understanding Her Customers

Designing Change

There are different approaches to help us design change. The two foundational approaches we'll discuss today are:

1) Strategic foresight. Strategic foresight is intended as a way of envisaging multiple futures to enable teams to sense and adapt to change.

A useful tool is scenario planning. I found this article from Adriana Tica which explains scenario planning extremely well.

2) Design thinking. Design thinking is a process, toolkit of techniques and mindsets to help teams innovate or problem solve.

These articles will help to build your design thinking capabilities:

• Design Thinking for Innovation – Ultimate Guide and Download
• Design Sprint Complete Guide: How to Innovate Really Fast

Implementing Change

Implementing change is perhaps the most difficult part of any transformation or innovation process.

Change is hard because of:

• Habit
• Fear
• The environment
• Group dynamics

This article details how to successfully implement innovation and change in 2023.

It includes practical systems and techniques to lead change.

That's all for today friends! 

I'll leave you with this statement from McKinsey , “Business leaders expect that by 2026, half of their companies’ revenues will come from products, services, or businesses that haven’t been created yet.”

If you enjoyed this edition, please share it with your friends and family.

See you next issue 👋

Vaughan

NOTE

This article was originally published in February 2023 as a Future-state Thinking newsletter. If you're not on the Future-state Thinking mailing list, you can catch up on recent publications and subscribe by clicking here.

Every Tuesday morning, you'll be the first to get Vaughan's latest thinking on innovation, strategy and leadership in practical, digestible advice for busy professionals and curious thinkers.