Agile Strategies for the New VUCA on Steroids World

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Professor John Metselaar

This Book

Seven years ago, I started my new, post-P&G retirement-life and found myself advising, speaking, and teaching about Innovation Leadership – building from my 30-year experience in the field. But how do I spark the need, the “burning platform” in popular terms, for business leaders and students alike to get “future-fit”. How to get them to go beyond emphasis to “perform” delivering the KPI numbers, to, at the same time, get ready to “transform” – spotting the developing consumer and societal needs and creatively tapping into emerging technologies to better meet them. This to, beyond meeting Wall Street’s quarterly expectations, is a critical responsibility to ensure the sustainability of the corporation, the institution you lead and serve.

As I believe leaders are readers (or should be), I intersected my work experience with insights from a number of wise books. One of these was “Team of Teams: New Rules of Engagement for a Complex World” by Stanley McChrystal. General McChrystal led the U.S. Task Force fighting Al Qaeda in Iraq. He found his organization in an environment the Force had never been before. He describes how he had to transform the slow-moving bureaucratic task force into an agile, adaptable network of teams united by a “shared consciousness”, trust, and decentralized decision-making to gain control over the situation.

He coined the phrase “VUCA”, to describe this environment – an acronym for:

  • Volatility: the nature and dynamics of change and its speed and catalysts.
  • Uncertainty: the lack of predictability, the prospects of surprise and the sense and understanding of issues and events.
  • Complexity: the multiplex of forces, the confounding of issues, no cause-and-effect chain and the confusion that surrounds us.
  • Ambiguity: the haziness of reality, the potential for misreads, the mixed meaning of conditions and cause-and-effect confusion.

The VUCA framework made the jump into the business world and gained traction, here, in describing the combination of rapid technological progress and unlimited connectivity, which has resulted in an explosion of data. If managed well, by you or your competitors, these can be translated into information, then knowledge and from there, into new opportunities.

I applied the concept to my talks, starting them with the provocative “We’re living in a VUCA world and what got you here won’t get you there (into the future)”. It worked. For a number of years, this approach sparked interest, made people curious, and, ultimately, woke them up to the notion that the only constant is change, and they’d better get ready for it.

Then two years ago Covid hit and the notion of VUCA needed a reset. I have come to call today’s world “VUCA-on-Steroids”, a new reality yet, only to be reinforced by the very recent geopolitical events and its economic and business consequences.

VUCA-on-Steroids sets the stage for a new philosophy of leadership that empowers business, strategy, and innovation leaders to create and foster the continuous innovation that is the only possible response to the volatility, uncertainty, complexity, and ambiguity (on steroids) that surrounds us. In this new approach, the leader is no longer the one who has the answers.“Everybody has a plan until they get punched in mouth”, Mike Tyson said famously.

And this gets me to Strategy. In my teaching I have found that a good place to start dissecting a subject is from its definition. The definition of strategy is “a plan of action to achieve a long term aim or goal”. There are, in today’s environment, two issues with this definition. How much can you “plan” and how “long term” are you able to prepare for?

The VUCA-on-Steroids world requires us to relook at how we’re doing strategy and be much more agile. It requires companies to get more in touch with its overriding purpose, and how the ensuing strategy’s emphasis should be on establishing the boundaries of the space you aspire to play and explore in – the arena in which you let your people experiment, fail and learn. Or, as Peter Simms states in his insightful work Little Bets “you’ve got to do things to learn what to do”.

Amy Edmondson and Paul Verdin term this approach “Strategy as Learning” – strategy re-invented from definitive, rigid, analytical planning and resulting in a more iterative approach to the future. It provides a sense of direction and a definition of boundaries in which key questions are iteratively answered. It’s where strategy merges with innovation, in which assumptions are tested and experimented on. Failure will be learning moments to move forward from. And once the business opportunity is defined and refined, scaling up happens at speed. It is thus that your employees should innovate and, through innovation, create new value.

This thought process has been the birth of this book. The volume compiles submissions from both academics and business leaders from around the world which I’ve selected and helped sharpen to maximize resonation with you the reader. I have attempted to combine and structure the individual chapters into a coherent ensemble with a narrative that flows. Let me introduce the specifics to you.

From Strategy to Successful Execution: An Integrated Approach through Five Lenses

“Execution is the only strategy the consumer ever sees” one of my former P&G CEOs used to say. It was, in fact, AG Lafley, well known for his books on strategy with both Roger Martin (“Playing to Win: How Strategy Really Works”) and Ram Charan (“The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation”).

Lieve Van de Walle and Patrick Stoop have also recognized this and have created a powerful framework around this premise. They introduce this in Chapter 1 with their submission “From Strategy to Successful Execution: An Integrated Approach through Five Lenses”. The holistic and eclectic approach, presented in this article looks at an organization through five lenses, and balances task and process in a wider systemic context.

The chapter introduces five disciplines to design and execute a strategy. Core Learning is the first and at the heart – it’s the mindset that makes strategy management successful. It represents “the vessel of collective intelligence” as they describe it so powerfully.

The other four disciplines represent the flywheel that keeps the ongoing strategy process continuously in motion, indispensable in today’s VUCA-on-Steroids environment. They are:

  • Commissioning the work on strategy by the leader who sets priorities and decides on the resources (s)he makes available.
  • Clarifying (or “aligning”) purpose with objective, goals, roles, and KPIs,
  • Co-creating – ensuring organizational and cultural fundamentals are in place,
  • Connecting all necessary internal and external stakeholders to ensure excellence in execution.

 

Strategy in Times of Uncertainty

In Chapter 2, “Strategy in Times of Uncertainty”, Silvia Vernizzi and Andrea Beretta Zanoni explore how, in today’s context of great uncertainty, companies need to constantly restructure their strategic path anticipating the environmental changes and adapting their business and organizational models accordingly.

They first define what it takes to develop strategic agility in an enterprise, arguing that strategic agility

  1. is an attitude, a mindset. It is not about quick reaction to a major threat or event but, rather, a constant ability to reshape the course of action. It also, critically, includes continuously checking, challenging, and where needed renewing the enterprise’s business model.
  2. involves overall organization design and not just the rearrangement of products or categories.
  3. entails requirements in terms of capabilities, e.g., sensing, leadership style, decision making, …
  4. does not exclude strategic planning, but, rather, integrates it in a more flexible way that avoids rigidity and inertia.

They then go on to introduce a powerful, actionable new framework to go about defining strategy for your corporation or institution:

  1. Work by scenarios, along a helpful grid of exploratory vs. anticipatory horizontally, and descriptive vs. normative vertically.
  2. Identify a vision that brings the various scenarios together and serves as polar star that guides the company’s journey. It’s a sense of direction sufficiently ‘high’ to be compatible with the different scenarios identified and at the same time sufficiently clear to make it possible to plot a course by orienting the strategic decisions.
  3. Activate a process of continuous learning. The continuous monitoring activity allows the signals arriving from outside to be read and interpreted, thus enabling the company to identify the scenario that has become more and more likely and hone the resources on executing it.
  4. Adopt flexible planning tools. As the evolution of the scenarios gradually becomes clearer, the tools enable the company to evaluate the potential impacts of the scenarios being defined, thus allowing it to refine the strategic choices that become the base plan toward execution and scaling.

 

Toward Ambidextrous Leadership: Performing While Transforming

I got in touch with Olivier van Duuren when I was looking for someone to inspire the European Innovation Council which I manage for The Conference Board and a mutual friend recommended Olivier. Well, it turned out to be a terrific choice. Olivier did a two-hour workshop that provided not only actionable insights but also gave birth to a phrase that we’ve now adopted widely across The Conference Board: it’s the need for leaders in today’s VUCA-on-Steroids world to “Perform & Transform” at the same time, or, in other words, to become “ambidextrous”.

When I decided to edit this second book for Proud Pen, I reached back out to Olivier to see if he wanted to contribute to the wisdom I was collecting, and here is the result.

In Chapter 3Performing While Transforming” Olivier describes how he, over his many years in senior leadership positions, has identified recurring patterns of why certain people, groups or companies sparkle, attract success and keep reinventing themselves successfully. The difference is made by three fundamental competences:

  1. See and Sense
  2. Energize and Respond
  3. Perform and Transform (or, possibly yet more apt, Perform while Transforming)

But how? Here he builds from his extensive experience at Microsoft where he lived and contributed to the remarkable reinvention of the corporation under Satya Nadella. He internalized the following recipe:

  1. Put The Customer as the Heart of Your Company – “Do not think about your customers but think like your customers”.
  2. Value People as The Soul of Your Company – “Don’t be a know-it-all, be a learn-it-all”.
  3. See the Digital as Oxygen for Your Company – “Experiment and determine what value you can create for your customers. And look, within this for those ‘un-holy alliances’ – alliances with partners or areas that are not immediately in your playing field”.
  4. Inspire with a Clear “North Star” – “What are your ambitions and in which world context do they fit? What value do you want to create for whom, considering external and internal stakeholders”?

He then takes a surprising turn in the finish by illustrating the presented competences and recipe through the Nespresso case, or “the Apple of coffee”.

Adopting a Hybrid Strategy with Strategic Flexibility, Strategic Capability and Organisational Learning

There is much to learn from failures, but also from companies, or industries, that find themselves under particular hardship. During the Covid crisis, the hospitality industry has certainly been among the ones hardest hit.

Narentheren Kaliappen, Siti Nur Atikah Moktar, and Dzulhilmi Ahmad Fawzi have captured some key insights from the journey of this industry through the challenges in their submission as Chapter 4: “Adopting a Hybrid Strategy with Strategic Flexibility, Strategic Capability and Organisational Learning: Creating New Business Models in the Hotel Industry”.

Strategy is about making choices. You only have limited resources, and you’ve got to focus them on the biggest opportunities to build extraordinary competence and capability in the where-to-play choices you’ve decided on. But unprecedented times call for unprecedented flexibility, and decisions.

This chapter explores the impact of a hybrid business strategy in particular in an environment of volatility, and how to bring it to life. The hybrid strategy enables organizations to satisfy customers’ needs in quality, novelty, convenience, service, and price – fundamentally, it integrates cost leadership and differentiation strategy.

This combination is challenging to execute, and it requires three pillars in support: strategic flexibility, strategic capability, and organizational learning.

Finally, proper performance monitoring, management, and actionability is paramount – choiceful definition of the KPIs in support of your ambitious hybrid strategy become a sine qua non.

It is the writers’ hope that this chapter will assist hoteliers in Malaysia and around the globe to make the right decision regarding the hybrid strategy, and provide thoughts and tools to properly implement it. And, at the same time, it may help companies in other industries to become more flexible and agile in our VUCA-on-Steroids world.

The Next Paradigm Shift: From Agile to Future-Fit

It’s now been twenty years since the Agile Manifesto revolutionized the planning and execution of work, and, over these years, has created an incredible following. Fast forward to today, a lot has changed. The nature of work, new technologies, emerging trends, best practices, and regulations are evolving exponentially and in unexpected ways. And then, on top of this, Covid shook the system with a blow.

Ludwig Melik, CEO at Planbox, recognized this and wondered if these developments warranted an update of the Agile Manifesto. He gathered a group of seasoned innovation experts from around the world for an exercise to update the (four) values and (twelve) principles into a “Future-Fit Manifesto”. (Disclosure: I was one of them.)

I’m thrilled about the end result and proud to be able to integrate the “Future-Fit” thinking into this book. In fact, I had my Executive MBA students at the Solvay Brussels School play with the concepts over March and they resonated with them enormously. So, Chapter 5 describes “The Next Paradigm Shift: From Agile to Future-Fit”.

It is important to note that Future-Fit doesn’t negate Agile; rather it builds on it. As a teaser, here is the elevation of the four values:

  • Collaborative culture of relationships and inclusion, over individuals and interactions
  • Innovative systems behind continued learning, over working software
  • Discovering opportunities together over customer collaboration
  • Creating alternate futures through anticipation, over responding to change

Now is the time for leaders, companies, and organizations to adopt a “Future-Fit” mindset that empowers their community of employees, customers, partners, academia, and governments to fearlessly navigate through turbulent times and into uncharted space at warp speed.

Beyond Old Economy: how to thrive in the “Phygital” World

Dietmar Schloesser is Director Digitalization & Innovation of TÜV NORD AG. Little known beyond Germany, it is no exaggeration to call the TÜV brand an “institution” within the country itself – behind its purpose to protect human lives from the risks and potential adversity of technology. It has always been a conventional company that started with traditional steam boiler inspection. Over time, it has evolved into a worldwide Testing Inspection Certification business covering a broad range of activity from functional safety in mining to the reliability of spacecraft components for Mars missions. Fundamentally, it is about functional safety in the physical world.

Dietmar and I met when he joined my European Innovation Council at The Conference Board. A few months in, when asked to do a keynote presentation at the yearly ISPIM – International Society for Professional Innovation Management – conference, he asked me if I wanted to join and moderate him.

I considered the topic of his talk “How to embrace digital transformation into the old economy” quite a challenge for so conventional a certification company that was grounded in experience, stability and routine. I was curious during our preparation to learn how TUV NORD had gone about this.

In the process I became totally impressed with how Dietmar and his team had turned an old industry enterprise into a powerhouse of a Digitalization. As many others have done, he did not go piecemeal ending up with bits and pieces of digitization in different departments with systems that don’t even talk to each other.

No, TUV NORD recognized that the world was changing, the markets were changing, the technologies were changing, and, critically for them, the regulations were changing. They internalized they had to (fundamentally) change, that digital transformation starts with digital technologies, but the pivotal aspect for business lies in the transformation. Dietmar embarked on a holistic program to drive this transformation deep into the company, from

  • integrating digitalization center-stage into the innovation strategy for future fitness, to
  • setting up the right governance strategy include key senior leaders from across the company, to
  • establishing a tailored, actionable measurement system via a “balanced scorecard”, to
  • growing the digital competence of the organization along two vectors through a “Digital Academy”:

 

–  skills, and

– mindset

The latter turned out to be terrific investment as it subsequently helped the company through the Covid crisis by building resilience across the organization for agility and adaptability.

In summary, as I deal with senior business and innovation leaders from across the world and across industries, I keep hearing how old-industry companies struggle to turn the digital opportunities into new business models. TUV NORD represents a very relevant case study of one that made it work.

I asked Dietmar if he wanted to write up the case and let me share it broadly. Chapter 6, “Beyond Old Economy: how to thrive in the “Phygital” World” is the result. I hope it resonates as much with you as it did with me!

Transforming Your Innovation Strategy

Tristan Krommer puts it provocatively and no-nonsense as he always is: “The current state of corporate innovation strategy is broken”. Indeed, the challenge today lies in the premise of the VUCA-on-Steroids world we leave, and how companies have to deal with the volatility, uncertainty, complexity, and ambiguity of changing environment.

For this chapter, Chapter 7, Tristan pulled a number of the shorter, punchy, and compelling articles he frequently posts and shares in newsletters into a coherent story, almost as a recipe on how to deal with the challenges, or as per the title “Transforming Your Innovation Strategy”.

He goes back to the fundamentals of envisioning, before jumping to strategy. Envisioning starts at, or should start at, Purpose. Do you have an inspiring purpose, do you live it? And does your corporate strategy flow from it – is it congruent?

This clarity and inspiration generate the meaning of your innovation, and only then are you ready to get into your innovation strategy. If a strategy is a heuristic for making decisions under uncertainty, then an innovation strategy must relate to innovation decisions. These decisions include:

  • What areas will we invest in?
  • How much will we invest?
  • How will I divide that investment up into an innovation portfolio?
  • Who will make investment decisions?
  • What capabilities will we need to build to support those investments?
  • What capabilities are we not capable of building and must acquire or form a partnership for?

Net, our vision of the future guides the strategic decisions to invest in capabilities that align with that future.

From there, we’re starting to think about taking strategy into execution, along three priorities:

  1. Explore in the right places. Or, as we used to call it in P&G, define your “Where To Play (WTP)” choices.
  2. Ensure to launch at the right time. Invest in your “How To Win (HTW)” capabilities, experiment, fail, learn, and “own” the field – and then exercise patience. Tristan reminds us of the fact that Blockbuster (yes, Blockbuster) pioneered into movie streaming but lost patience and gave up with the arrival of a new CEO – and we all know how this turned out….
  3. Hack traditional mindsets. Understand the boundaries you’re operating in, stretch them, but don’t stress them. Be practical, creative, smart, don’t overthink. Gabor George Burt calls this the “Innovation Shortcut” – Instead of outright invention, you can simply unlock powerful, new combinations of existing components.

Innovation strategy in a corporate environment today requires us to think of strategy as a moving target that requires constant adjustment. It’s only as we experiment, learn, build knowledge, and combine this with a practical dose of creativity that we can create new business models and transform the company and perhaps the market itself.

Sincerely,

John Metselaar

Order a hardcopy of the Book
Price : £59.00
Book Information
Published: Tuesday, 10 May 2022
ISBN: 978-1-914266-30-0
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