Planning for the future in times of disruption

In today’s world, managers have to master a wide range of challenges. In the last blog post, we talked about the changing demands on internal leadership styles. In this article, we would now like to shift the focus from inward management to outward management, i.e., the management of companies in the context of their markets.

With regard to a permanently changing world, in which upcoming disruptions through artificial intelligence require a new dimension of adaptability, many are asking themselves the question:

Can corporate management still design sound strategies in this time? Is the formulation of visions still legitimate in 2023?

1. VUCA World

The world seems to be slipping from one exceptional situation to the next. After pandemics and inflation, the next big wave of challenges and changes is now imminent due to artificial intelligence.

There is a fitting term for the difficulty of managing a business in modern times: VUCA (Volatility, Uncertainty, Complexity, Ambiguity).

Volatility, uncertainty, complexity, and ambiguity describe the various dimensions of lack of predictability that executives face on a daily basis.

Artificial intelligence seems to be taking the associated problems to the extreme. It leads to rapid changes, which make it difficult to predict the market, the competition and even one’s own future corporate structure.

Using the VUCA model as an example, a number of uncertainty factors can be identified that are directly associated with AI:

  • Volatility exists, for example, with regard to changing framework conditions in the business model, technologies used and skills required.
  • Uncertainty exists, for example, around potential hazards that could accompany widespread implementation of AI.
  • Complexity exists, for example, in the unpredictable interactions of social, political and technological developments.
  • Ambiguity exists, for example, in the case of ambiguous decision-making bases regarding the implementation of AI, for example, as a result of different value concepts of the stakeholders.

2. Plan & Control in the Age of Artificial Intelligence

The fact that the ability to plan and control companies is strongly (but not only) influenced by AI is also reflected in various surveys among executives.

For example, one-third of the executives surveyed in a Deloitte study already complained about a lack of vision in the context of Industrie 4.0. A key aspect of this was change that was perceived as happening too quickly, accompanied by too many technologies being deployed (Deloitte 2019).

With the rapid spread of AI, this already confusing situation now seems to be getting even worse. This is also reflected in the urgency that corporate management is currently feeling with regard to their implementation. Finally, studies such as that of the Irish Management Institute pointed out several years ago the need to implement AI technologies early on in order to avoid the risk of being left behind by the competition (IMI 2019).

That AI will play a central role in the future of their companies is, in any case, beyond question for most high-ranking executives. In the IT industry, for example, about 80% of C-level executives surveyed said that opportunities from artificial intelligence will shape their future strategies (Infosys 2018) – already five years before ChatGPT & Co.

At the same time, there are serious concerns among business leaders, especially in technology-focused industries such as IT, about the security and privacy risks posed by AI. In addition, there is a general lack of transparency and controllability of the technologies used, which are inherent in the nature of artificial intelligence (Infosys 2018).

3. Remaining Capable of Acting in the Context of Uncertainties

Versatile challenges have basically always existed for senior executives. But the fact that so much fundamental change is happening in such a short time does indeed seem to be a novelty.

If this rapid change really does make it difficult to make a well-founded prediction of the future, what room for maneuver is left to corporate managements when it comes to planning for the future?

Three overarching best practices can be identified for this:

  1. Accepting uncertainties: Instead of fighting VUCA, senior executives should align their companies to be agile and flexible in a constantly changing environment.
  2. Mentality of learning: Companies should foster a culture of continuous learning and innovation. This also includes experimentation and a positive error culture.
  3. Scenario planning: Instead of adopting a single scenario as the basis for their vision and strategy, companies should design diverse possible futures and develop appropriate strategies for each.

Even if the future is even more difficult to predict than usual, there are definitely concrete processes and structures that corporate management could and should already start implementing now.

4. HR Consulting for Sustainable Strategies

The challenges of our time require holistic approaches instead of selective “quick fixes”. As the central interface in companies, Human Resources in particular needs solutions that look at the big picture.

Our experts analyze your company’s situation with a fresh eye and develop customized solutions that can withstand the rapid changes in the world of work.