Strategy In An Uncertain World
In a world that is characterised by volatility, uncertainty, complexity and ambiguity (VUCA), we can question whether the idea of strategy as we have known it for long is still valid. After all, under such challenging conditions, it is far from obvious that long-term plans, objectives and systematic analysis still serve their purpose. And if not, the more pertinent question is: What should strategy should look then in order to be useful under such conditions?
After having explored the paradoxical demands put on strategy by the first element of VUCA (volatility) in my previous article, in this article I examine what its second element means for your strategy making: uncertainty.
Uncertainty refers to the extent to which we can confidently predict the future. Part of uncertainty is perceived and associated with our inability to understand what is going on. We often feel uncertain when things are out of our control or too hard to grasp. This is the subjective part of uncertainty.
Uncertainty, though, is also a more objective characteristic of an environment. Truly uncertain environments are those that don’t allow any prediction, also not on a statistical basis. Such uncertainty is the result of unexpected events, unpredictable human reactions and the vast complexity of our world that makes it impossible to reliably predict the effects of something happening. In short, the more uncertain the world is, the harder it is to predict. This can be summarised with the following picture: