VUCA= Volatile, Uncertain, Complex and Ambiguous
1. Our business and public policy schools still rely heavily on traditional case studies. The meta-lesson of nearly every case study is that the world and its problems are easily and quickly understood.
2. Our leading business and management thinkers proffer theories which make the world look more predictable and malleable than it really is:
One of the real problems with business education is the heavy use of prepackaged case studies. While they purport to hone critical thinking skills, they also impart false lessons. Future managers come to believe that the information in front of them is complete, reliable, and predictive. The only thing left to do is exercise some thinking and then make a decision.
In real life it will never be that simple. Numbers are shaky and dirty data is a persistent problem. In the beginning there won't be enough critical information on the matter at hand. At the same time , there will be a flood of trivial and irrelevant material that demands attention.
It is tempting to wait until more data and better data can be obtained. Unfortunately, time is often a critical competitive dimension.
Clausewitz vs. Porter
Clausewitz presents descriptive theories, his aim is to help the future commander prepare himself for the challenges he will face. In contrast, Porter's work is intensely prescriptive. His Five-factor framework and generic strategies are templates waiting for the executive's implementation.
Porter's, then, implies that the key to business strategy is "knowing". The doing will almost take care of itself. Clausewitz never presumed that the science of war (which gets studied in peacetime) could ever supplant the art of war (which wins actual battles and campaigns).
What was the Fed thinking in the summer of 2008?
There was no real planning or preparation for crisis. They did not have contingency plans for the post-Lehamn fallout just has they did not have a clear understanding of what the failure of a TBTF institution would mean.
Fortunately, we have ways of coping with these challenges. If we cannot predict the future, we can become more resilient when surprised.
We know how to study the past to prepare for (not predict) the future.
The historian Michael Howard wrote a brilliant article ("The Use and Abuse of Military History")* on the right way for officers to study military history. He offered up three general rules:
1. Study in breadth. Look at wars and campaigns over a long sweep of time. Look for both similarities and discontinuities.
Only by seeing what does change can one deduce what does not.
2. Study in depth. Look at a single campaign by reading a variety of histories, memoirs, letters, diaries, etc. Recognize the confusion, chaos and varying perspectives at work. (Clearly, this is the antithesis of the classic business case study.)
3. Study in context. Do not just look at the military action, study the sociology and politics of the nations involved. Again, these are perspectives that are usually absent in the analysis of strategy foisted on executives and students.