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Manifesting Growth to Overcome VUCA and Disruption
Agus Setiawan

PhD Graduate and result-oriented Director with 25 years experience with involvement in all levels of Business Strategy, Sales and Marketing, Managing Project and Product Development. Aside of managing a company, he is also the best corporate trainer and public speaker in seminar and conference.

Manifesting Growth to Overcome VUCA and Disruption

Disruption is inevitable. Many businesses require to utilize various technology without having enough knowledge of them. This condition forces businesses to adapt to new knowledge and build new behavior to put new knowledge into practice. Disruption is less a single event than a process that plays out over time, sometimes quickly and completely, but other times slowly and incompletely (Wessel, Maxwell & Clayton. 2017). It has been manifested over time and interrupted previous business behavior into extreme movements of change.

Emerging technology and innovation that rapidly disperse create confusion and uncertainty for businesses, specifically to drive their business models. This condition is mostly known as VUCA (Volatility, Uncertainty, Complex, and Ambiguous) world. The concept of a VUCA world was introduced by the U.S military as the Cold War ended and as the United States looked out over the emergence of a diverse, rather than monolithic, global landscape (Millar, et. al, 2018). Meanwhile, global demographic shifts, migration, trade protectionism, intergenerational hand-offs, and life pattern changes are adding fuel to the fire of VUCA (Millar, et. al, 2018). The uncertainty and complex condition of the VUCA world are also added by social factors such as population displacement, natural disasters, and global crises.

Key Concepts of Technological Disruption and Radical Innovation

The digital disruption and the VUCA world enforce businesses not only to immerse in new technology and information but also to innovate to drive market success. Companies such as Uber, Airbnb, and Spotify have explored the challenge and innovation in the middle of uncertainty and created new demands that the market hasn't offered before. Uber and Airbnb spread their business by building partnerships with their market. This innovation enables them to manage costs effectively and escalate their customer focus. Spotify popularized music streaming and reshaped how people perceive the music industry. This innovation enables the market to explore countless music in one device, beating the previous technology where the music needed to be downloaded first before listening to it. In order to create the opportunity for change, businesses require to inspect the internal and external elements of their business model in terms of technological disruption and radical innovation.

Technological Disruption

Technology Disruption refers to new ideas that affect business operations and create new markets. It enables technology to facilitate market changes, along with the technical standard, functionality, and ownership. The concept of digital disruption is often framed as a type of environmental turbulence induced by digital innovation that leads to the erosion of boundaries and approaches that previously served as foundations for organizing the production and capturing the value (Karimi and Walter 2015; Weill and Woerner 2015; Rauch et. al. 2016). This view of digital disruption as a major cause of fundamental creative destruction processes is echoed in white papers of IT and management firms (e.g Bonnet et. al. 2015; Gracia et. al. 2015; Knickrehm et. al. 2016). Disruptive technologies typically demonstrate a rapid rate of change in capabilities in terms of price/performance relative to substitutes and alternative approaches, or these experience breakthroughs that drive accelerated rates of change or discontinuous capability improvements (McKinsey Global Institute, 2013).

Radical Innovation

Besides understanding how to utilize disruption, businesses also need to build new innovations that drive markets to new values and move up their business model to a whole new system. In disruptive innovation theory, Disruption refers to a very specific process that explains how entrants can successfully compete with incumbents (Christensen et. al. 2015). This means continual changes are more favorable to bringing innovation than constant technical standards. Radical Innovation moves up the market and enables a user to adopt new behavior and achieve new tasks that were impossible before the innovation, which encourages rapid innovation in business processes. According to Thomond and Lettice, there are three innovation characteristics identified to have the potentials to change the market, which are radical functionality, discontinuous technical standards, and an innovation's ownership.

Defining Growth in Businesses

According to a survey conducted by Strategy&, part of the PwC Network, in Great Expectations: Global Executives Respond to Business Disruption in 2021, 78% of the business leaders expect their companies to transform within three years and 51% of them plan to develop new business models. The survey was taken from more than 250 senior executives around the world. This data suggests that businesses are ready for a great demand for growth in their business models. Manifesting Growth means that businesses are able to adapt to uncertainty and complex condition to create innovative models that drive advanced improvements. However, business leaders need to acknowledge room for innovation in their business models.

How to Manifest Growth

1. Fostering Agile Mindset

The ability to encourage an agile mindset should come first by the importance of using training to develop both skills and knowledge among employees and leaders that can promote or enable change, and as a result, organizational agility (Baran. et. al. 2020). With sufficient knowledge and practice in agility, both employees and leaders will be able to adapt the agile behavior to their workforce in order to deliberate continuous and integrated delivery, create structural changes, and support teams to collaborate in agile.

2. Adapt to Knowledge and Teamwork

Digital Innovation involves transformational changes in strategy, processes, and products, and thus requires the company to rethink its organizational patterns (Yoo, Y Henfridsson, O & Lyytinen, K. 2010). For instance, sharing knowledge can help to identify VUCA trends internal and external to the organization (Baran et. al. 2020). An example of adapting agile in knowledge and teamwork is the Sweden-based technology company, Ericsson, which has more than 100 small teams that are now devoted to addressing customer needs, using agile principles to deliver solutions in three-week cycles.

3. Transparency and Effective Communication

The ability to communicate and make decisions quickly is important to respond to and adapt to rapidly changing environments (Baran et. al. 2020). Effective communications enable swift decision-making and risk mitigation, making room for innovations to happen, while Transparency helps businesses in identifying the market's current conditions, as well as the internal and external condition of the company itself. When business leaders are able to identify their organizational structure and workflow, they can react to VUCA effectively by making sense of emerging situations and highlighting important communications.

4. Deep Customer Focus

Innovation creation in businesses should be aligned with the market trends. In this way, having an immersed understanding of their customer profile will support businesses in predicting trends and offering solutions to their customers' needs. Netflix is an example of using deep customer focus to drive agility, In contrast to Blockbuster, Netflix had a much better sense of what customers wanted and how to address their needs (Baran et. al. 2020). Having a deep customer focus also enables businesses to conduct internal improvement processes and develop strategic plans for future changes.



Conclusion

Over the next decade, the innovation opportunities are going to come from the digital natives, particularly from digital natives in emerging economics (Johansen, 2015). Disruption and VUCA World enforced businesses to make room for adaptability and radical innovations in order to drive growth in their business model. Businesses need to adapt to new technology and create innovations that emerge with new market demands. VUCA World Concept is very helpful because it creates expectations and helps leaders realize what kind of environment they're operating in (Johansen, 2015). In order to manifest growth in their business model, business models should foster an agile mindset, adapt to knowledge and teamwork, conduct effective communication, and have a deep customer focus.

Reference:
Bonnet D, Buvat J, Subrahmanyam K (2015) When digital disruption strikes: how can incumbents respond?
Cap Gemini Consulting. https://www.capgemini.com/consulting/resources/when-digitaldisruption-strikes. Accessed 26 June 2018.
Baran, Benjamin., E, Haley M. Wozny. (2000) Managing VUCA: The Human Dynamics of Agility. DOI: 10.1016/j.orgdyn.2020.100787.

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