Is there an operating system for strategy under absolute uncertainty?
Well, the world has gone to hell in a handbasket. It certainly didn’t take long, did it?
Ask anyone and they will tell you that the world is somewhere between an intense over-reaction and The Walking Dead’s best impression of The End Of The World As We Know It (you know? TEOTWAWKI). That is to say, it’s anybody’s guess where the global economy–nay, the global social fabric–may end up after COVID-19 has run its course. Sports are canceled, schools are shut, travel is being banned in ever-tightening circles, and social institutions are being completely put on hold.
Right now, just another blog on strategy may not be sufficient for the Big-Mac-layer-cake of stress that is being thrown at the average citizen around the globe. We are, all at once, not only dealing with commercial collapse, but also social and institutional uncertainty on a scale not often seen without physical invasion. And, if YOU, dear reader, are not feeling the stress, you can be assured the people around you do.
So, instead of writing about what you should do as a strategic executive–which is a hard thing to do when a reader might just as easily be at an airline, a retailer, or a bank–I thought I’d write on how you might organize your thinking in any challenging circumstance. The question at hand is really this: Is there an operating system for strategy under absolute uncertainty? I think that there might be.
There is an acronym that is commonly used in military circles called “VUCA.” It has been around since the 1980s.
A VUCA environment comprises:
Volatility – where the speed and magnitude of change is exceptional
Uncertainty – where outcomes are unpredictable and surprises are many
Complexity – where the number of changes happening at once is very high
Ambiguity – where the potential for error and over- or under-reaction is real
or, just VUCA, for short.
We all live in a VUCA world right now. So, how do we handle it?
With my best fireside chat tone, I’m going to suggest that the first way of navigating VUCA is to realize that you cannot “handle” it. There is no traditional “control” of circumstances in a VUCA world whether you are an executive or a common citizen. You cannot “priority list” your way out of VUCA. If you are used to controlling circumstances, you’d best get ready to learn to read and react. If you are used to calling the plays and issuing the orders, you’d best get ready to play defense and establish your lines of retreat. If you have been inflexible in your pursuit of success, it may be time to consider flexibility in the shadow of collapse.
In other words, it’s time to focus on resiliency and responsiveness vs. concrete priorities and resoluteness. VUCA demands it.
But, where do you start? Your portfolio is a mess, your kids are out of school, your office is shut, and your customers aren’t answering the phone…how does a person regain footing?
Here’s my best advice, and it’s as simple as two steps:
The first step is to major in the majors. Just as I’m sure there will be a lot of people who may one day regret that they drove all over town trying to hoard toilet tissue when they absolutely should have been ensuring that grandma was comfortably anti-social, I’m sure that there are a lot of minor things you are stressing about that are adding to your sense of VUCA. You have to prune the ones that matter less.
That means postponing that training program and using today’s environment as a training program in itself.
It means canceling that “nice to have” project and doubling down on the must-haves.
It means stopping the standing meetings that you have and opening up your calendar.
It means ensuring you have enough strategic cash reserves (at home or in your business) without resorting to willy-nilly asset sales.
It means taking a moment to understand what kind of volatility is tolerable (perhaps the market being down 8 percent today really is a secondary concern), and what kind is not (how can you ensure that your customers will actually receive the goods???)
It probably means having a frank conversation with your family and your organization about what it means to live in times of extreme VUCA: about how choices we make now may look a lot different than choices we made even days ago. The circumstances demand that we major in the majors.
The second step is to accelerate your review cycles on the “majors.” Decisions on the majors that might have been revisited quarterly or monthly are now reviewed daily or hourly. In the first step (majoring in the majors) you created some capacity by pruning the activity set. Now, it’s time to deploy that capacity to evaluate and react faster than you would have otherwise. Many executive teams are, today, engaging in rapid, periodic calls about their workforce when just last week they probably did so monthly. Why? Because the environment demands it. The same is true of your household, your office, your customer portfolio, and many other things. This is not to say that short-term thinking dominates and that long-term things don’t get done, it is to say that long-term things are tested for relevance on a much more frequent basis.
But a word of caution: Don’t try to evaluate everything rapidly. Step one is critical, lest you over-stress yourself, your family, and your organization. Be explicit about majoring in the majors. Take some stuff off your plates, and those of your cohorts.
So, is there an operating system for strategy under absolute uncertainty? I think so, but it’s a concept–perhaps a mindset–and not a recipe.
First, major in the majors: Prune the activity set to create the capacity to stay ahead of what matters most.
Second, tighten up your decision cycles: Invest the capacity you have created to accelerate your review and decision cycles to match the pace of change in your environment.
This two-step process for managing uncertainty is true if you are running a household, and it’s true if you are running the largest organization in the world.
Keep your hands washed, and your prayers flowing.
What do you think?