LT Synergy

International Alliances:

COVID-19, VUCA and a more digital world

One of the first introductions to the acronym VUCA (Volatility, Uncertainty, Complexity and Ambiguity) was made in the 1998 paper of the US Army War College, “Training and Educating Army Officers for the 21st Century: Implications for the United States Military Academy”, intended to prepare officers for the paradigm shift of the information age.

Despite the subsequent adoption and frequent use of the term by management experts and leading journals, to depict the disruption anticipated to be brought by increased competition, technological change, economic crises and natural disasters, nobody could prepare the world for the Volatility, Uncertainty, Complexity and Ambiguity a virus would bring!

Following the classification of COVID-19 as a pandemic, and attempting to contain its spread and safeguard public health, governments around the world imposed quarantines, lockdowns and other restrictions, which brought businesses, industries and economies to a halt. Even countries like the United Kingdom or the United States that selected a different approach, the so called “herd immunity” and kept their economies open, were affected by problems in the supply chain and the global economic slowdown.

Pleasantly enough, these unprecedented measures did contain the spread of the virus but also led to an expected global economic paralysis threatening economic growth and stability, with the International Monetary Fund forecasting a 3% contraction of the global economy for 2020, and its worst recession since the Great Depression.

While admittedly no “traditional” business continuity plan could prepare the world for such an event, with the global economies getting back to normal, organizations must switch from sedentary to business-as–usual mode, prepare for the recovery and seize the opportunity to transform how they operate and become resilient to future shocks.

  • The digital transformation challenge

The coronavirus has enabled companies to appreciate the benefits of digital transformation. After all, the digital pathway, is what kept companies running, to the extent possible, and maintain their operations and engage customers. As the viral online meme goes, COVID-19 is driving the digital transformation of companies, not their CEOs or Chief Digital Officers.

At the same time, companies should not forget that digital transformation does not simply involve using online collaboration tools or providing employees the option to work remotely. Digital transformation should be a whole journey leading companies to rethink and optimize their strategy, business model, operations, systems and culture.

While performance gains and cost reductions should be on top of the agenda, how companies interact and add value to their customers should be the starting point and driver of digital transformation projects. At the conclusion of the project, the company’s “new” digital operating model and identity, must be embraced by employees, customers and other stakeholders.

Like all projects, digital transformation projects should have a clear roadmap, specific goals and objectives, a leader, and a quality and risk management plan. It is also important to remember the two rules of Microsoft’s founder Bill Gates, “# 1: automation applied to an efficient operation will magnify the efficiency” and “# 2: automation applied to an inefficient operation will magnify the inefficiency”.

Corporate governance should not be overseen as its absence may wreak havoc before and after the implementation of digital transformation projects. Accountability, transparency, clarity of roles and responsibilities, as well as data and information ownership and use, must be integral parts of the effort.

  • Digital transformation for all

SMEs are crucial to the economy and must be part of the digital transition. The “Digital for SMEs Global Initiative” launched by the OECD in November 2019, identifies that many SMEs are lagging behind the digital transition citing a combination of reasons, ranging from ignoring the benefits, to not being able to identify their needs and the lack of capabilities and resources.

On the other hand, despite its tragic consequences, the pandemic has provided companies with the opportunity to rethink and reorganize, most probably not in a structured manner, how they design their products and services and how they add value to their customers and economies.

Companies should now build on this experience and initiate or expedite their digital transformation projects, overcome their challenges and seize the benefits of the digital world, which will be our new normal. As noted in the “Training and Educating Army Officers for the 21st Century: Implications for the United States Military Academy” report,  “In situations that are characterized by volatile, uncertain, complex, and ambiguous (VUCA) conditions, it becomes necessary to structure organizations in such a way that will meet the challenges presented by the environment”.

Developing digital competences and capabilities is not a panacea but it will allow organizations to develop the reflexes that will enable them to quickly adapt and respond to competitive and market pressures, prepare for the unexpected and in the corporate governance lingo, be better directed and controlled.

Find out more

Contact us to find out more about how we can support you become efficient and effective through the establishment of proper and actionable corporate governance practices.

LT Synergy Ltd
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