After I take into consideration the modifications within the context for technique throughout my profession, my view contrasts starkly with the consensus view. Most obsess about rising VUCA (the mixture of volatility, uncertainty, complexity, and ambiguity) as the important thing change. I don’t—and I clarify my place on this Enjoying to Win/Practitioner Insights (PTW/PI) referred to as What has Modified the Most for Technique: Implications for Your Technique. And as all the time, you’ll find all of the earlier PTW/PI right here.
The VUCA narrative
I began advising executives on technique in 1981. The query I contemplated for this piece is how has the context for technique modified over the previous 44 years?
The final reply I get from observers is that the context for technique has gotten extra VUCA, an idea borrowed from army technique, which adopted it within the late Nineteen Eighties and has gotten ever extra obsessed about it since. And that obsession has rubbed off on the enterprise world. It’s a bit like SWOT. The acronym rolls off the tongue and may be very evocative. The narrative holds that as a strategist, you will need to acknowledge that you simply dwell in an more and more VUCA world, so you will need to do SWOT analyses (ugh) and set out OKRs (double-ugh) to cope with that scary world.
{“blockType”:”mv-promo-block”,”knowledge”:{“imageDesktopUrl”:”https://pictures.fastcompany.com/picture/add/f_webp,q_auto,c_fit/wp-cms-2/2025/09/martin.jpg”,”imageMobileUrl”:”https://pictures.fastcompany.com/picture/add/f_webp,q_auto,c_fit/wp-cms-2/2025/09/Untitled-design-1.png”,”eyebrow”:””,”headline”:”Subscribe to Roger Martinu0027s publication”,”dek”:”Wish to learn extra from Roger Martin? See his Substack at rogerlmartin.substack.com.”,”subhed”:””,”description”:””,”ctaText”:”Signal Up”,”ctaUrl”:”https://rogerlmartin.substack.com”,”theme”:{“bg”:”#00b3f0″,”textual content”:”#000000″,”eyebrow”:”#9aa2aa”,”subhed”:”#ffffff”,”buttonBg”:”#000000″,”buttonHoverBg”:”#3b3f46″,”buttonText”:”#ffffff”},”imageDesktopId”:91412496,”imageMobileId”:91412493,”shareable”:false,”slug”:””}}
I simply don’t purchase the notion that the world usually, or particularly the enterprise technique world, has gotten extra VUCA and wrote about it three years in the past on this sequence. Maybe my feeling is knowledgeable by the actual time I entered the enterprise work world and my subsequent tenure in it.
I graduated into my first full-time job from enterprise college in 1981, when the financial system was in the course of the third 12 months of by far the best three-year inflation (39%) since WWI (1916-1918). US unemployment was nicely on the best way to hitting 10.8% in December 1982, its highest charge by far because the Nice Despair. The Federal Funds charge (the idea for all rates of interest) crested over 19% as I graduated. Coverage makers needed to invent a brand new identify for the mixture of excessive unemployment with excessive inflation—stagflation—which my economics programs taught me was not possible.
Suffice it to say, it was fairly rattling VUCA. Neither governments nor companies had a clue how one can cope with it—and easily made stuff up as they went alongside.
Then we had the Iraqi invasion of Kuwait in 1990 and Desert Storm to comply with—together with one other deep recession. Then we had the dot.com bubble and crash between 1999 and 2001, adopted by September 11 in 2001, adopted by the worldwide monetary meltdown in 2008-2009, adopted by the Russian invasion of Ukraine in 2022.
I feel it’s not possible to argue that it has not been continuous VUCA for the previous (not less than) 44 years.
Actually, I feel the VUCA narrative is so standard as a result of it makes an ideal excuse: “We’re doing badly as a result of it has gotten so VUCA.” Whereas the breakdown of the Soviet Union is cited because the motivation for the US Battle School adopting the VUCA narrative, my very own perception is that it had as a lot to do with being outsmarted by the Viet Cong within the catastrophic Vietnam Battle that ended a decade earlier in 1975. Confronted by the then-dominant US doctrine of overwhelming air and technical superiority, the Viet Cong stated no thanks and performed a wholly totally different recreation, and gained towards what within the previous recreation would have been an overwhelmingly superior pressure. However to rationalize the loss, the dropping facet noticed it as a manifestation of this horrible new phenomenon—VUCA.
It isn’t dissimilar to competing towards Microsoft in private pc working techniques. No competitor has been in a position to dent its close to monopolistic share. Nevertheless, the true opponents modified the sport and labored on making another system the ‘pc’ of selection—i.e. the smartphone. In that extra broadly outlined recreation, Android is the large winner with a share 50% better than Home windows—which most likely felt fairly VUCA to Microsoft. Dominant successful methods all the time have and all the time will create VUCA responses as if out of skinny air.
Whereas the world merely hasn’t gotten demonstrably extra VUCA, two modifications have generated the most important influence on technique over the time of my profession: fastened/variable value combine and value/worth discovery.
Mounted/variable value combine
Traditionally, and nonetheless as of 1981, variable prices dominated the fee construction of enterprise (as I chronicled on this Harvard Enterprise Evaluation (HBR) article. Traditionally, corporations had been primarily factories (whether or not services or products factories) with a skinny veneer of workplace tower overhead. The most important proportion of prices diverse with manufacturing and a tiny proportion had been fastened. The auto business is an ideal historic instance. When the client desires a automobile, the auto firm should purchase hundreds of components, assemble them, and bodily ship the product—a complete lot of variable prices.
However starting within the Nineteen Sixties, giant corporations began to get actually huge, rising revenues 5.3 occasions in actual phrases between 1960 and 2000—big progress. They usually doubled once more in actual phrases since.
As they grew, they constructed up fastened prices—in classes resembling branding, R&D, and distribution—partially as a result of they grew to become large enough to reap the benefits of scale economies in these fastened value classes. Because of this, cost-of-goods-sold (COGS) as a share of revenues has fallen dramatically since 1981 and the share of gross sales, normal & administration (SGA) has grown equally. That in flip has pushed scale. Should you don’t unfold your fastened prices over nice quantity, you’re going to get out-invested by another person—after which you might be in bother as a result of your product gained’t be as superior, gained’t be as branded, gained’t have the distribution. On this manner, scale begets extra scale.
Industries which have the bottom fastened prices (as a share of revenues) stay essentially the most fragmented, as with the auto OEM business that has been famously consolidating for many years but the most important participant, Toyota, nonetheless has a mere 12% market share and the following highest is under 10%. Industries with highest fastened prices—like software program the place variable prices are miniscule—are consolidated or consolidating. For instance, in cloud software program companies, three corporations—Amazon, Microsoft and Google—have 63% market share. In smartphone working techniques, Android has 75%, iOS 24% and everyone else combines for 1%.
Throughout sectors, this shift in fastened/variable value has pushed elevated focus, which I mentioned within the HBR article above and is proven in numerous items of analysis together with this College of Chicago research.
Value/worth discovery
The second big change impacting technique is the dramatically elevated velocity and effectivity of value/worth discovery. As of 1981, it was genuinely onerous to match costs and assess worth of choices, whether or not in B2C or B2B. Aggressive costs weren’t simply obtainable. You may must go bodily from store-to-store to match—and in lots of B2B companies it was even tougher. And to get correct assessments of high quality/worth, you would want to subscribe to Client Stories or Automobile & Driver journal and anticipate the difficulty that handled the providing for which you had been . In B2B, pioneer Gartner Group solely got here into existence in 1979.
In B2C, if a vendor may lure you into its bodily location, it had a good probability to promote you one thing with out you understanding what it value elsewhere or how the providing truly carried out. In B2B, a salesman visited you to promote you person-to-person and use the connection to get you to purchase—once more usually with out understanding aggressive costs or efficiency.
Clearly, it’s utterly totally different 44 years later. In most industries, there’s ease and effectivity of value comparability. There may be little or no you purchase in the present day with out understanding the value relative to aggressive choices. And there are limitless buyer critiques obtainable to offer a (comparatively) unbiased evaluation of worth. Value and worth discovery occurs immediately and cheaply—a number of clicks and you’ve got what you want.
Implications for technique
For me, there are three huge implications for technique of the intersection of those two elementary modifications.
Extra deterministic
Technique has turn into extra deterministic. With prospects in a position to uncover value and worth shortly and effectively, corporations can’t conceal or obfuscate. Both you’ve got invested extra fastened prices properly in making your product extra interesting, or not. And that can decide outcomes.
In fact it isn’t completely deterministic. Nothing in life is—besides demise and taxes! However it’s much more deterministic in the present day than in 1981 when obfuscation was far more efficient.
Faster to logical conclusion
The trail to a logical aggressive conclusion is shorter. In 1981, mediocre corporations may survive as viable entities for many years. It was a controversial assertion for Jack Welch to say in his well-known 1981 speech that GE would both be #1 or #2 in its business or exit the enterprise. That appeared overly excessive – #3 or #4 gamers may very well be worthwhile for a very long time, couldn’t they?
They may then however they will’t now. Should you can’t discover a The place-to-Play (WTP) in which you’ll put in place a How-to-Win (HTW), the clock is ticking quick to your demise. Winners get on an upward spiral of having the ability economically to take a position extra fastened prices in better successful whereas losers get on a downward spiral of investments turning into unaffordable—and these upward and downward spirals are occurring faster than ever earlier than.
Peakier
Winners are successful greater than they’ve ever earlier than. As I mentioned within the HBR article above,
in 1978, the 100 most worthwhile companies earned 48% of the income of all US publicly traded corporations mixed, however by 2015 the determine was 84%. Much more narrowly the so-called Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Telsa) have been accountable for an enormous proportion of inventory market progress in recent times, as I’ve written about on this sequence earlier (although Telsa much less so not too long ago).
Whereas these winners are successful huge, losers are dropping huge—whether or not Ceremony-Assist, Tupperware, Silicon Valley Financial institution, Neiman Marcus, Spirit Airways, and many others.
Practitioner insights
The primary perception is that technique is extra essential than ever on this deterministic, speedy, and peaky enterprise context. Please ignore the voices who argue that in search of aggressive benefit is fruitless on this VUCA world. They’re 180 levels mistaken, and their recommendation is lethal to your well being.
Decide a WTP by which you purpose to create an identical and highly effective HTW. Put money into that WTP/HTW mixture shortly and aggressively. In case your WTP is just too broad and/or your funding is sluggish or tentative, another person will have the ability to out-invest you—and prospects will determine that out quick. And once they do, it’s a fast downward spiral for you.
In case you are investing vitality and capital in actions with out an intention of successful, you might be fooling your self. I hear it on a regular basis: Roger, we are able to’t exit that mediocre product line/enterprise unit as a result of our general gross sales will shrink. They foolishly assume that their place in that mediocre enterprise is secure. It isn’t. Will probably be crushed—faster than ever. And it’ll proceed to bleed funding assets away from product strains/companies which have an opportunity of an upward spiral.
Determine a spot to face—and combat to win. Out-invest your competitors. Should you can’t, you might be fooling your self. Should you can, double down and take the combat to your competitors. Encourage transparency in value/worth discovery. Be like Progressive Insurance coverage and present your opponents’ charges by yourself web site. In case you are really superior, the extra transparency the higher.
It’s the age of ‘killer apps’ (which I imply metaphorically—F-150 is a killer app). Few choices will win and win huge. Many choices will lose and lose totally. In case your probabilities of making a killer app whereas doing X issues is A%, will probably be >A% when you deal with doing .5X issues.
Merely, what has modified most in technique is the diminished efficacy of throwing spaghetti at partitions and playing-to-play.
{“blockType”:”mv-promo-block”,”knowledge”:{“imageDesktopUrl”:”https://pictures.fastcompany.com/picture/add/f_webp,q_auto,c_fit/wp-cms-2/2025/09/martin.jpg”,”imageMobileUrl”:”https://pictures.fastcompany.com/picture/add/f_webp,q_auto,c_fit/wp-cms-2/2025/09/Untitled-design-1.png”,”eyebrow”:””,”headline”:”Subscribe to Roger Martinu0027s publication”,”dek”:”Wish to learn extra from Roger Martin? See his Substack at rogerlmartin.substack.com.”,”subhed”:””,”description”:””,”ctaText”:”Signal Up”,”ctaUrl”:”https://rogerlmartin.substack.com”,”theme”:{“bg”:”#00b3f0″,”textual content”:”#000000″,”eyebrow”:”#9aa2aa”,”subhed”:”#ffffff”,”buttonBg”:”#000000″,”buttonHoverBg”:”#3b3f46″,”buttonText”:”#ffffff”},”imageDesktopId”:91412496,”imageMobileId”:91412493,”shareable”:false,”slug”:””}}
