In any economic downturn, small businesses are often hit the hardest. Some industries are affected more than others. Budget constraints, reduced spending power and inadequate preparedness for an upheaval can make it impossible for a small business to survive. In many cases, this can cause companies without adequate planning to be unable to continue operating.
With the growing animosity between the two economic powerhouses, US and China, we should really brace ourselves for impact. Recession is not far behind and VUCA is now a clear and present danger. It is an acronym and stands for Volatile, Uncertain, Complex and Ambiguous. And there are plenty of explanations. But despite these explanations, it will be helpful if we define each letter in VUCA. And no less than Leadership strategy expert Jeroen Kraaijenbrink makes an excellent definition:
Volatility – Volatility refers to the speed of change in an industry, market or the world in general. It is associated with fluctuations in demand, turbulence and short time to markets. The more volatile the world is, the more and faster things change.
Uncertainty – Uncertainty refers to the extent to which we can confidently predict the future. Part of uncertainty is perceived and associated with people’s inability to understand what is going on. Uncertainty, though, is also a more objective characteristic of an environment. Truly uncertain environments are those that don’t allow any prediction. The more uncertain the world is, the harder it is to predict.
Complexity – Complexity refers to the number of factors that we need to take into account, their variety and the relationships between them. The more factors, the greater their variety and the more they are interconnected, the more complex an environment is. Under high complexity, it is impossible to fully analyze the environment and come to rational conclusions. The more complex the world is, the harder it is to analyze.
Ambiguity – Ambiguity refers to a lack of clarity about how to interpret something. A situation is ambiguous, for example, when information is incomplete, contradicting or too inaccurate to draw clear conclusions. The more ambiguous the world is, the harder it is to interpret.
VUCA and Planning are conjoined
Business and strategic planning strengthens the ability to share decision, align, course correct and hold on to value orientations. They are all critical requirements for success in perpetuating your business. So, in addition to providing a framework for evaluation and choice of a business direction, strategic planning is a process that prompts healthy communication amongst business partners on critical business issues. It is also a valuable tool that helps build qualities such as the ability to work toward consensus, team management, and shared decision making. Below is a checklist of elements that comprises action plans that should be incorporated during strategic planning sessions.
- Current mindset and commitment to the vision, mission, values
- Business owners and key personnel need to craft their vision, mission. These are very valuable
information and must be internalized and co-owned by all employees
- Employees must embody the core values of the business such as commitments to quality products,
customer responsiveness, caring for employees, long-term investments as well basic ethical standards of
honesty, respect and fairness.
- Explicitly state the Company’s Objectives in terms of the results it desires to achieve in the next three to five years.
- It should relate to the expectations and requirements of all major stakeholders and should reflect the underlying reasons for running a business.
- It should highlight the achievements and broad progress to be realized over the next three to five years.
Strengths and weaknesses are internal to the business, and opportunities and threats are external. All SWOTs should be strength or weakness, an opportunity or threat, they cannot be both.
Areas that are external to the business, which the business cannot control, but can, have an impact on its potential success or failure.
- Structure and manpower plan should be finalized
- Leadership positions should be handled by qualified executives. Do not make the mistake of having
unqualified individuals especially entitled children handling critical positions
- Policies, procedures, guidelines must be in place
- Employee code of discipline should also be enforced
- Communication platform to address issues or grievances as well as a forum to discuss difficult strategic issues
There are many challenges to sustaining a business. A deliberate, thorough and powerful planning is one key to navigating unpredictable elements. Inevitably, it helps create motivation that can sustain the business through minefields and differences under a VUCA environment.