Sunday, September 27, 2020

Hidden Paradoxes Behind “VUCA” New Normal

The more complex the situation is, the more different approaches and role gaming is needed to reach for insightful understanding of hidden paradoxes and effective pattern-finding. 

The hyper-connectivity of the digital business blurs the functional, organizational, industrial, geographical, and knowledge domain borders. Change is significantly speeding up, the business strategy can no longer stay static, and the business goals can no longer be well framed in advance. 

In many circumstances, business leaders couldn’t predict the future with a certain degree of accuracy, they have to understand the following hidden paradoxes, do an in-depth cause-effect analysis, optimize complicated things and deal with the “VUCA” dynamic skillfully.

The only thing that is certain is that there is no certainty, probably: Now with the uncertainty around almost all industry sectors, companies large or small are faced with volatile market situations, extreme competition, emerging digital technology trends, nonlinearity, and ambiguity, etc. Business management needs to know which factors contribute to uncertainty in order to handle it smoothly. Is it caused by “unknown” factors -not identified with the scope of the business planning; is it caused by “unknowable” -beyond the knowledge and understanding of management? or is it caused by situations with random distributions as well as “unknown” distributions? Etc. From a business management perspective, the problem is not uncertainty, rather, it is unpreparedness towards the efficient handling of uncertainty. Many factors need to be considered in order to understand and handle uncertainty smoothly.

From a strategic management perspective, in these uncertain times, strategic planning should go hand in hand with contingency planning around “what if” scenarios. Business managers are able to visualize and identify and convert uncertainty to risk through the application of quantification methods in order to be able to manage uncertainty as risk, move up management maturity from risk mitigation to risk intelligence, take an entrepreneur's spirit for envisioning, exploring, learning and advancing towards the future confidently.

Find a regularity in chaos, and recognize chaos in a regularity: Running a digital business is a dynamic change management continuum. It is important to strike the right balance between chaos and order. Often a big risk is that the risk management system is detached from the real management of the business. In business, every day is a risk, as long as risks have been identified and agreed with stakeholders as per business needs, you can find regularity in chaos, take risk models that effectively predict, optimize, and consider a continual and sustainable approach with multi-faceted perspectives. Keep in mind though, when a company embarks on a growth strategy, the risk curve will always be greater than business as usual approaches. So be preventive, recognize chaos in regularity, and take a specific threshold for justifying opportunities and business outcomes.

The greatest risk for organizations today will be a real business/reputation issue that is not being properly identified or managed. We can't and won't be able to predict or manage every turn or twist of the business, but by mapping and measuring complex interactions in real-time can gain early warning or have anticipatory awareness of possible/plausible negative impact. From chaos to order, contemporary leaders today must shape digital mindsets and have the right dose of risk appetite and have discernment by asking profound questions such as- Is your Enterprise Risk Management program immature and shortsighted? What to do with the risk even when an ERM program is neither immature nor shortsighted. What do you think needs to change so that the kinds of things suggested can actually occur? Etc. Genuinely intelligence-led organization (meaning all dimensions, from risk to marketing to logistics), has to be embedded into both processes and operations and manage risks in a structural way.

Good questions provoke comprehensive answers; great answers stimulate more thought-provoking questions: With the high velocity and unprecedented uncertainty, disrupting, or being disrupted? Business leaders today need to ask themselves what their strategies are and which practices they need to take to change with the “tide.” For digital leaders or professionals today, there is time to ask, and there is time to answer. The good question is usually open and thought-provoking and brings a multifaceted perspective. Asking the right questions helps to validate how thoroughly and deeply your team's thinking is on a particular issue. Innovators and change agents are not afraid to challenge the status quo, they have unlimited curiosity to ask good, open questions for attracting great answers in order to solve problems smoothly.

There is a strategic value of understanding businesses and being able to ask open-ended questions that evoke a response to enlighten or illustrate a specific issue or topic. Collaboratively, get your team to come up with their own answers to solve a problem or address an issue insightfully. By doing so, you've led them to easily buy-in on the direction to follow. The leader simply coaches the team along the way, including asking more questions as necessary, to attract constructive feedback and better solutions. On the other side, great answers stimulate further thought-provoking questions, pulling up resources, gaining multifaceted perspectives, to ensure doing the right things, before just doing things right.

Forward-looking companies across vertical sectors are at the inflection point of digital transformation. The more complex the situation is, the more different approaches and role gaming is needed to reach for insightful understanding of hidden paradoxes and effective pattern-finding behind the “VUCA” new normal. It takes a lot of effort and resources to make change happen, and it takes even more effort to sustain changes and make a smooth digital paradigm shift.


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