I know what you're thinking...who the hell is this guy telling us the great Roger Martin is wrong!? And you would be right. But consider the following before you dismiss me out of hand.
In another excellent HBR blog post concerning the shortcomings of Adaptive Strategy, Roger makes the statement that, "There is really no actual evidence that ours is a more VUCA world than previous ones." You'll no doubt recall that VUCA is a favourite buzzword/acronym being used these days describing an operating environment for business that is Volatile, Uncertain, Complex and Ambiguous.
For the record, I'm a big fan of Roger's, and I love his recent addition to strategy literature (along with A.G. Lafley) entitled, Playing to Win: How Strategy Really Works. And I don't disagree with the main assertion of his post that Adaptive Planning is a cop-out. But evidence is something we take seriously here. And in this case, I think there is decent evidence that we do live and work in a more VUCA world than previous ones.
While I believe there are several ways to go about proving this, I’m going to stick to a few areas we know a little something about rather than straying too far into more abstract economic factors like the power of multinational corporations, the near-frictionless movement of capital, the ability of emerging economies to leapfrog others with newer technologies, or the severity of economic impacts due to global warming.
We’ll focus instead on factors that have changed forever in our work lives, or are at historical levels, which represent never-before-seen conditions. We will not tackle the “why” of each of these conditions in this post. That’s a serial-post venture.
Work Has Changed
Our economies are driven more now by information work than by physical work. This has a number of downstream effects on both macro or business environment-level conditions as well as internal organizational dynamics. Again, we won’t discuss these here, but the type of work most of us now do is not the same as in previous eras.
Interaction Costs Are Plummeting
I won't bore you with the history behind Interaction Costs except to say that Ronald Coase received a Nobel Prize for his work in the area. His theories included the idea that a firm will continue to expand until the cost of doing business with external parties is cheaper than it would be having the work done in-house. Explained another way, you won't hire people to do a job as an employee if you can get the service cheaper from a sub-contractor or outside service provider. And when that happens, your firm stops adding people.
So, as the composition of our work becomes driven more by information, and the costs of processing and transacting continue to drop, the pressures on businesses to synchronize their size with the market realities continues to intensify.
People Are Overwhelmed
I think this is something we all feel intuitively. Given the move to information-driven work, the dropping interaction costs and the skyrocketing connectivity of the worldwide population means things are just getting more and more frenetic at work.
Market Leadership is Shorter-lived
Any company executive worth their salary understands the growing science behind market disruption. We’ve seen it repeated time and time again from the largest industries like automobiles to retail store niches.
Each of these factors contributes to decreasing barriers to entry in markets and the ability of competition to emerge from anywhere.
People Being Displaced in Market Disruptions
One factor driving the massive increase in long-term unemployment is the rapid change in employment opportunities now available. The move from Physical to Information work and rapidly shifting market boundaries has left many people on the sidelines with skills that do not match current market opportunities. Whatever the full reasons behind the situation, we’ve never seen long-term unemployment like this.
More VUCA or Not?
If I were to argue against myself I could say that these things indeed are different, but in totality the amount of VUCA is not markedly different than in previous times. Rather, it's just the underlying causes of VUCA are different but the aggregate total amount of VUCA is the same.
Or, are we connecting random bits of data which don’t sum up to a more VUCA world than previous ones?
What do you think? We’d love to hear your view.