This weekend, I was listening to the podcast of a friend and fellow solopreneur. She was discussing entrepreneurial burnout in this crazy world we are all living in today. And during the podcast, she mentioned the term “VUCA”.
Living in a VUCA World
As soon as I heard the term, I started singing “Living in a VUCA World” as if I was back in the 80s. If you are old enough to know what I’m talking about, then I imagine you have the tune in your head now, and you are welcome! If not, then check out this classic Madonna song. But while the 80s was a Material World Decade, the 2020s are clearly a VUCA World Decade.
Okay, perhaps you are wondering – what the heck is VUCA? VUCA stands for “Volatility, Uncertainty, Complexity and Ambiguity”. At this point, what with a lingering pandemic, inflation, a potential recession, war between Ukraine and Russia, among other things, I would say that VUCA is an accurate description of our world.
It reminds me of something I read recently in the book Ten Lessons for a Post-Pandemic World by Fareed Zakaria: when managing a business, an economy, or a government, systems can be open, fast, or stable – but only two at a time. We are currently more “open and fast” – less stable.
So why does this matter to small business owners?
If the world around us is not stable, then it can become a challenge to plan for the future. It is much easier to just focus on reacting to what’s going on around you (inflation, supply chain, covid, recession) than to figure out how to plan in such an uncertain world.
A 2021 study by the Nuremburg Institute for Market Decisions (NIM) showed that prior to COVID, the average number of months that managers felt their company could be competitive “without a fundamental transformation of core offerings or business model” was 33 months. Since COVID, that average time has decreased by six months, down to 27 months.
Think about your own business – have you made any fundamental changes to your offerings or your business mode in the last couple years?
Did COVID force you to make any changes?
Do you anticipate making any changes to your business offerings or operations as a result of any other changes that are underway?
What are some emerging challenges in your industry – or in your customers’ industries that you should be following?
Top Challenges Moving Forward
According to the managers surveyed in the NIM Report, the top issues expected to have an impact on their business in the next 5 to 10 years were:
- Adopting new technologies
- Intensified competition in general
- Changing customer behavior
- Compliance and regulations
- Cybersecurity threats
- Missing skills
- Retaining customers
- Rising social inequality
- Building sustainable businesses
- Economic downturn
This was based on a survey that took place in the spring of 2020, while we were still in the early stages of the pandemic.
If the same question was asked now, a few other topics might move up that priority list. For example, “economic downturn” and “missing skills” (or perhaps ‘tight labor market’) would take the place of a few of the top choices.
The NIM Report also examined the responses of the managers whose companies were considered to be “top foresight performers” based on a Foresight Checklist each manager completed. (The checklist is available in the article). Top Foresight Performers were much more concerned about issues like climate change, geopolitical volatility and rising social inequity.
But I Can’t Fix the Whole World!
I’m sure you’re thinking “Okay, so people who think more about the future are worried about climate change and politics – but what am I supposed to do about that as a small business owner?”
The idea isn’t that you can solve those issues so much that you can adapt your business model to live in a world where these changes are taking place.
For example, when asked if the pandemic had a high impact on their operations (mind you, they are being asked in May 2020), only 17% of the companies with high foresight performance agreed, while 56% of those with low foresight performance agreed.
The message is that the more you plan for living in an uncertain world, the more comfortable you feel in that world. And the more informed you are about what is going on in the world around you, the more confident you are in making decisions amid the uncertainty.
The starting point for being better informed is as simple as knowing more about your competitors, your industry and the external factors impacting both.
Easier said than done!
How can you become someone with “high foresight performance”?
One key step is to set aside time to plan. When small business owners are busy “putting fires out” (something I hear with great frequency), then it can be a challenge to look toward the future. As a matter of fact, a Harvard Business Review study showed that “85 percent of executive leadership teams spend less than one hour per month discussing strategy, and 50 percent spend no time at all.”
What can you do during that “planning time”? According to the NIM Study, top foresight performers prioritize these activities:
- Gaining insights into changes taking place around your business
- Better understanding customer needs
- Identifying opportunities and threats for the company’s products/services
- Identifying potential new customers
- Better managing business objectives internally
These should be activities that even a small business owner or solopreneur can accomplish by setting aside a little time each week. Consider blocking off time on your calendar for some reading and planning. The more you do this, the more it will become an ingrained habit, and the better informed you will be.
How can I measure my planning success?
Aha! That is a trick question. If you are really looking out a few years as you consider your business model, customers, competitive environment and so forth, the only certainty in your planning is that you will be wrong.
Think back to the start of your business. Perhaps you put some financial pro formas together to estimate your initial revenue, and how it might grow over time. As a market researcher who has reviewed and put together dozens and dozens of pro formas, I can tell you that they are never right. But they are a good start.
The same is true with some longer-term strategic planning. Rather than just reacting to what’s going on today and expecting more of the same, we need to use our imagination to envision a future that could be drastically different than the present.
I am a big fan of Jane McGonigal, a director at the Institute for the Future, who helped me with this exercise when I took the Futures Thinking Courses on Coursera. She shares some great tips in a recent Fast Company article.
How to be ready for a VUCA Future
According to the article, the best way to get started is to envision your business – and yourself – ten years from now.
What will your business look like in the summer of 2032? Will you be offering the same products or services? Who might your customers be? Or your suppliers?
The goal of this exercise is to think far enough in the future that it’s okay to be somewhat ‘fantastical’ in your vision.
One great exercise to help you get into the spirit of 2032 is to set aside time and a blank piece of paper and start writing about a day in your life in 2032. Where do you live? How do you wake up? How do you get to work? Who do you work with? Be creative and open to new concepts!
Now that you have some sense of your ridiculous or unimaginable future, it’s time to start looking for any signals of change that point in that direction.
What is a signal of change?
According to the Institute for the Future (IFTF), signals of change are “small and often local innovations that draw your attention to where new ideas, technologies, and habits of the future are being actively experimented with, tested, seeded, and invented today.”
How soon do you think we will be attending conferences in the metaverse? Or transporting completed products from our manufacturing line by drone?
The best way to guess when (and if) these things are likely to happen is to look for news that trends in that direction.
The IFTF offers suggestions for ways to search for these signals.
How can a busy business owner get started preparing for a VUCA world?
- Set aside time to write up your fantastical version of your life in 2032
- Think about some of the key changes you are envisioning
- Block out time weekly to search for signals of change
- Block out time monthly to reflect on these signals and connect them to your business growth strategic plan
Or, of course, reach out to your friendly market researcher/futures thinker (see below!) for help getting started!
My passion is to help growth-minded entrepreneurs like you find ways to plan for your version of a successful future. I do this through courses, consulting, and a community of like-minded people. Reach out for a free ½ hour conversation if you’re curious to learn more!
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