23 Sep. 2013 | Comments (0)
Some of the best current lessons on how to adapt to our changing business environment come from the realm of military doctrine. And one key methodology stems from mid-1990s, when students at the U.S. Army War College were told repeatedly they were preparing for leadership roles in a “Volatile, Uncertain, Complex, and Ambiguous” (VUCA) world. Barack Obama’s “Light Footprint” doctrine of warfare, featuring novel uses of drones, cyberweapons, special forces, allies, and proxies, is an early adaptation to the VUCA world.
The business analog of the use of drones is easy to see and already happening; business has an insatiable hunger for automation and values the efficient, targeted strike. The analog of cyber warfare is, most obviously, the fact that competition increasingly takes place in cyberspace. More broadly it is the recognition that there can be many ways beyond hand-to-hand combat in the marketplace to rob a competitor of its advantage. Management’s version of the use of special forces might be a switch from a hierarchical into a modular form of organization, and a shift of agency from executive committees to self-managed, multi-disciplinary teams. The equivalent of the military’s use of allies and proxies might be a propensity to form partnerships that verges on the indiscriminate.
How might Light Footprint management look in action? Here’s an example that shows some of the differences from conventional practice. A manager I know was recently appointed regional vice president in charge of a product line at a major consumer goods company. I’ll disguise the particulars, but let’s say her name is Sheila Regan, and she oversees yogurt business lines for Latin America. Faced with falling market shares in major cities, she refused to make the easy excuse (that competition had become more intense there) and instead got to work organizing her first foray: a precisely targeted intervention in one city where growth had petered out.
“We didn’t push all the levers”, she recalled, “We focused on channels, the 48 stores and key brands. We stopped buying media and did in-store promotion. Target stores got special treatment. To avoid stock-outs, for example, we always served them first.”
The 48 stores were never told about the special treatment, because Regan was anxious not to alert competitors. A key objective of the mission was to persuade competitors that the incumbents were too strong to make the investments they would need to gain a foothold worthwhile.
A cross-functional team was assembled, and a “war room” was opened with a wall showing the 48 stores and their objectives. When a store went from red to green, cheers broke out. “It had a snowball effect”, said Regan. “By sharing results, we encouraged others and could apply best practices quickly.”
If ever there was a business analog to the effective use of special forces, this was it. Before the mission, revenues in the target city were falling by 1% a year. By the time Regan left, revenues in the target city were growing at 18% a year, and global head office was planning similar missions in other markets.
I’ve seen other VUCA-adapted companies using what I would call Light Footprint Management. Companies whose structures are modular, allowing them the benefits of being centralized and de-centralized at the same time; companies who leverage their own strengths with strategic collaborations and partnerships, because they add much less weight than acquisitions; companies who are unusually secretive, because their advantage hinges on an element of surprise and they must be prepared for the responses their actions will bring. Light Footprint companies tend to be more integrated with and more sensitive to their constantly changing environments and therefore less likely to be caught flat-footed by the unexpected developments common in the VUCA world.
It’s important to note, however, that even when new tactics win major battles, it takes a long time until they are routinely taught. Pixar and Apple under Steve Jobs grew opportunistically, guided by a man who combined technical know-how with an artistic sensibility. The moves Pixar and Apple made under Jobs’ stewardship may seem inspired strategies now, but at the time they were simply tactical responses to problems and opportunities.
Xavier Niel’s French telecoms firm Free is another early adapter to the VUCA environment. It is nimble, unpredictable, tech-savvy, and seems to pay no heed to the sector’s conventional wisdoms and business models. UK chip designer ARM Holdings is apparently achieving enviable “lightness.” Its chip designs dominate the world mobile phone market, but it makes nothing. Its essence is its intellectual property and its partnerships with chip and device manufacturers.
We will see the victories of Light Footprint managers long before we quite understand their strategies. But applying the framework of a different discipline, like a military doctrine that has already adapted to a volatile, uncertain, complex, and ambiguous environment, can help. Recognizing that gains can be made and sustained with a light footprint not only explains how some unlikely players manage to win on certain fronts — it might help you figure out, going forward, how to beat them at their own game.
This post is part of a series authored by speakers at the forthcoming Global Drucker Forum, taking place in November 2013 in Vienna, Austria. For more on the theme of the event, Managing Complexity, and information on how to attend, see the Forum’s website. A collection of previous posts in the series can be found here.
This blog first appeared on Harvard Business Review on 08/28/2013.
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