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Management of VUCA (Tools and Framework (Adapting (Resilience (4…

- - - - What?
        
        Capability to recover quickly from difficulties
      - Zero Trauma
        
        A strategy that is forever morphing to meet emerging opportunities
        
        A organisation that is constantly making its future than defending the past
        
        Turnaround is something that is hard to bounce back
      - 4 Challenges
        
        Strategic
        
        Difficulties in creating options to dying strategies
        
        Political
        
        Fail to divert resources from yesterday's products to tmr's.
        
        Cognitive
        
        Unwilling to consider how changes affect current business
        
        Ideological
        
        Fail to question doctrine when current model is becoming irrelevant
      - 4 Strategies
        
        Valuing Variety
        
        Liberating Resources
        
        Conquering Denial
        
        Embracing Paradox
    - - What?
        
        Agility
        
        Ability to consistently identify biz opportunities more quickly than rivals
        
        Require high adaptability and ability to read and act on signals quickly
        
        Absorption
        
        Ability to withstand hard times till golden opportunities and to outlast rivals
        
        Allow firm to secure an early lead and reinforce its position
      - How to build?
        
        Agility
        
        Portfolio Agility
        
        Shift resources out of less-promising business & INTO more attractive ones
        
        Need disciplined processes when evaluating individual units and allocating key resources
        
        Diversify biz units ( need to value add )
        
        Cultivate versatile managers to move across units
        
        Strategic Agility
        
        Identify and Seize game changing opportunities
        
        Usually on big bets
        
        Scaling new biz
        
        Aggressive new market entrants
        
        New tech
        
        Those that avoid big bets risk falling behind more aggressive competitors
        
        rely on small bets as well
        
        Operational Agility
        
        Seize opportunities to improve operations and processes
        
        Quality Improvements
        
        Refinement to distribution processes
        
        Cost reduction
        
        Speed and execution is important
        
        Absorption
        
        External
        
        Customer Lock-In
        
        Buy-Time
        
        Protected Core Market
        
        Provide stream of cash
        
        Powerful Patron
        
        Provide extra resources during change
        
        Resources
        
        Intangible
        
        Insulate against short and mid term market shifts
        
        Excess Staff
        
        To shed during hard times
        
        Tangible
        
        Generate profits in future
        
        Vast Size
        
        Downsizing during hard times
        
        Money
        
        Large war chest of cash
        
        For unexpected opportunities or threats
        
        Diversified Stream of Cash Flow
        
        Diverse units will be a store of potential wealth
        
        Weather downturns in specific units
        
        Low Fixed Costs
        
        Weather against change
      - Balance
        
        What?
        
        Agility and Absorption are complements with the right balance
        
        Shift the balance according to circumstances (when need more absorption or agility)
        
        How?
        
        Actively manage trade-offs
        
        Complexity kills agility
        
        Must know which are the complex ones (understand characteristics of complexity)
        
        Break large firm into multiple and independent P&L units
        
        Increase transparency and accountability for performance
        
        Foster sense of ownership
        
        Move quickly
        
        Probe into different markets
        
        See new opportunities before rivals
        
        Ideal: Combine 3 types of agility with high level of absorption (HIGH COST)
        
        Maintain a culture of agility
        
        Strict focus on values (values that are critical to agility)
        
        EXAMPLE: Google gets bigger yet still work in small groups to promote entrepreneurship (nurturing agility)
        
        How agility erodes
        
        Startup > Super agile but not absorptive
        
        Overtime > Absorption stabilize while agility decrease
        
        Absorptive strength can erode culture of agility (when one is highly absorptive, bcos they can withstand alot of hard times it leads to Complacency)
        
        More good fats, Fewer bad fats
        
        Recognise that different sources of absorption have different impact on agility
        
        Good fat = Low fixed costs : Allow firm to weather threats and does not hinder ability to seize opportunity
        
        Bad fat = Excess stuff : create unnecessary layer of complexity, which reduces agility
  - - - What?
        
        Paying a small price now to cover unexpected price movement
      - 4 Steps to Establish Portfolio of Options
        
        Establish processes
        
        Build
        
        Optimize portfolio
        
        Uncover hidden constraints
        
        Expand knowledge of new market segments and customer
        
        Expand new capability
        
        Combine planning and opportunism
    - - Why need?
        
        Avoid errors of under/over prediction
        
        Planning tool for the long run
        
        Divide knowledge into three areas
        
        Elements we consider uncertain or unknowable
        
        Things we don't know we don't know
        
        Things we believe we know
      - What?
        
        A disciplined method to image possible futures to a range of issues
        
        To prepare for different potential scenarios
        
        Consider multiple scenarios of different themes
      - When to use?
        
        Uncertainty is high
        
        Costly surprised have occurred in the past
        
        Firm does not generate new opportunities
      - 5 stages
        
        Scenarios & Narrative Creation
        
        Check for consistency and plausibility
        
        Develop Learning Scenarios
        
        Construct Initial Scenario themes
        
        Options Consideration
        
        Identify research needs
        
        Develop quantitative models
        
        Exploration
        
        Identify Basic Trends
        
        Key uncertainties
        
        Integration of Scenarios into current management process
        
        Evolve towards decision scenarios
        
        Orientation
        
        Define Scope
        
        Identify major stakeholders
      - Practical use
  - - - What?
        
        Holding two opposing ideas and generate a new idea that contains the element of both yet superior to both of the two ideas
        
        A process of considerations and synthesis
      - 4 Steps
        
        Analyze causality
        
        Question validity
        
        Consider multi-directional and non-linear relationships
        
        Envision Design Architecture
        
        See problem as a whole
        
        Examine how the different parts can fit together
        
        How one decision affect the other
        
        Determine Salience
        
        Seek less obvious but relevant factors
        
        Embrace the complexity of numerous salient factors
        
        Achieve Resolution
        
        Not accepting unpleasant trade-offs
        
        Holistic Thinking
        
        Innovative Outcome
    - - What?
        
        Predict which action lead to what and why
      - Process
        
        Pinpointing Causations
        
        Moving Towards Predictability
        
        Importance of Failures
      - Where does it come from?
        
        Observation of phenomenon > Categorization > Formation of theory
        
        Theory: A statement of what cause what and why
      - Limitations
      - Problem
      - Why care?
        
        Intrepret present
        
        Make predictions
        
        Central Role in Managerial Decision-making
        
        Reduce learning curve for managers
  - - - Key Assumptions
        
        Environment is rapidly and unpredictably changing
      - Where do you want to go?
        
        Semi-Coherent Strategic Direction
        
        Inefficient
        
        Proactive
        
        Uncontrolled
        
        Continuous
        
        Unpredictable
        
        Variety
      - How do you get there?
        
        Time Pacing
        
        Edge of Time
        
        Edge of Chaos
        
        Be partially structured
        
        Between stability and failing apart
        
        Captures the complicated, uncontrolled, unpredictable yet adaptive behaviour
      - 10 Rules
        
        Organisation
        
        Stretch out past
        
        Integrate past experiences
        
        Use past to start new opportunities
        
        Reach into future
        
        Create strategic alliances
        
        Employ futurists
        
        Launch more experimental products
        
        Believe that future is unpredictable
        
        Live in present
        
        Maximise minimum structure by being adaptive
        
        Time pace change
        
        Find the right rhythm that is aligned to marketplace and demand
        
        Leadership
        
        Grow Strategy
        
        Dismantle mega structures
        
        Develop strategy step by step not all at once
        
        Start from what firm is currently doing
        
        Set priorities, responsibilities and operating measures
        
        Revamp where necessary (such as over/under structure)
        
        Drive strategy from biz level
        
        Strategy cannot be top-down
        
        Re-patch biz to market
        
        Re-align biz with emerging opportunities and shaping emergent strategy
        
        Strategy
        
        Reinvention is the goal
        
        Find new ways to create value and profit will come
        
        Strategy must be complicated
        
        Semi-coherent direction
        
        Strategic options AKA flexible plans
        
        variety of moves and follow thru the successful ones
        
        Advantage is Temporary
        
        Competitive advantage is lasting for a very short time
        
        Change as opportunity and not threat
        
        Focus on new sources of competitive advantage
  - - - What?
        
        Organizational Learning
        
        Reflect
        
        Sharing Findings
        
        Collect Info
        
        Implement and Improve org.
        
        Single Looped
        
        Attempt at same problem with no variation in method
        
        Levels of Learnings
        
        Group
        
        Organizational
        
        Individual
        
        Inter-organizational
        
        Double Looped
        
        Able to modify goal or reject goal depending on experience
        
        Hindrance to double looped learning:
        
        Challenging status quo
        
        Power and social dynmaics
        
        Little time to think about big issues
      - 3 Stages
        
        Knowledge Sharing
        
        Knowledge Ultilisation
        
        Knowledge Acquisition
      - 7 LO
        
        Dissemination Mode
        
        Formal
        
        Informal
        
        Learning Focus
        
        Incremental
        
        Single Loop
        
        Transformative
        
        Double Loop
        
        Documentation Mode
        
        Private
        
        Public
        
        Value-Chain
        
        Delivery
        
        Design
        
        Product-Process
        
        What
        
        How
        
        Skills Development Focus
        
        Individual
        
        Group
        
        Knowledge Source
        
        Internal
        
        External
      - 10 FF
        
        What?
        
        They are structure and processes that affect how easy/hard AND effective learning will be
        
        Characteristics
        
        Involved Leadership
        
        System Perspective
        
        Experimental Mindset
        
        Action
        
        Climate of Openness
        
        Continuous Education
        
        Scanning Imperatives
        
        Multiple Advocates
        
        Operational Variety
        
        Problems
        
        Performance Gaps
        
        Concern for Measurement
      - Strategies to improve org learning capabilities
        
        Right mix of LO
        
        Improve FF
        
        Change both LO and FF to suit business climate
    - - 3 stages
      - What?
        
        Types
        
        Limitations
      - 10 Requirement to capitalise on it
        
        Analytics on an Industrial Scale
        
        Management
        
        Cross-Disciplinary Teams
        
        Chief Analytics Officer
        
        New Ways of Deciding and Managing
        
        Technology
        
        Embedding Analytics
        
        Faster Methods of Analysis
        
        Prescriptive Analytics
        
        Data
        
        Combing Multiple Types of Data
        
        New Data Management
        
        Data Discovery
- - - - Reinvent Business Model
      - Stick to new customers
        
        Align business models and product design with needs of new market
      - Identify new market and customers
    - - Disruptive
        
        New market
        
        Low price and lower quality offerings
        
        Eventually take over market
        
        Improve until everyone would switch over
      - Sustaining
        
        Incremental Improvements
    - - Importance
      - Firm's Capabilities
      - Creating Capabilities
  - - - Stakeholders
      - Demographical
      - Horizontal
      - Geographical
      - Vertical
    - - End Goal
        
        Nexus Effect
      - Initial State
        
        Great Divide
      - Boundary Spanning Leadership Model
        
        Forging Common Ground
        
        Connecting
        
        Build trust
        
        Mobilising
        
        Create a community
        
        Discovering new frontiers
        
        Weaving
        
        Intergroup interdependence
        
        Transforming
        
        Integration of all 5 to reinvent groups
        
        Managing Boundaries
        
        Reflecting
        
        See both side of boundary
        
        Buffering
        
        Protect groups
    - - Acquiring Capabilities
        
        Legal Constraints
        
        Strategic Flexibility and Uncertainty
        
        Reduce Value of Capabilities
        
        Unwanted baggage
        
        Leveraging Acquired Capabilities
      - Creating Capabilities
        
        Social Complexity
        
        Path Dependence
        
        Causal Ambiguity
        
        Historical
    - - Transaction Cost Analysis
      - Organizational Capabilities Considerations
        
        Co-operate with firms that already possess the capability
        
        Market
        
        Intermediate
        
        Develop own capabilities
        
        Hierarchical
        
        Acquire another firm with the capability
        
        Hierarchical
    - - Intermediate Governance
        
        Complex Contracts
        
        Replace independent arm's length market
      - Hierarchical Governance
        
        Exchanges within firm's boundaries
        
        In-house
        
        3rd party make the decisions
        
        more integrated
      - Market Governance
        
        Less-integrated
        
        Arm-length market transaction
        
        Rely on market-determined prices
        
        Used when it is not prone to opportunism / during low-levels of transaction
      - cost
        
        the more elaborate, the more costly
        
        Minimise cost = market governance
  - - - What?
        
        Scheduling change at predictable intervals
        
        Rhythmic and Proactive
      - How?
        
        Create a sense of urgency
        
        Focus on common goals
      - Managing Rhythm
      - Managing Transitions
      - Event-Pacing
    - - Importance
        
        Competitive advantage are not reliant on first order capabilities
        
        Advantage are on second order capabilities which is the ability to do new things
        
        Traditional Approaches are failing
      - Capabilities Requirement
        
        Ability to experiment
        
        Ability to manage in complex multi-company systems
        
        Ability to read and act on signals
        
        Acquire right information
        
        Use data analytics to recognize relevant patterns
        
        Quickly act to reinvent business model
        
        Ability to mobilize
        
        Empower employees
        
        Downside: High cost and loss of accountability
      - Challenges
        
        For big firms
        
        They have hierarchy and fixed routines
        
        They are rigid and lack diversity
        
        Firms are focused on managing scale and efficiency
        
        Steps to deal with challenges
        
        Address every significant risk
        
        Examine multiple alternatives
        
        Identify and address uncertainties
        
        Increase clock speed
        
        Accelerate change by making annual processes lighter
        
        Look at the mavericks
        
        How to deal with it?
        
        Look at mavericks from own or other industries
        
        Identify uncertainties
        
        Assumptions
        
        Megatrends
        
        Hedging Bets
        
        Put initiative on every risk
        
        Examine multiple alternatives
        
        Varied and powerful set of movements
        
        Plan in shorter intervals
        
        Accelerate change
- - - - What?
        
        Characteristics
        
        Cannot know everything
        
        Lack knowledge
        
        Unpredictable
        
        basic cause and effect are known
        
        change is possible but not a given
        
        forecasting and decision making is hard
        
        4 levels of uncertainty
        
        Alternate Future
        
        Decision Analysis, Option Valuation Models, Game Theory
        
        calculate probability
        
        Best strat. depends on (1) which one occur (2) competitors
        
        Range of Future
        
        Scenario Planning , Technology Forecasting and latent-demand research
        
        Clear enough future
        
        Traditional Strategy
        
        True ambiguity
        
        No basis to forecast future
        
        Will change to other levels (3,2,1) over time
        
        By studying other markets and as much as possible
        
        Analogies and Pattern Recognition
        
        Posture
        
        Adapt to the future
        
        Reserve the right to play
        
        Shape the future
        
        Moves
        
        Options
        
        Big bets
        
        No-regrets moves
      - Solutions
    - - What?
        
        Types
        
        Inherent
        
        Designed
        
        Imposed
        
        Unnecessary
        
        Properties
        
        Diversity
        
        Different elements > Greater complexity
        
        Interdependence
        
        Greater connections > Greater complexity
        
        Multiplicity
        
        More elements > Greater Complexity
        
        Complex vs Complicated
        
        Complex: Unpredictable and constantly changing
        
        Complicated: Many parts but predictable
        
        Characteristics
        
        Institutional
        
        No. of countries
        
        Individual
        
        Confusing roles
        
        Internconnected
        
        Non-linear interactions
      - Solutions
      - Examples
        
        A firm doing biz in many countries
      - Drivers
        
        Digitalization, Global Competition, Connectivity, Trade liberalization and Institutional Change
    - - What?
        
        Known cause, unknown duration
        
        Unexpected changes caused by shocks and triggers
      - Solution
        
        Devote resources
        
        By stock piling inventory
        
        Benchstrength
        
        Having enough manpower and using when necessary
        
        Build agility
        
        So can be quick to react to changes
        
        Build in slack
        
        Decoupling
        
        Redundancy
    - - What?
        
        Charazcteristics
      - Solutions
        
        Experimentation
        
        Organizational Agility
        
        Systems Thinking
      - Drivers
        
        All volatility, uncertainty, complexity lead to high ambiguity
      - Examples
        
        A firm moves into immature/emerging markets to launch products outside of its core competencies
  - - - A surprising event that makes prediction harder
      - Major Impact that is large scaled and highly unexpected