Digital Leadership: VUCA World and Business Innovation
From the lessons of the CAS Digital Masterclass with lecturer Dr. Torsten Wingenter reports student Ivana B. Lachner:
What do we know about tomorrow?
Corona showed us more than ever that we live in a fast changing world. While in the past there might have been a certain stability and security, we have immediately become aware that we are in a VUCA World.
What is VUCA, and what models can help navigate and drive business innovation?
V – Volatility:
Adam Tinworth defined Volatility with “rapid and unpredictable changes”. Considering the Schumpeterian Cycle of Innovation and Entrepreneurship, we see that the cycles are getting shorter and shorter. Within this volatility it is important that one does not lose oneself but has something like a North Star to find orientation and to know which direction one should drive.
Simon Sinek addresses this as the WHY, also known as “The Golden Circle”, who calls for identifying the purpose. Why do you do what you do? Based on your why, you can unleash the potential to find the way and the tools to fulfill your purpose. Employees will find out how to achieve the purpose and what will be needed for this. Starting with the why is way more inspirational and touches emotions. Why is a stronger driver then just the what.
U – Uncertainty
Nowadays it is more and more difficult to predict the future and forecast events. Planning development and investments is more and more impossible. It is less and less clear where the journey is going. To be able to act in these times it is important to understand relationships and the bigger context by comparing the diverse stakeholders and analyzing the multiple behaviors and reactions possible within the market.
The SWOT is a well-known model to check the status quo. What are your strengths and weaknesses, and what are your advantages and disadvantages over your competitors? Looking at the market, what are the elements respective to the situation your company could leverage to increase profitability.
Without doing this you might oversee the developments within the market like Nokia or miss an opportunity like Kodak did.
In this context it is worth checking on the “Blue Ocean Strategy” where you identify critical success criteria within the market as a first step. Afterwards you analyze which factors could be added or left off to create a competitive differentiator. For example, the American Airline Southwest won market share because they differentiated themselves from competition and known for extra friendly services, low prices, higher flight frequency but left away lounge and meals onboard.
C – Complexity
The world is getting more and more complex. While in the past there was only a hand full of possibilities to get in contact with a customer, the channels and tools to do so have increased exponentially. Looking for example at marketing and communication, choosing the right path to reach the prospects seems to be hardly possible. In addition, there are multiple tools and channels being used at the same time (e.g. using the smartphone watching tv or being in a store) influencing each other and generating more complex and difficult processes, making it more challenging to understand.
So what is the solution for this?
A great framework for this is the Business Canvas. Start thinking from the customer’s perspective. What is the value proposition for the customer? What is the added value that can be brought to the customer? Starting from here you can define where to focus your activities.
A – Ambiguity
“One size fits all” is over. In the past it was essential to optimize and get more and more efficient – nowadays we do not only need to be exploitative (efficient) but also explorative (effective). We need to be ambidextrous. It’s showing that size is not the key pillar anymore, but flexibility will show who wins the race.
“Success seems to be connected with action. Successful people keep moving. they make mistakes, but they don’t quit.” Conrad Hilton
Eric Ries sees the Lean Startup Mentality as a possible solution. Starting with a Hypothesis companies quickly start with trying and testing the assumptions. This helps test ideas faster and learn from them to improve the offering again and again. With this constant innovation he sees businesses to be radically successful.
Are you ready?
One thing we know– time as we knew it is over. It Bangs, sooner or later. Are you ready for it?
Thus – better embrace the VUCA mind, be prepared and start to disrupt yourself today.
In the past we’ve been taught how to check the correct box, then we learned to think outside the box but nowadays we need to think without a box… the only limit is our imagination.
So – Start today – improvise to innovate!