5 ways entrepreneurs can survive and thrive in a VUCA world
Tuesday, July 28, 2020
“Volatility, uncertainty, complexity and ambiguity.” When the U.S. Army War College first introduced these four words in 1987, it drew on the leadership ideas of Warren Bennis and Burt Nanus to describe the effects of the end of the Cold War on the world.
Since then, both world leaders and business strategists have applied these terms (which often go by the acronym ”VUCA”) to reflect the relative chaos and instability caused by other world events, including the 9/11 terrorist attacks, the Great Recession of 2008-09, and now, the coronavirus pandemic.
As world crises evolve, change is inevitable, and yet we hear references to the “new normal” as each situation settles down, and people adjust and get back to their lives. For example, after 9/11, our new normal included new security procedures at airports around the world. After the Great Recession, it included lasting effects for each generation, such as a fear by baby boomers that they wouldn’t be able to retire on time; fear by Gen Xers that they would be unable to purchase a home; fear by millennials that they couldn’t cover emergency expenses, and fear by Gen Zers that they might not ever be able to make ends meet.
Since the coronavirus outbreak, some have speculated about what our new normal will look like this time. Are large, in-person events gone forever? Will wearing masks become second nature, like wearing clothes or shoes? Will we ever get to travel again? Which businesses will survive?
If you are an entrepreneur, you tend to deal with volatility, uncertainty, complexity and ambiguity on a daily basis. There’s no “new” normal here, because challenges are inherent in starting and running a successful business. And while psychologists advise tapping into emotional intelligence to tame personal stress, I’m offering five practical ways to inoculate your business against future VUCA events:
1. Conduct a “state of the business” audit.
If nothing else, COVID-19 has provided an opportunity to test the completeness and reliability of your policies and procedures. Now is a perfect time — while the latest VUCA event is still in progress — to gather feedback from your team about what’s working and what isn’t.
2. Update (or create) your business continuity plan.
If you created a plan early on in your business and checked it off your to-do list, it may have been buried on your server or gathering dust on a shelf as the pandemic spread. With the successes and failures of your company’s response still fresh in your mind, create an action plan that includes:
- Updating emergency contacts for all employees.
- Appointing a Pandemic Point Person to keep up with COVID developments and disseminate employee communication as you reopen or react to a second wave.
- Updating (or creating) your succession plan.
- Cross training employees.
- Developing “outage” scenarios (critical software failures, supply chain failures, etc.) and plans for workarounds.
3. Work with your financial adviser to assess cash-flow problems and create contingencies.
An interpretive adviser, one who can both provide you with critical information and help guide you to the best decision to address your needs. And don’t just focus on the business: Your adviser should consider your personal financial situation as part of the overall picture.
4. Update (or create) your crisis communication plan.
How well have you communicated with customers, suppliers, regulators or other key stakeholders about how your company is operating (or not) during the pandemic? What would you do differently in another crisis?
One way to create an actionable crisis communication plan is to anticipate a variety of scenarios that could trigger the plan (think natural disaster, criminal behavior, or the death of key employee). If you’ve never created such a plan, HubSpot offers free templates and other advice to get you or a team member started.
5. Review and update your supplier agreements.
As the coronavirus outbreak spread, the nation watched as both federal and state authorities, desperate to shore up supplies of personal protection equipment and other medical supplies, turned to untested sources. How well did your suppliers meet your needs? Do you have reliable backups in place in the event of another, or a different emergency?
At some level, volatility, uncertainty, complexity and ambiguity will always affect entrepreneurs, but anticipating difficulty and knowing what to do when it strikes can mean the difference between success and failure.
As an antidote to a VUCA world, entrepreneurial leaders can choose to turn VUCA’s meaning into a leadership strategy, such as the one developed by Bob Johansen of the Institute for the Future: Turn volatility into vision, uncertainty into understanding, complexity into clarity, and ambiguity into agility, and make those your new normal. You’ll be better prepared for any situation the future might hold.
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