Professional Documents
Culture Documents
Uncertainty
Returns on common
investments in mature,
stable markets
Potential regulatory,
legislative or judicial
changes
Unpredictable
competitor moves
New technology
performance and
adoption rates
All-or-nothing industry
standards competition
Unstable macroeconomic
conditions
Courtney, 2003
V
U
C
A
Volatility :
Rate of change
Uncertainty :
Unclear about the present situation and future outcomes. The
inability to know everything, the lack of predictability and
likelihood of surprise events.
Complexity :
Multiplicity of Key Decision Factors. Multiplex of forces, the chaos
and confusion that surround an organization or environment.
Ambiguity :
Lack of clarity about the meaning of an event. Differences in
interpretation when contextual clues are insufficient to clarify
meaning.
More than half of the most turbulent quarters over the past 30 years have occurred during the past decade
Volatility in revenue growth, in revenue ranking and in operating margins have all more than doubled since
the 1960s
therefore exposure to stock-market volatility. We then looked at what these meant for specific
industries (see figure 2).
Figure 2
Economic turbulence affects industries differently
EBIT %
35
30
2001
2011
25
20
15
10
Aerospace
FMCG*
Automotive
Process and
chemicals
Pharma
Professional
services
The impact of turbulence differs by industry. For instance, agribusinesses are subject to the
full range of turbulence variables, automakers are sensitive to particular variables such as the
(Sustainable)
Competitive Advantage
Transient Advantage
ople on the
ng powerful
dvantage is
ting advanin becomes
s what hapd a host of
ible trouble,
RETURNS
LAUNCH
RAMP UP
EXPLOIT
McGarth, 2013
RECONFIGURE
DISENGAGE
Nature
People
Lesson Learned
Companies shore up an existing advantage for as long as possible,
until the pain becomes so obvious that there is no choice.
TRAPS
7
1.
2.
3.
4.
5.
6.
7.
Distinctive knowledge
surpassing that of
competitors
Invest in initiatives
possessed by company
or easily acquired
Risk
Knowledge surpassed
by competitors
Attempt small to
midsize investments
to gain familiarity
Probability of success
difficult to estimate
Attempt small
investments to gain
familiarity
Familiar
Unfamiliar
Uncertain
Initiatives
Size indicates potential market capitalization at stake
Adapt core
capabilities
Build new
businesses
Shape corporate
business portfolio
Initiatives
contribute to
current earnings
Initiatives
mature in
23 years
Initiatives
mature in
3+ years
Timing
Experiment,iterate,learn
Planning new ventures with the same approaches
they use for more established businesses.
They need to focus on experimentation, iteration
and learning
Uncertainty demands a more flexible approach to situation analysis. The old one-sizefits-all approach is simply inadequate. Over
time, companies in most industries will face
strategy problems that have varying levels of
residual uncertainty, and it is vitally important
that the strategic analysis be tailored to the
level of uncertainty.
page 8
Scenario
Value
1.
2.
3.
4.
No-regrets
movesmoves
No-regrets
Strategic decisions that have
positive
payoffs
in any that
scenario
Strategic
decisions
have
Options
Options
Decisions that yield a significant
positive
payoff
some
outcomes
Decisions
thatinyield
a significant
and a (small) negative effect in others
Big bets
Big bets
Focused strategies with positive
payoffs
one or more
Focusedin strategies
withscenarios
positive
but a negative effect in others
5. Bio-empathy
Ability to see things from natures point of view; to understand, respect,
and learn from its patterns. Nature has its own clarity, if only we humans
can understand and engage with it.
Johansen, 2012
6. Constructive Depolarizing
Ability to calm tense situations where differences dominate and
communication has broken down and bring people from divergent
cultures toward positive engagement.
7. Quiet Transparency
Ability to be open and authentic about what matterswithout being
overly self-promoting. If you advertise yourself, you will become a big
target.
8. Rapid Prototyping
Ability to create quick early versions of innovations with the expectation
that later success will require early failures. Leaders will need to learn
from early setbacks and learn to fail in interesting ways.
9. Smart-mob Organizing
Ability to create, engage with, and nurture purposeful business or social
change networks through intelligent use of electronic and other media.
10. Commons Creating
Ability to seed, nurture, and grow shared assets that can benefit
all playersand allow competition at a higher level. This is the most
important future leadership skill and it grows from all the others.
Johansen, 2012
Focused on extending
existing advantages
Budgets, people, and other resources are largely
controlled by heads of established businesses
We tend to extend our established advantages
if we can
McGarth, 2013
Deddi Tedjakumara
Prasetiya Mulya Executive Learning Institute
dedditedja@me.com
deddi@pmbs.ac.id