Session 2 Pt 2 VUCA A

So let's talk about VUCA. VUCA is an acronym that stands for volatility, uncertainty, complexity, and ambiguity. Volatility, uncertainty, complexity, and ambiguity. Now, this is a concept that originated in the late 1980s, developed by the US Army War College in the late 1980s. And it was used to describe the complex and turbulent, unpredictable world that emerged after the end of the Cold War. After the end of the Cold War, when Russia still was a superpower, the geopolitics was very turbulent, complex, unpredictable. And so the U.S. Army War College came up with this paradigm called VUCA to describe that environment. Volatile, uncertain, complex, and ambiguous. Since that time, since the late 1980s, since when the U.S. War College developed this paradigm, it has become widely used in business. In the marketplace. And what, what, what, what business owners and business leaders have found is that it's a war out there, right? It's like a Cold War sometimes, trying to compete, um, stay ahead of the curve, stay ahead of your competitors, manage costs, manage people, manage organizations. It could become very volatile, uh, uncertain, very complex, and very ambiguous. So the term VUCA became part of the business leadership and business management lingo, if you would. General George Casey, a retired 4-star general serving as the 36th Chief of Staff of the United States Army, he had this to say about VUCA and the crossover from military to public and private sector. He says, in the public and private sector, the world is getting increasingly volatile, uncertain, complex, and ambiguous. And it's the type of environment we need to prepare people to lead in today. In other words, if you're doing any type of leadership training like this DIME strategic leadership training, if you're doing any type of management training, it's got to be able to lead, to teach you how to lead in a volatile, uncertain, complex, ambiguous marketplace. I mean, you know, the world economy changed a few years ago with the advent of COVID Nobody knew it was coming. In spite of all the pundits and conspiracy theorists who knew. COVID was coming. But for most of us sane people, non-conspiratorial people, it was a surprise, right? It was a surprise at the level of disruption in supply chains, the level of disruption in labor markets, the level of disruption in the economic markets. It was complex, volatile, uncertain, and ambiguous. The world is in a state of VUCA. The marketplace is in a state of VUCA, and you've gotta have a framework like Dimes to help you navigate VUCA if you want to get maximum return on your vision. So, so let's talk about this. Risk is amplified. So there's already inherent risk in strategy implementation, right? There's measurement risk, there is monetary risk, there is labor market risk, there is all kinds of risk already inherent in the strategy implementation. VUCA amplifies those risks so that the risks associated with strategic planning implementation are amplified because the traditional approaches to planning and forecasting are less effective. The way you plan and forecast when there is no or little volatility, that's not going to work in a environment where volatility is through the roof. It's not going to work in an environment where uncertainty is through the roof. You've got to find different, more innovative ways to do forecasting, strategy development, and strategy implementation. A couple of very successful business leaders understand risk. In fact, Mark Zuckerberg said the biggest risk is not taking any risk. I don't think that's original to him, but he said it at some point in time. I'm sure he was quoting someone. In a world that's changing really quickly, the only strategy that is guaranteed to fail is not taking risks, right? But again, there's two sides to that statement. Not taking risk is a risk that guarantees failure, according to Mark Zuckerberg. True statement. So which means you've got to take risk. But if you take risk without a framework to help you identify and mitigate and manage risk, then you're also guaranteed to fail. You don't take risks just to take risk willy-nilly without some type of mitigating framework like Dimes, right? Kobe Bryant, Mamba mentality. Mamba mentality, right? He was going to crush the competition. That was Mamba mentality. It's like nothing's getting in my way, right? He was quoted as saying, look, I'm not afraid of failure. I don't like to fail. I hate to fail, but I'm not afraid of it. Now, one of the risks that, that you could find yourself paralyzed by is the risk of failing. That's, that's a given. Anything you, any strategy you develop in business, in leadership, has a risk of failing. Why? Because the marketplace is volatile. Things will change in a minute. It's uncertain. You don't know what's coming tomorrow. It's complex. There's so many moving pieces and it's ambiguous. Sometimes there's no clear-cut path forward. Any strategy, and I don't care who tells you, you know, all the strategic planning gurus and experts out there. That, that gives you a foolproof plan. There's no such thing in business as a foolproof plan guaranteed to achieve a certain result. What you have to do is to create a strategic plan that is agile enough to identify risk early enough so that you could make contingency pathways or what we call strategic off-ramps to get to where you want to go. Being afraid of the risk of failure is a risk that some people succumb to and become paralyzed and say, well, I can't, I can't really, we don't, we don't really want to do that because we might fail. You may not want to live because you might die, right? But anyway, I'm sharing these perspectives on risks from different business leaders and successful people, because it's important to understand that as a business owner and a business leader, your role is really to navigate, strategically navigate the risks in the marketplace so that you could achieve strategic vision. How do you strategically allocate, navigate with your relationships, with your resources, And when I say you, I mean you and your organization. How do you strategically position people in key roles? How do you ensure that strategically rules and processes are put in place strategically so that you can maximize your ROVs, which is the essence of strategic vision, right? Achieving or maximizing your ROVs. Is what your task is as a leader, a business owner. You are tasked with maximizing ROVs, not so much ROIs. All of that is important, but beyond ROIs, your role, business owner, business leader, is to maximize ROVs, which includes ROIs. And to do that, you have to, you must have a framework by which you manage, navigate, strategize your relationships, your resources, your roles, and your rules so that you could achieve maximum impact, maximum image, and maximum income. So Warren Buffett, Warren Buffett says risk comes from not knowing what you're doing. That's, that's, that's a good one. That's a good one. Whatever framework it is you choose, right? However it is you choose to approach, um, identifying, mitigating, minimizing, and managing risk to achieve strategic vision. And I highly recommend you use the DIME framework. But whichever framework you use, you've got to know what you're doing. You've got to have a body of knowledge that is proven in the marketplace, proven in the workplace where the rubber meets the road. You've got to know what you're doing. The worst thing an organization could have is a leader who is clueless. And trust me, I've seen my fair share of clueless leaders. You don't want to be one of those. You don't want to manage or lead by the seat of your pants. You ever heard that? Instinctively, intuitively. You've got to know stuff, right? And, and one of the things that is important, imperative that you know is a framework to maximize ROVs, return on vision. All right, so Warren Buffett says risk comes from not knowing what you are doing. Um, this, this talks about some of the key elements of Dimes. For example, um, decision-making. To make effective decisions, you've got to have good research, intelligence, business intelligence, financial intelligence. I just did a a guest lecture at my alma mater, Andrews University, and talking to some students in the finance department. And we were talking about data, financial intelligence, and the role accountants and financial analysts play in providing information so that leaders can know what they're doing, right? It's very important. So Warren Buffett was right on point. With that. And who am I to say whether or not Warren Buffett's on point, right? The man's a billionaire. So VUCA stands in your way of maximizing ROVs, right? You've got to, you've got to, you've got to have a framework. And if, if there's anything that you get from this session is that you've got to have a framework who attack VUCA so that you can maximize ROVs. So with that said, let's just do a quick overview of what each one of these elements of VUCA is. It's fairly self-explanatory, but allow me to share a few insights on each one of these VUCA: volatility, uncertainty, complexity, and ambiguous— ambiguity. Volatility, conceptually you think, well, Things are changing all the time, right? It's not the change that makes it volatile, it's the speed of the change, the frequency of the change. So an example of speed in change, which is what volatility is all about, is in employee turnover, right? Uh, as a leader trying to execute strategy implementation, right? You're going to have employee turnover, but if you have a low rate of employee attrition, a low rate of employee turnover, you know, maybe 1% per quarter, you know, 2% of the employee total turning over per every 90 days, You can handle that, right? There's not major disruption. But just imagine that change in employee turnover. Imagine that change happening more rapidly, right? So now you have the same 2% change, but it happens every pay cycle. Let's say you have a biweekly pay cycle. Every pay cycle, somebody's gone, new person comes on. Imagine the disruption. Volatility. It's a major risk factor in strategy implementation. Another one to look at is technology adoption, right? Adopting technology is good, you know, using AI to help facilitate and turbocharge your workflow, that's great. But if you have technological adoptions, new technology interjected into your workforce every week, there's some new software, some new technology, that kind of volatility, albeit for something good, could actually be disruptive to your strategy implementation. So the risk of volatility is not necessarily the risk of change, but it is the speed at which change happens. Um, so when we talk volatility in this context, it's the speed of the change, rapid change. Um, it's change that's beyond the organization's ability to control. It's change that is unpredictable, which brings us to the next element of VUCA uncertainty, lack of predictability, lack of predictability. Now that's different than lack of knowledge. There's things that we just don't know. I mean, we don't know the future. Who's it that said this? Don Rumsfeld, was it Donald Rumsfeld? One time Secretary of State said,, there are things that we know we don't know. There are things that we don't know we don't know. What did he say? I'll play that quote. Reports that say there's, that something hasn't happened are always interesting to me because As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns. The ones we don't know we don't know. So here is Donald Rumsfeld's quote about uncertainty, the not knowing, the not knowing of the future events. He says there are known knowns, right? These are things that we know we know. I know I am tall, dark, and handsome. I know that. Yeah, I'm only 5'9", by the way. So there are things, there are the known knowns, things we know we know. There are the known unknowns. That is to say, there are things we know we don't know, right? Again, there's a certain level of predictability on that. We know we don't know it, right? But here's where true uncertainty comes in. But there are also unknown unknowns. These are the things we don't know we don't know. Let that sink in for a moment, right? So, so the marketplace, leadership, strategy implementation, there is an element of things that we don't know that we don't know. They're just gonna crop up on us and no amount of planning. And I had a meeting with, uh, uh, some team members, uh, at a nonprofit organization this past weekend. And, um, they, they put, do these programs every Saturday and on Fridays they meet. To rehearse the programs and the presentations. And, you know, invariably I was saying, look, it doesn't matter how much you rehearse, how many rehearsals you do, things are going to go wrong because there are things that you don't know, that you don't know. And if you don't know what you don't know, you can't plan for what you don't know. You can't rehearse for what you don't know. And so, and so, because The gist of that conversation was that, you know, some of the team members were getting really hyper, really hysteric about, you know, oh, this should have never happened and how could this happen? And as business, as a business owner, business leader, you have to be the one that brings a certain calm to situations because you understand, look, I don't know everything. There's, you know, there are known knowns, there are things I know I know. There are things I know I don't know, but then there are things that I don't know that I don't know. That's the marketplace. That's the uncertainty and the unpredictability that VUCA envisions when we talk about VUCA. Complexity. So complexity has to do with moving parts. There's just so many moving parts. And one of the things that makes complexity even greater and will become so much more complex in the future is the influx of information, right? As a business, so with AI, with AI, you now have, you're now exposed to a higher volume of information that's coming at you. That's available to you that you need to parse and vet in order to make a decision. Complexity. The more data points you have to consider, the more moving parts that are going to impact your decision and your strategy makes that a complex, a VUCA complex situation. Again, in the DIMES strategic framework that we teach, the first element we teach is decision-making, strategic decision-making risk. The D is DIMES, decisions, right? Because we can't change the complexity of the marketplace, but we could change the complexity by which we process the complexity. Right? And one of the things that we teach in our decision, decisioning element, the Dimes, the first D being Dimes, is how to create an organizational-specific decisioning algorithm. What an algorithm does, it simply is a process by which you could streamline a decision-making process. This is invaluable to deal with the complexity of VUCA. Right? And we teach an entire segment on the decision algorithm, how to create one based on the 3 I's. We call it the 4R3I decision algorithm. But you've got to have something like that, some type of framework to deal with complexity. And then the final element of VUCA is ambiguity. Ambiguity has to do with, you know, have you ever asked a question, right? You're in a conversation and you ask the other person a simple question, a simple question that would probably require a one-sentence response. And it's 2 minutes, 3 minutes, 4, 5, 6 minutes. And they still trying to answer that question. And it's like at the end of the response, you'd be like, what the, what, what did you just say? So you have experienced ambiguity. Um, you know, so, so we do some trading on the market, which I'm sure you do too. Um, and you look for certain signals, buying signals or selling signals, depending on where you're trading. And, but sometimes the signals are not clear-cut. And those are the times when you have to look at your data and you have to look at your trends. And even when you do that, you're still not sure, should I buy or should I sell? You know, Nvidia is a stock that I held for a while. Until about maybe a year or so ago when I sold it. I don't remember the reason why I sold it, but I think I had a pretty good reason. But if you've been watching the market here lately, and for time reference, in case you're looking at this on a recording, today is February 26th, 2024. If you've been watching the market here in the last few days, starting what, mid last week? Nvidia is on a tear, right? And you look at the last year's results on Nvidia, it's up what, 200% or more? And I'm like, wow. I made a selling decision about a year ago, right around the time when Nvidia took off because the data I was looking at To me at that time was ambiguous. I wasn't sure, should I hold? Should I sell? And obviously I made the wrong choice. No, I bought something else that did pretty well. So net-net, I'm not totally at a loss, but it would've been nice to get some of that Nvidia profit over the last 12 months. Again, decision-making. Strategy implementation is very VUCA, right? So from this section here, the takeaway has got to be, as a business owner, business leader trying to achieve strategic vision for you and your business, you're going to run into a very, very VUCA environment. And without, without a strategic framework like DINES to help you navigate the landmines and the quagmire of VUCA, and I hate to say this, but you're dead in the water. You're up a paddle without a creek. Well, that'd be interesting. That'd be interesting to be up a paddle without a creek. What I meant to say was you'll be up a creek without a paddle, strategically speaking. All right. So let's, let's go into the next section. All right. So now that we've talked about ROVs, you know, impact, return, return on vision based on impact, return on vision based on image, return on vision based on income, both quantitatively and qualitatively. We've talked about VUCA. VUCA stands in the way of your ROVs, and Dimes helps you to navigate VUCA so you can in fact achieve high ROVs in impact, image, and income, right?