We’re approaching the new year at a time of almost unparalleled uncertainty and yet in our business planning process we’re supposed to be certain, to plan effectively.
But, as renowned businessman, educator and author, Stephen Covey said, “If there’s one thing that’s certain in business, it’s uncertainty.”
In these truly VUCA (Volatility, Uncertainty, Complexity and Ambiguity) times, how can we best protect our businesses for the years ahead and navigate these difficult times?
Consider, for a moment, some of the main issues we should be discussing:
- Climate change – the climate is changing. Regardless of what you believe the reasons to be, we are seeing more extreme weather and increasingly unpredictability, impacting everything from agriculture to real estate.
- Conflict – the Russian invasion of Ukraine has driven a sharp increase in energy prices and fertiliser (a major input is natural gas) as well as in the costs of certain basic food stuffs, such as wheat and sunflower oil, that have traditionally been major exports from that region. And then there is the increasing concern about China and Taiwan, and the possible impact of that on the global electronics industry.
- Inflation – a combination of the significant additional expenditure by governments around the world on pandemic-related matters, coupled with the very sharp increase in energy costs is fuelling inflation and the cost of money. In many countries this is reaching levels not seen for some decades. Declines in consumer expenditure across the board are certain, and there are fears of recession looming in many parts of the world.
Add into this mix the issue of government instability, particularly with Western governments; it seems that big changes are afoot, as voters realise the power of the ballot and seek to change the dynamics in so many countries. Europe, in particular, is increasingly unpredictable, while the US is also seeing a growing lack of ability to forecast government outcomes.
No wonder the stock markets around the world are so troubled – investors simply cannot see where businesses are heading.
So, how can a business effectively plan when the future is so very uncertain?
Certainly, having regular (monthly) discussions at board level, evaluating your risk register and updating possible scenarios is extremely important. Given the McKinsey survey which showed only 7% of directors felt their boards were “most effective” at risk management, and 60% not believing they were prepared for the next crisis, adopting a proper risk management framework is clearly a matter of great importance for boards, no matter how big or small. But in such a dynamic environment you just can’t be sure which scenarios are most likely, so this alone will not protect the business.
What business needs more than ever today is the ability to adapt to changing circumstances, and to do so quickly and repeatedly.
And this is where the traditional top-down management style falls down.
However, businesses with a strong culture of accountability, with clear and open communication throughout and people being encouraged to question and to suggest, with an absence of micromanagement so they can get on with their jobs, and with a culture of truly developing the team through skills upgrading and cross-training, are far better placed to succeed, even in the most difficult times.
And the reason is that this culture leads to a business that is flexible and able to adapt quickly to changing circumstances. The whole team is aligned on vision, values and the road ahead. They are not only able, but encouraged, to give input and feedback, to perform their roles in the best possible way. They see themselves as part of a success story – a success story in which they are active participants – and so are far more inclined, and able, to adapt to change, and do so quickly.
So, while risk identification and management is a critical area in these companies, for, like all companies, they need to understand what might happen, the primary driver of success is the culture which facilitates adaptability and flexibility.
As business strategist and author, Max McKeown says, “All failure is a failure to adapt, all success is successful adaptation.”
How well does your business culture encourage adaptability?
I work with high-performance owner-led businesses to enhance their growth, profitability, cash flow and business value.
If you’d like to have a conversation about your business, culture, strategy, or any business challenges or concerns, book a free 30-minute call with me here. I’d be delighted to talk with you.
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