BusinessDay 13 April 2018

BUSINESS DAY
Insight
NEWS YOU CAN TRUST I FRIDAY 13 APRIL 2018
C002D5556
Operating in a VUCA Environment
I
have been asked to say a few
words about the challenges
and opportunities of operating
in a volatile, uncertain, complex
and ambiguous (VUCA)
environment. I think the first thing
when you are managing a business
in a VUCA environment is that you
have to face the reality that VUCA is
not just a conceptual expression, it is
real, by which I mean, the volatility
of which you speak manifests itself
every day, every week, every month.
Volatility by definition means you
cannot be certain what will happen
today, tomorrow, or the day after.
The first thing I do in managing
in such an environment is that I aim
to build an organisation equipped
to interpret the risks surrounding it.
Always scanning the horizon, facing
reality, asking yourself: ‘what are our
current risks?’ Ask yourself – ‘were
these risks to surface, is our business
ready to deal with them?’ I find that, a
lot of time, people talk about working
in a volatile environment, but with
the first sign of volatility, the business
cracks. We talk about it, but do not
plan for it. If you do not prepare for tomorrow,
tomorrow overwhelms you.
Face the reality of the environment
The first thing is to face the reality
of the environment and deal with it.
When you face the reality, you will
build more resilient models. Models
that can cope with shocks and enable
us to thrive in highly volatile
circumstances. Take the volatility of
our telco networks as an example:
some people do not understand the
tendency of others to carry more than
one phone. I believe this is their individual
response to the fragility of the
networks and their frustration at the
companies. They know there will be
places where one network doesn’t
work, so they carry another back-up
network to make a phone-call if one
fails them.
If you apply the same thinking
to business, you should always in a
volatile environment, think about
back-up plans and what changes
you can make in the short term.
For example, having multiple vendors
for a particular service, which
means that when shocks surface,
you are better prepared. You can
move from supplier A to supplier
B or both can give you half your
requirement.
Therefore, the economic cycle
and the evaluation criteria of what
is right in business in volatile environments
must now be viewed
through a long-term lens. Planning
cycles are shorter and you plan during
these shorter cycles, because
every month, every quarter, things
change. Review, change, review.
But evaluation of economic benefits
must be done with a longer-term
horizon in mind. In tangible terms,
that means you may carry high inventory
levels and in the short term,
that comes with huge constraints on
working capital, interest payments
and so on. If you look at it in the medium
to long term, you realise that
by having more reserved for times
of adversity, volatility will reduce.
For example – if ports go down or a
road route is clogged, your delivery
trucks won’t get through, but you
however will be better prepared
with inventory and your revenues
will therefore grow faster. You may
even gain market share and brand
loyalty because of your ability to
serve consumers and shoppers
at a time your competitors could
not. On a medium-term cycle,
therefore, it becomes a benefit not
a hindrance.
Immerse in your Environment
In any environment, be it volatile
or not, there is a cultural conversation
within which brands
must express themselves. In times
of adversity, people develop a certain
sense of humour about things
such as poor infrastructure and
implication on services, so brands
seeking to serve people purposefully
must immerse themselves in
that environment and speak their
language. It is not for nothing that
people wake up in markets like
Nigeria and Ghana and talk about
‘E go better’ or if you go to the
Caribbean, they say ‘better a go
come’ (these expressions mean;
things will get better). A sense of
hopelessness is counteracted with
a sense of humour.
Brands should not ignore the
tendency for people to try and
soothe themselves. They must
embrace and understand it in the
context of the unpredictable times
in which we live, the news culture of
their people and the role their brand
can play in the day-to-day conversation
in communities. Whether
things are good or bad, brands have
a responsibility – because they are
part of the fabric of life.
Flexibility
When it comes to your business
model – and I have touched on this
already – but in summary: it must
have flexibility and resilience combined
with the ability to adapt rapidly
to new and changing circumstances
which is critical for survival during
volatile periods. It is true always, but
particularly in the VUCA world, because
of the tendency of people to say
that the environment is so difficult,
that excellence at world-class levels
is impossible. Business leaders must
be curious and go out of their way to
seek best practice wherever they can
find it. Through this quest they will be
able to demolish the pervading tendencies
of people to think we cannot
aspire to world-class in this environment.
I can tell people about what
happens in Singapore, Germany or
Scandinavia, and they hear me, but
many are cynical about their ability
to bring it to market in a country like
Nigeria. If however, I find examples
of the same high quality as those
markets, here in Nigeria – someone
deploying it in a manner from which
we can observe and learn – it tends
we face and see it as an opportunity
to grow. Existing recruitment criteria
can sometimes favour extremely
cerebral people who, at the first sign
of trouble, find a reason why they will
not be able to deliver. It is therefore
no surprise when global organisations
using such criteria then struggle
to sustain results in extremely volatile
environments.
Reduce Hierarchy
I believe that particularly in our
current environment, we must empower
the frontline. For example, our
sales person in Maiduguri should be
able to wake up, understand the local
dynamics of the company inside
and out, and have the knowledge,
confidence and support to succeed
there. My task as a leader of
this organisation must be to build a
system: a management information
system. I want to build a culture of
empowerment that strips away layers
of hierarchy, so that when that
guy speaks to the organisation, his
voice is taken seriously, he knows he
has my backing, the backing of the
leadership team and will therefore
feedback what he observes. I call it
‘the inverted pyramid’, particularly
in volatile times, you do not have
the time and luxury to ask for information
to reach you through layer
after layer. You have to put in place
mechanisms and you have to disrupt
the system, otherwise the layers of
the ordinary pyramid will resist you.
When you cross layers and go right
to the frontline, there will be many
who feel that they’ve been left out of
the process, but you must persevere
as a leader and create that culture so
the organisation is speaking to itself
My task as a leader of this organisation
must be to build a system: a management
information system. I want to build a culture
of empowerment that strips away layers of
hierarchy, so that when that guy speaks to
the organisation, his voice is taken seriously,
he knows he has my backing, the backing
of the leadership team and will therefore
feedback what he observes
to have a much more motivating
influence on people and their ability
to let barriers drop and aspire to
it themselves.
So, it is critical, particularly in
volatile markets, to be on the continual
look-out for people doing things
better than you, and benchmarking
as a culture in every part of your
business: always looking for areas
to improve and putting in place appropriate
plans, delivered with speed
and agility.
Team Selection
The talent base of the organisation
is vital to survive and thrive as a
business under usual circumstances.
It is even more acutely important
during volatile times. I always suggest
that you have to find people, who,
when they wake up in the morning,
are not overwhelmed by volatility but
instead appreciate that it’s the reality
about what it learns in real time and
acting on it, so every employee realises
how you can march faster toward
your goal and is willing to express it.
Segment Markets
There is nothing like a one-Nigerian
market or one market anywhere,
and so you will come up with
your own segment descriptors, but
you must be close enough to the
markets to understand different
characteristics, so you can meaningfully
segment. Then, with the correct
segmentation, cater for those markets
and serve them in a meaningful way
for which they will reward you.
Organisation
In all organisations, particularly
during a volatile era, where there are
many external distractions, leaders
must focus the organisation on key
objectives. In particular, try establishing
a growth mindset, because it’s a
growth mindset that enables people
to overcome obstacles, see opportunities
and keep the organisation
resolutely focused on its objectives
and goals. Clarity on what we are all
trying to achieve, especially in turbulent
circumstances, is critical.
Ecosystem Consideration
What I mean by this is that no
business is standalone. You have
suppliers, customers, employees,
shareholders. So, the leadership
must be constantly considering how
to create value for all. We call it a
‘multi-stakeholder approach’. If you
create value for all stakeholders in
your ecosystem, you are much more
likely to win.
The multi-stakeholder approach,
particularly in volatile markets, is
crucial. Map them out: who are they?
Are you giving back to the community
in meaningful ways that advance the
business? Is your supplier and customer
base strong? Do your financial
partners understand exactly what
success looks like, and are you are
working with them to achieve this?
If you get all that, correct, the fallout
is positive: your business and ecosystem
is strengthened. Your ability
to win in the market place improves.
Your ecosystem becomes so strong
that your business has end-to-end
resilience and is able to withstand
sudden shocks.
Cultivate a Culture of Humility
My final point and I believe this is
true of all business, but particularly
in a volatile environment, is that a
culture of humility and curiosity
must be established. Why humility?
Because you must be willing to learn
from anywhere and anyone. Organisation
must put learning at its heart:
willing to learn from competitors,
(bigger or smaller), other players
(not necessarily in its industry space),
anybody doing anything better. We
must be willing to learn continuously,
together.
If you can do that, then you are
much more likely to succeed sustainably.
So, to summarise:
•Read reality, face it, plan for it,
map risk and build a resilience model.
•Benchmark religiously.
•Select a team that can cope in the
environment we describe as volatile.
•Reduce hierarchy, so the frontline
is able to speak - and the entire organisation
takes it seriously.
•Take the ecosystem into consideration
all the time and do things to
succeed long-term.
•And the last point, be humble.
Learn! Learn! Learn!
YAW NSARKOH
Yaw Nsarkoh in Executive Vice President,
Unilever Ghana and Nigeria.
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