Leadership in the VUCA world: the seven principles of the Light Footprint strategy
How can companies hold their ground in the new VUCA-world?
By taking a bearing on the army and on China's private sector writes Charles-Edouard Bouée in his book “Light Footprint Management“, published in 2014. Charles-Edouard Bouée is the president of Roland Berger Strategy Consultants, Asia. He is an economic advisor of the French government in China and a board member of the European Chamber of Commerce in China.
Chinas flourishing private sector is a child of the VUCA-world and developed out of and with it. In his book “China’s Management Revolution: Spirit, Land, Energy” (Palgrave Macmillan, 2010), Bouée describes the characteristics of the basic leadership style used there. Chinese managers attach a certain value on tactics and visions, on philosophic and spiritual topics and differ from Western managers in many other aspects.
In his view, China's private sector and the army are „Early Adapters“ in an unstable, uncertain, complex and ambiguous world. Military experts developed the VUCA-concept at the “War College” of the US Army in Carlisle (Pennsylvania). VUCA is an acronym, that stands for “Volatile”, “Uncertain”, “Complex” and „Ambiguous“. Like that, graduates are prepared for their military career in the VUCA-world.
In the Roland Berger Enterprises Magazine “think:act”, Bouée describes seven key principles that real winners in the VUCA world use in October 2013.
Together this principles form the “Light Footprint” Strategy, in an echo of the US military strategy which Obama has applied as a reaction to the changing warfare in asymmetrical scenarios.
Which characteristics distinguish this “Light Footprint” approach from traditional leadership methods? According to Bouée, “a Light Footprint company is better integrated into its constantly changing surroundings and reats more sensible to them”. Competition means that companies have to adapt constantly to their changing surroundings, they can easily lose their competitive advantage over night.
Trends like digitalisation, changing legal restrictions, Emerging Markets, reconstructing the value creation chain and the need for higher organisational agility are huge changes for the business world. Nowadays, companies constantly have to apply innovations in order to stay ahead of the competition.
The seven principles of the Light Footprint Strategy:
VUCA winners are technophile. They constantly apply innovations and integrate external technological innovations in their business models.
An example for technology-affinity thinking is the networked vehicle– the integration of Internet, E-Mail, iPhone etc. into vehicles with the goal to create an autonomously driving vehicle.
the second principle of the Light Footprint Strategy is the ability to influence new technologies/the cyberspace, especially Web 2.0, the analysis of Big Data and digitalisation. The US Army calls the Internet the fifth battle field after air, land, sea and outer space.
Small, multidisciplinary autonomous teams that only pursue one special goal. These teams are the business equivalent of small well-trained units appointed by the US Army instead of big battalions, e.g. the Navy Seals. For enterprises they are the true “Gemba” – the place where value creation in produced.
In the VUCA world, it is essential for companies to quickly react to changes in their entourage and reorient themselves without hesitation. Therefore, a good balance of centralization and decentralization at the same time is needed.
In today's unbelievably complex world, it is no surpries that the mos successful players are those who create the strongest partnerships – with different companies, clients, public services, research facilities, local partners and others.
Being open does not mean that one should share everything with everybody. VUCA winners are usually quite discrete concerning their topics. Discretion especially concerns innovations in order to protect the surprise moment from the competitors.
7. Minimizing risks
The last principle is the minimization of risks. In a volatile world it is not always possible to predict the consequences one's own actions might have on others. Managers therefore have to integrate risk management into their strategies.
The seven principles of the Light Footprint Strategy can be summarized as follows: investing in the right things – like e.g. organizational construction and information – in the am right place in order to focus one's own energy on the target, and to be sufficiently agile to then go there yourself. In today's VUCA world, companies can quickly be degraded from market leader to loser. Traditional firms that cannot adapt will soon be in crisis. A famous example for this is Kodak, a former market leader, that did not make it to adapt to the digital revolution. Good news is that such a process is not inevitable.
The Roland Berger Study has identified many examples of traditional companies that have become successful Light Footprint Champions:
BMW with its networked vehicles, Target with its ability to evaluate Big Data, Chanel with its perfection of secrecy. Further examples are Netflix, Free, Zara or Nestlé.
Since most VUCA champions were already born in the VUCA world, agility and flexibility is part of their DNA. Traditional companies can become Light Footprint Champions by means of the seven principles.
Because VUCA refers to the whole of modern society and not only to the military and business world, Bouée suggests a change towards Light Footprint for all kids of organisations. In a volatile and insecure world, our growth strongly depends on our ability to react to changes within a few days or even hours. And there is no reason why that should only be available to new players on the field.
Source: Roland Berger Unternehmensmagazin „think:act“, October 2013