VUCA short for Volatility, Uncertainty, Complexity and Ambiguity. In other words, it is total disruption mayhem out there – the world of constant disruption and the growing challenge of having to always adapt, plan and think ahead. Eytan Hattem of the Prodware Group shares his thoughts on the subject.
One of the main challenges for companies today is being able to adjust to market volatility and long term planning. This phenomenon is labeled VUCA, which is short for Volatility, Uncertainty, Complexity and Ambiguity. In other words, VUCA stands for constant disruption and how harder and harder it is to keep up, adapt and plan ahead for the future.
What we mean by a very “volatile” world is the constant and fast-paced changes that occur, be it in industry sectors, markets or throughout society in general. The quicker and more profound is the change, the more the world can be considered as volatile. This rapid and deep change dynamic has all of us having to face unexpected challenges non-stop.
“Uncertainty” calls into question our forecasting and planning capability in properly predicting how situations can evolve and therefore have some kind of reliable idea of what the future holds. In addition to this state of uncertainty, some also have a hard time wrapping their heads around what is actually going on. And, this is also compounded by environments with structures that are not (or no longer) conducive to understanding and appreciating change in motion. The more the world is uncertain, the harder it is to predict. This leads us to being immersed in a whole series of changes that are more or less straightforward. We know that there are many variables and unknowns, that we do not necessarily have the answers for.
“Complexity” is the outcome of interactions between a growing number of key factors. Their number, variety and the nature of the relations between them make it so that when reaching a certain threshold, decision-making is that much more difficult because too many variables need to be factored in. The more complex the world becomes, the harder it is to run a thorough analysis and therefore to predict.
“Ambiguity” refers to being unable to clearly understand a given situation either because the ideas or terminology put forward are unclear or because the information made available is incomplete or contradictory. A pertinent conclusion cannot be drawn from a situation with too many “unknowns.” The more the world is ambiguous, the harder it is to understand.
Of course, these four categories all tie into each other. This makes it even more challenging when it comes to answering the two essential questions when at the helm of an organization: what do you really know and/or understand of the current situation at any given moment and to what extent can you predict what the outcome of your actions will be?
The ongoing dynamic of this change in motion and the volatile nature of the market means that looking back to past experiences to draw any kind of insight, simply does not apply anymore and that the future remains oh so unpredictable. It is all about now, now and now. And how does that affect the running of a business?
Staying in the race, maybe even winning it…
Staying ahead of the game in such a challenging and disruptive environment is hard because you really cannot afford to take the time to properly plan things or resize your teams. Winning the race implies being in ready-to-change and adapt mode 24/7. However, what is unique and specific to competitiveness in the VUCA world is that it never stops. You can cross the finish line with arms raised in victory one day and come in last the next. Nothing can ever be taken for granted.
In this very unstable landscape, the key to success is being able to adopt a continuous transformation work mode. We hear it all the time, like a professional mantra, that one must be agile which is indeed very true. However when this concept of agility consists in dividing up the 5-year, bi-annual or year plan into quarters or half-years with the idea of achieving “quick wins” and rolling out quick projects, it is still not enough. This only translates the implementation of the “when” phase – action plans supporting the strategy – but that does not factor in other components nevertheless essential.
While it is true that the VUCA world is very disruptive in nature it does not alter the fundamentals of a business that are to generate/increase turnover and profitability, reduce costs, gain market share, having loyal customers and so on… What does change though, is the means used to reach these objectives. The tricky thing is trying to implement different initiatives in a constantly changing environment. This extremely rapid evolution can lead to very significant gaps between a given situation and the solutions considered for dealing with it. If a situation evolves very quickly, the solutions considered may prove to be inappropriate, counterproductive or even damaging. What more, if they are obsolete, they may even result in heavy financial losses.
Moreover, deciding to move quickly to change things does not guarantee that one is on the right track. What needs to be done is to activate the “what” phase (decide on the initiatives to roll out), also the “how” phase (how to roll them out) and the “who” phase (the team tasked with executing all these initiatives).
Companies are struggling to stand out and remain competitive. One way of doing this is by choosing Customer Experience (CX) as a way to weigh in on the decision-making process. CX is a pivotal paradigm having become the business “must-have.” Refocusing on the customer is definitely the best way to survive in a VUCA world where the boundaries are constantly being pushed back, opening up new and unprecedented opportunities for businesses.
CX: the cornerstone of continued business transformation agility
CX is an approach that helps companies establish processes to deliver an optimal customer experience at all touch points of the organization. There are real benefits to this approach: improved brand notoriety, a boost in customer loyalty, increased customer acquisition, improved satisfaction, better conversion rates, more personalized services, etc.
Applying a CX methodology to ensure agile and continuous business transformation requires structuring an operational model that aligns CX issues with strategy and objectives. Then, all the initiatives and projects the organization chooses to conduct need to be crafted around this CX methodology. This is done at different levels and is tied into a repetitive process of information gathering, data analysis, action items, monitoring and adoption, all the while continuing to monitor the impact of the execution on the Customer Experience and the Business Objectives, which are two sides of the same coin. An incremental circle can then be set up. With each cycle, the process can be repeated and thereby increasing Customer Satisfaction.
This methodology reverses the decision-making cycle by looking at customer feedback as the starting point. Such an “outside-in” approach requires that decision makers change their mindset as they usually tend to come up with mitigation plans based on a more traditional “inside-out” perspective. Trusting customers and reliable feedback processes to identify their true needs takes courage but it is the only guarantee that the “what” step is well integrated.
However, these principles are not holistic. They are fundamentals that the organization must establish and evolve to serve the business. Using this methodology allows an organization to transform its organizational structure, business processes and information system in an efficient way. It is also a flexible model that focuses on the customer and reflects a new business perspective.
Embracing agility without making the necessary changes does not guarantee results. Customer Experience is unquestionably the most effective tool for bringing a business back to life.
When pointing out the benefits of the CX approach it becomes apparent that the best way to figure out which direction to take when transforming a company is to listen to its customers. They will let you know what they are looking for, what they expect and what they find annoying. They are the linchpin of your product, service and overall offering development strategy moving forward.
But having to listen to them is one thing, but really hearing what they have to say is another – the future depends on it.
Article initially published in ZDnet