Developing Business Strategy Using VUCA Scenarios

June 9, 2020 | FEE Content, FEE Posts


by Bob Leonard and David Ross


NOTE: This is the fourth article in our series about managing business in a Volatile, Uncertain, Complex and Ambiguous (VUCA) world. With our ongoing Corona virus issues, the resulting recession, plus our developing climate crisis, VUCA is the new normal.


Developing an effective business strategy has always been a challenging endeavor. In the past, organizations could get away with a linear approach to solving problems and subsequently, didn’t always have to have a true strategy in place.


CEOs are stressed and time-starved, and many have been enticed by easy to use strategic templates or  brief conversations that yield a quick and dirty business strategy. Downloading a template and populating it by yourself or with a select few (who are often like-minded) tends to foster poorly informed, short-sighted thinking. The result is something closer to a short-term operational plan than a true strategy.


Thriving in a VUCA world demands a style of leadership that constantly innovates while nimbly leading and rapidly adapting. All of this should take place within a collaborative environment of trust that values and nurtures healthy relationships, so the entire team is motivated to cooperate and collaborate. This has profound implications for the development of your strategy.



Develop a True Vision


A vision statement is a snapshot into the future. It should include aspirations of what type of company you want to be and, unlike a mission statement, articulates what success looks like in clear terms.


Your vision statement should give employees a higher purpose… something well beyond a paycheck. People are motivated by a purpose they can aspire to. Of course, the vision must also make sense for your business and its products and services. A well-crafted vision inspires, has the power to establish your brand, and attracts top talent. Some examples include Patagonia: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”; IKEA: “To create a better everyday life.”; and Tesla: “To accelerate the world’s transition to sustainable energy.”


From Scenarios to Strategy


In a VUCA world, the old “set goal / plan / execute” doesn’t work anymore. Strategies must be context-aware and malleable. Fortunately, the cure is straightforward: determine that you are going to differentiate your strategy from your vision, create strategies flexible enough for our VUCA world, and integrate your strategy development with the scenarios you have created. This requires bold leaders who understand the necessity of reframing strategy.


There are several routes you can travel from scenarios to strategy. Rather than picking one scenario and betting the company on it, it is far better to find a strategy that is robust across the range of scenarios. Sometimes the relevant scenarios are sufficiently diverse that no single strategy will prevail across all of them. In that case, it’s a good idea to have a strategy appropriate to each, then pay close attention for early signs that indicate which scenarios are more likely to occur than others.


What is strategy?


Is what you’re calling “strategy” actually something else altogether? Creating a meaningful and effective strategy is difficult, and takes a great deal of effort, time and resources. A business strategy is a purposeful plan of action or rules of intent – designed to accomplish an organization’s mission, vision and goals.


At the core of strategy is identifying how a company can position itself to deliver unique value to its customers and its key stakeholders. Effective strategy must make sense given the external environment it must function within (in this case, of relevance to our climate crisis and what that entails) and with the internal environment (how a company can differentiate from competition in its products, service offering, pricing model, delivery system and more).


In a future article, we will discuss innovative business models and how advantage can be gained through genuine collaboration with key stakeholders.


Considerations and Logistics


It is important to understand the future today and adapt as it changes. In a VUCA world, that requires monitoring on an ongoing basis, always aware of what is happening that might affect your organization, flexibility to evolve as needed, and empowerment of stakeholders to enable agility and nimbleness.


This is where you, the strategist, come in. Remember, our climate crisis is an example of a “wicked problem”. Your strategy isn’t being developed to solve the problem; rather, you are developing a strategy that helps position the organization to adapt to the problem and minimize risk.


Strategic planning cannot be casually accomplished in a few hours. Void of research and ideation, many companies make hasty and ill-advised decisions. Our desire for simplicity should not override our need to be thorough, especially when the future of a company is at stake.


Future-fit organizations actively prepare to respond to disruptions and anticipate change. Conventional logic works well for solving discrete problems with definite answers. But the wicked problems we face today require more creative responses. Issues as serious and complex as our climate crisis defy simple, straightforward solutions. Be careful not to deploy any strategy without thoroughly vetting it. In complex situations it is easy to create unintended consequences. 


Design in Flexibility


We should hold on to our long-term vision, but we must be willing to let go of our rigid and linear plans if we hope to achieve organizational objectives. In our VUCA environment, strategies must contain pathways that allow us to respond effectively to rapidly shifting trends, and that promote breakthroughs to our company’s next stage. It is crucial that organizations be agile and creative.


Define Your Targets


What is the other side going to look like? Scenarios by themselves do not determine strategy any more than a forecast does. A strategy needs to be developed in light of a set of scenarios.


“Think of scenarios as different hands of cards you might be dealt. Think of strategies as the way you would play those cards.” – David Ogilvy


Strategic planning can only be done properly once leadership has engaged in strategic ideation sessions. These sessions determine where the company wants to go. When there is clarity around that, strategic planning can leverage that clarity to determine how to get there in each of your potential scenarios.


Develop Your Narrative


It is one thing to develop a great strategy, one that has the right fit with the environment within which your organization is operating. It is another to ensure that your stakeholders, internal and external, understand your strategy and are engaged. Have you ever been in the situation when you listened to senior management launch a new strategy over the space of an hour or longer… only to leave the launch wondering “what was that all about?” 


That highlights the importance of having a compelling narrative in place that succinctly communicates your strategy. That is the topic of our next article ‘Storytelling to Sell Strategy’.


Think Long Term


In the face of constant change, planning horizons are shorter than they used to be. However, thinking quarter to quarter is a trap that may rob companies of their ability to see around the bend. Best-in-class companies create practices designed to treat strategy as a living process rather than a one-time, static event.


Revisit your strategy frequently because the environment you’re operating in is constantly changing. Companies can think long term and still be nimble. For example, a critical component of strategy is an external forces analysis. Companies should be evaluating long-term external forces, and adapting based on new information (meeting monthly, or even weekly) to pivot.


Measure Your Results and Adjust Accordingly


Every strategy should be actionable. Companies that are best-in-class:


  • Have a strategic action plan that they track on an ongoing basis.
  • Promote and encourage common ownership of the plan across executives, departments and appropriate stakeholders. (NOTE: We will discuss stakeholder responsibilities in depth in a subsequent article.)
  • Employ key performance indicators (KPIs) that are predictive and align directly with the strategic plan.
  • Develop milestones for every department so employees understand what is required of them and when.
  • Include the “why” behind each goal and milestone so everyone clearly sees how they support the overall strategy.
  • Establish a performance management cycle that institutes cascading goals and objectives for employees.


The execution of strategic planning requires discipline, and it is the responsibility of senior executives to promote processes that keep a team focused on the ultimate goal and milestones along the way. 





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