The world of business has seen some significant changes during the last decade. The global financial crisis during this period has taught us how interconnected the world could be with the growth of global trade and commerce. At the same time, many countries, including Bangladesh, have been able to insulate themselves against significant financial turmoil due to their relative disconnectedness. However, the world has become much more connected today compared to the last decade. And emerging countries such as Bangladesh have become active players in global trade and commercial activities.
Businesses fail quickly in the current business environment. For example, Kodak had maintained its leadership in the category of photography for nearly 125 years. But it took very little time for the company to move towards bankruptcy subsequently. Such a dynamic and fast-changing world of today is being described as the VUCA world by many economic and political observers. VUCA, a word initiated by the US Army War College, stands for Volatility, Uncertainty, Complexity and Ambiguity.
Today, the VUCA world denotes a volatile, uncertain, complex and ambiguous world. Business leadership in a VUCA world requires a unique set of capabilities, with the ability to innovate rapidly and adopt new technology quickly.
In today's volatile environment, business environments change unpredictably, suddenly and in extreme directions, making businesses obsolete. Going back to the case of Kodak, the company continued in its leadership position in making cameras and films. It successfully migrated from still photography to the world of motion pictures. It also transitioned from black-and-white to colour photography. But it could not survive in the world of digital cameras that became miniaturised to get fitted inside mobile phones.
The business environment became too volatile for Kodak to maintain its leadership in the domain of photography. The company lost out to players such as mobile phone-manufacturing companies that started bundling digital cameras within their mobile phones and cloud service providers that offered users free space to store their photographs.
In a volatile environment, rapid innovation is an important tool for maintaining leadership. Businesses should encourage development of challengers in their own organisations who can create perceivably disruptive products and services that are capable of replacing existing ones.
In an uncertain world, important information is generally not easily available. And frequently, such information is old, its authenticity is questionable and it does not provide any insight on business. In such cases, business leaders make decisions based on their gut-feeling. Such business decisions, taken in an uncertain world, are likely to fail rather than lead to success. Today's uncertain world therefore poses a challenge to business leaders in their decision-making around the world.
Moreover, in an uncertain world, business leaders need to learn to take decisions based on data. And data will continue to play an important role in decision-making in business organisations. Business leaders in Bangladesh have been taking high-stake decisions to grow, diversify and internationalise their businesses. They should now start relying on data available in digital formats to take big decisions rather than just bank on their experience and intuition.
However, this does not mean that intuition and experience are to be disregarded. In fact, they remain as valuable in the VUCA world as they were before. But data can help them scientifically prove or disprove their intuition, and thereby increase their confidence in the decision-making process.
In a complex world, many related and unrelated parts of business and society are interconnected. The number of key decision-making factors, as well as interaction among stakeholders, has increased significantly. For example, trade-related conflicts between large economies may create new opportunities for Bangladesh. But the complexity of the environment makes it difficult to accurately calculate the size of such opportunity. This requires organisations to be agile and nimble enough to adapt quickly to new processes.
In a complex world, digitalisation of business will be the key driver. Digitalisation helps vertical and horizontal integration of value chains, and creates digitalised products and services, and new business models. Today, the complexity of business is ushering us into the new era of Industry 4.0.
Industry 4.0 is expected to influence enterprises in Bangladesh significantly. The manufacturing, transportation and logistics, construction and packaging industries are expected to experience this revolution sooner than the others. Early adoption of enabling technologies will help these enterprises to create new products, compete globally and grow their businesses.
In this ambiguous world, business decisions are subjected to many interpretations. A wide range of stakeholders interpret every decision from viewpoints ranging from profitability to sustainability. Moreover, megatrends such as climate change are set to influence every business decision, while our collective understanding of climate change remains incomplete.
Today, business leaders need to take decisions after assessing all their stakeholders' agendas. For them, technology should become the key enabler to simulate all possible consequences quickly and to facilitate faster decision-making. Technology will also help them manage business risks when ambiguity grows significantly.
Business leaders in the VUCA world are expected to be capable of dealing with such situations mentioned above, and demonstrate their leadership. Accordingly, the educational institutions should also revisit their curricula and refresh these with relevant content to develop skills for the VUCA world. For example, a leader's capability to communicate to a diverse group of stakeholders to make a decision will become an indispensable capability for future managers. Therefore, business schools need to address such skills requirements by revising their curricula.
According to the PwC's economic projection, Bangladesh is set to emerge as one of the fastest growing countries in the next 30 years. There will be ample challenges and opportunities in the VUCA world on this growth journey. Consequently, implementing the right measures to build the right set of capabilities will help the country avail of all opportunities and grow to a new high.
The writer is a partner at PwC. The views expressed here are personal.