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The business landscape has never been so challenging. It feels like we are living at the edge of Chaos with the digital acceleration of the Fourth Industrial Revolution closely followed by the COVID-19 pandemic, the Climate Emergency, international conflict and post-truth politics. How do we frame what’s required? How do we plan our next step into the future? We have to think beyond.
VUCA in the rearview mirror
I’ve been using the VUCA term in strategy sessions and presentations all of this century. Actually the term was first coined in 1985 by organisational consultant Warren Bennis and academic and leadership specialist Burt Nanus in their book “Leaders. The Strategies For Taking Charge,” to describe the challenges posed to management and leadership by various external factors and what their consequences are for corporate leadership. In the early 1990s VUCA came into regular use as part of the US Army War College’s response to the collapse of the USSR.
VUCA stands for volatility, uncertainty, complexity and ambiguity. The v, u and a make it exceedingly difficult to plan even the first step of where you are heading next. But let me say a little more on the c of complexity. Over the last 25 years our business world has steadily moved through levels of complicated, but now it’s complex. What’s the difference? Complicated can be controlled. Complicated might be difficult, but there are a set of rules to be understood – instructions, recipes, and algorithms all ripe for the application of machine learning and AI. Complicated can be controlled with a mindset of efficiency and doing things right. We can reduce the problem to steps, and with enough computing power and the right data we can make solid predictions, improve the process or even solve the problem completely. Complex is different. Complex problems involve too many unknowns, and too many variables and interrelated factors that can’t be reduced to a set of rules and processes. Complex means patterns that don’t repeat themselves regularly so how do you find the right thing to do next? Complex defies forecasting and brings in the unexpected with radical uncertainly. Complex needs to be managed in a different way.
VUCA needed a different mindset. But VUCA evolved.
BANI is right, left and centre
Brittle – something that is susceptible to sudden and catastrophic failure. It looks strong, but it breaks easily and unexpectedly. As I’m writing this it is 160 days since Russia invaded Ukraine in a major escalation of the Russo-Ukranian War. In today’s geopolitically, economically, and technologically interconnected world a catastrophic breakdown happens in one country, but we are feeling the effect in all our of economies around the planet. Jamais explains:
“Brittleness emerges from dependence on a single, critical point of failure, and from the unwillingness – or inability – to leave any excess capacity, or slack, in the system”
Anxious – a sense of helplessness. The fear that whatever you do will be the wrong thing. Our social media driven, 24/7 news feeds are tailor made to increase our anxiety, accentuating the extremes of bad news to drown out the good. They make it all too easy for the extremists to get more airtime or propagate fake news. Suicide rates are on the rise. People are beginning to feel things are out of control, even if they never really were in control.
Nonlinear – where cause and effect seem disconnected or disproportionate. This comes back to complexity. As humans we’ve been linear thinkers for 200,000 years. As hunter gatherers or farmers we’ve felt ourselves age, we’ve watched a single animal or tree grow. We’ve been used to looking at a massive herd, a deep forest, or the size of an ocean – we can deal with big numbers, but today’s complexity has changed the game. Small change can have massive consequences. Reports of a new Coronavirus in the East at the end of 2019 had changed the course of most lives on the planet within a matter of months, and in unexpected positive ways as well as all the horrendous negatives. The Climate Emergency is another nonlinear problem we haven’t fully got to grips with yet. What’s next?
Incomprehensible – where we are witnessing events and decisions that seem illogical or senseless. Switch on the news. Check your feeds. There is so much data coming at us it’s difficult to make out the signal from the noise. Information overload. Another byproduct of complexity and the ever-increasing numbers game as the population rises exponentially.
Machine Learning and today’s more advanced Artificial Intelligence adds a new level of incomprehensibility. We’ve been used to expert systems based on decision trees, created with human expertise and knowledge experts making early AI easy to understand. Now with the paradigm shift to Machine Learning systems based on Deep Neural Networks and the Big Data that can train them, suddenly they are much more difficult to understand, even though they can produce great results. However, we also have to watch for racist, sexist or biased outcomes and make sure we get the training right. The complexity of what we are now asking ML/AI systems to do can give strange and incomprehensible results sometimes.
We’ve navigated across VUCA and stepped into BANI. These acronym’s frame the problems, frame the ground we need to navigate. They highlight we need a different kind of leadership, a review of our organisational structure, new exponential thinking, with clarity, transparency, and a sense of purpose. We need new approaches, new technology and new tools. More than ever we need to be adaptable, in fact we need our organisations to be in a permanent state of reinvention to tackle these new challenges as they hit us. What about the next step?
What Business Needs
How can business tackle this new landscape? What’s needed? Evolution. Reinvention. What can we use as a guide? Our Bloor Research Mutable Business™ is a six-part framework we’ve put together for exactly this challenge. We’ve just reviewed, validated and updated it with a new iteration. It focuses on business outcomes and value creation. It covers new Business models and marketing approaches, the leadership and People factors required, and the Technology and automation to deploy. It recognises the Stakeholder Engagement a mutable organisation needs, it promotes Design Thinking end to end across your products, services and internal processes, and recognises that Trust is at the heart of all commerce.