VUCA, an acronym for volatile, uncertain, complex, and ambiguous, describes the business world and the myriad issues organizations face, such as shortages of funding, government regulation, lack of qualified personnel, and so on. In a VUCA world, the keys to success are being proactive about strategic planning and having the ability to transform.
Several years ago, Gen. John Casey, retired Army Chief of Staff, was asked to give a lecture about the VUCA World. He said yes even though he had no idea what “VUCA” meant. When Casey googled the acronym, he found to his astonishment the term originated with the U.S. Army War College. VUCA, it turned out, is an acronym for volatile, uncertain, complex, and ambiguous – which is the way the Army think tank described the world after the fall of the Soviet Union.
The fall of the U.S.S.R. was a major inflection point for the Army. For decades, the Army knew who its adversary was and that its mission was to stop any large-scale Soviet aggression. It knew what types of weapons and the number of soldiers needed to accomplish that mission.
The good news was the fall of the Soviet Union removed a major adversary; the bad news was the U.S. Army was seemingly deprived of its main mission. The Cold War was a bipolar world1 where the calculus of power was simpler to solve than in the years to follow. Army doctrine, tactics, organization, and weaponry needed to be updated to fight different types of war. Now, the Army had to deal with a multipolar world filled with conventional and asymmetrical threats. The Army had to reinvent itself and its mission, and Casey was instrumental in that process.
Organizations, including accounting firms, often find themselves operating in their own VUCA World. The COVID-19 crisis is just one example of operating in an uncertain environment. Another could be the uncertainty around tariffs.
Strategies in Uncertain Times
Even with the myriad issues an organization may face – shortages of funding, added government regulation, potential financial mismanagement, lack of qualified personnel, and so on – firms can set themselves up for success. By being proactive about strategic planning, accounting firms can transform themselves.
Casey had several suggestions, but there is one that stood out from the rest: it is important for leaders to spend a large portion of their time “outside” rather than “inside” their organization. Casey illustrates this suggestion with an example from his life. When he was a lieutenant colonel, Casey was in command of a battalion of about 800 soldiers. They were predominantly from one branch of the military (i.e., infantry, armored, etc.). When he was promoted to colonel, he was given a brigade to command. A brigade consists of multiple battalions tailored for a specific mission.2 The soldiers under his command were no longer all from one branch; a brigade could consist of infantry, armored, aviation, artillery, and other types of battalions. Brigade commanders have to transcend their previous much more narrow focus and learn how to manage many different and moving parts.
Outside-In Approach
Casey learned to focus outward. He spent more than half of his time looking outward rather than inward, learning what was expected from him and his units. He gained an understanding of how the “outside world” assessed his units and what type of changes he needed to make to his command. Eventually, Casey used this technique to reinvent the Army’s mission and more effectively set strategic goals.
Why is this important to businesses – particularly accounting firms? An outside-in approach creates a space for firms to stay competitive and relevant. By assessing and internalizing what external customers want, an organization’s decisions are more aligned with customer needs, not just what the company wants. This approach also fosters new innovations and ultimately improves the customer experience as their desires are more integrated into the business. Being connected to customer expectations and wants also increases an organization’s agility and ability to adapt to an ever-changing market.
Casey also believes in not stepping on the toes of subordinates. As he rose through the ranks, he found the people around him were more and more competent. Not only were they capable of running their units, they wanted to run their unit. His subordinates wanted to show what they were capable of and their competence as officers. To avoid trampling on their effectiveness and aspirations, he stayed out of their way. How often do we see that in our own organizations?
How does all of this translate into the business world? In one regard, the board of directors and executive management need to spend time both inside and outside the organization harnessing all respective strengths. By venturing outside the confines of their offices they will learn what is occurring in the VUCA World and learn how to respond to it. They will be better able to set strategic plans for their organization. To do this, the board and executive management need to make sure there is a capable middle management being trained to eventually run the organization. By surrounding management with such help, the board assists them in being “outside” the organization. Middle management should be able to handle day-to-day problems without the involvement of senior management. By the same token, senior management must strive to be outside of the organization. Staying “inside” and managing internal processes only deprive middle management of an opportunity to shine.
The U.S. Army, despite an occasional setback, has been successful over its long and storied history at reinventing itself many times. Part of its resilience is its ability to look outside of itself and deal with the VUCA World. It is something any management should consider. Even in uncertain times, there are tried and true strategies that will help management prosper.
1 The description of a bipolar and multipolar world is attributed to Henry Kissinger, a former U.S. Secretary of State.
2 A brigade could have as many as 5,500 soldiers assigned to it. Put another way, a brigade is the size of a major corporation.
Heather Kuhns, DBA, is an assistant professor of practice in management at the Moravian University School of Business and Economics in Bethlehem, Pa. She teaches across marketing, management, and leadership disciplines. Kuhns also is owner/chief inspiration officer of zenspire communications, specializing in branding, social media strategy, and communication planning. She can be reached at kuhnsh02@moravian.edu.
Mark Koscinski, CPA, DLitt, is an associate professor of accounting practice at the Moravian University School of Business and Economics, where he teaches undergraduate and graduate accounting courses. Koscinski has worked for a Big 4 accounting firm and also held various executive positions at privately held and public companies. He can be reached at koscinskim@moravian.edu.
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Statements of fact and opinion are the author's responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.
