Thriving in a DEST World: Strategies for Business Adaptability
The ideal world that most people yearn for is one characterized by stability, clarity, simplicity, and certainty. Up until the late 20th century, the business landscape seemed to align well with this vision; it was often referred to as the “SPOD” world—Steady, Predictable, Ordinary, Definite. However, the reality today is vastly different. We find ourselves in a “VUCA” world, characterized by Volatility, Uncertainty, Complexity, and Ambiguity. Initially coined by the U.S. military in the mid-1990s to describe new conditions of warfare, the term was later adopted by strategic consultants in the early 2000s to encapsulate the challenges of planning and sustainability in the corporate world.
This shift from SPOD to VUCA is not just a change in terminology; it reflects a fundamental change in conditions. Consider the oil industry. Extracting oil in the frigid landscapes of Siberia demands a different set of skills and tools than does the task in the scorching heat of the Middle East. Though it may be the "same" oil, the means of extraction differ significantly based on the environment.
Take another example: imagine you have been driving a car on a highway and suddenly find yourself in a forest. Your car instantly becomes an impractical means of transportation. You would likely start considering alternatives like a motorcycle. If you encounter a water barrier, you would likely switch to looking for a boat. This illustrates that the tools or means we choose depend heavily on the environment in which we operate. Choosing the wrong tool can halt your progress entirely—as a motorcycle will not navigate on water, nor a boat on a highway.
The crux of the issue is that people, entrepreneurs included, often fail to accurately recognize their environment. They tend to take it for granted, sticking with what seems familiar or convenient, like the "vehicle in their garage," regardless of whether it is actually suitable for their current conditions. As American anthropologist Ralph Linton wisely observed, "Water is the last thing a fish notices." In the varied "seas" and "oceans" of business, different rules, criteria, and tools apply. Yet, even intelligent and educated individuals often make the error of thoughtlessly applying decisions from one context to another. In short, understanding and adapting to our environment—whether in business or life—is crucial. In a VUCA world, failing to do so can result in stagnation or failure.
Consider the historical example of Claudius Galen, a pioneer in the field of medicine during the second century AD. Galen authored more than 120 works on anatomy and physiology, relying on animal dissections to understand bodily functions. However, when he extrapolated his findings to humans, he made significant errors. It took nearly 1500 years for the medical community to understand that human physiology needs to be studied independently of animals. This oversight misguided medical practices for centuries.
In entrepreneurship, a similar lack of nuance persists. Often, "successful" strategies and expert advice from one domain are indiscriminately applied to others. When studying the experiences of talented individuals, the focus should not merely be on extracting ready-to-use tips. Instead, understanding their thought processes is more valuable, as the context in which these tips can be employed varies greatly from one business to another.
The reason we began our discussion with the concept of "changing worlds" is to highlight how shifts in the business landscape inevitably lead to alterations in worldviews, objectives, evaluative criteria, and means to achieve goals. In today's fast-paced environment, where change occurs at an unprecedented rate, the task of managing a business successfully becomes increasingly challenging.
In 2018, I came up with the term 'DEST world' to describe a shift from what was previously characterized as a VUCA environment—Volatility, Uncertainty, Complexity, and Ambiguity. The DEST world stands for Disordered, Egocentric, Suppressive, and Turbulent. This new framework has become increasingly relevant, as recent geopolitical shifts and the pandemic have exacerbated these issues to the point where they can no longer be ignored. Whether in medicine, entrepreneurship, or any other field, adapting to these rapidly changing contexts is essential. Failing to adapt not only hinders progress but also risks applying outdated or irrelevant solutions to contemporary problems.
The famous physicist Albert Einstein, once remarked, "Our main problem seems to be that we are improving our methods, but we are confused about our objectives." I echo this sentiment in my book "Business-Incognita: How to Push the Boundaries of Entrepreneurial Thinking," stating, "The core issue in today's entrepreneurship is often a lack of clarity about what—and why—we are managing."
Thesis No. 1: What DEST Encapsulates
The DEST model I have proposed addresses four critical dimensions of the modern business environment: Disordered, Egocentric, Suppressed, and Turbulent.
Starting with Disordered, the first element of the DEST model, we find that the current business landscape is anything but harmonious. Gone are the days of predictability and coordination; today's environment is fraught with unexpected events that defy control. The tried-and-true approaches of yesteryears are increasingly obsolete.
The second element, Egocentric, describes the prevalent self-centeredness among business participants, irrespective of their rank or role. Individuals often operate from a myopic perspective, focusing solely on their own interests and disregarding alternative viewpoints. This tunnel vision becomes a hindrance to understanding the larger context, as judgments are made based on a limited "I-system" ("I want this," "I need that," "I don't like this") and other such caprices.
Next is Suppressed, the third component of the DEST model. In an era marked by global regulations, sanctions, and political instability, businesses face a labyrinth of obstacles. Navigating this restrictive landscape to discover growth opportunities and streamline operations becomes a high-stakes art form.
Lastly, the Turbulent aspect refers to the whirlwind pace at which the business environment is evolving. Changes happen so swiftly and unpredictably that discerning cause-and-effect relationships becomes nearly impossible. This volatility undermines the reliability of various systems—be they businesses, organizations, governments, or entire countries.
The DEST model captures the core challenges of managing a business in a complex, rapidly changing world. As we navigate this Disordered, Egocentric, Suppressed, and Turbulent environment, the need for a deeper understanding of what we are managing—and why—has never been more critical.
These, then, are the four dimensions of the DEST model. To make decisions in such a complex environment, business leaders need new capabilities—what I often call business intelligence. This specialized form of intelligence enables leaders to not just survive but thrive in the demanding DEST era. It is a world fraught with challenges, yet also ripe with opportunities for those willing to adapt and evolve.
Thesis No. 2: A Few Words About Business Intelligence.
In my book, I define business intelligence as both the entrepreneur's intent to recognize varying market conditions and having the readiness to use available resources for tangible market gains. The very ability to recognize differentiating factors serves as a unique competitive advantage.
Think of a builder who sees a pile of stones as both a heap of garbage and valuable building material. Depending on the builder's ability to recognize its potential, that same pile can be considered in two entirely different ways. Failure to distinguish between the two can be catastrophic. it is akin to mistaking a heap of garbage for building material, thus creating an unstable structure, or overlooking valuable material and missing out on building altogether.
The Kodak Company serves as a cautionary tale. Steve Sasson, a Kodak engineer, invented the world's first digital camera in 1975. The management, however, dismissed it as an oddity. They viewed Kodak as a producer of photographic film and cameras, failing to see how a digital camera could fit into their business model. This lack of recognition led to missed opportunities and ultimately to the company's downfall—a mistake made all too often.
Harvard Business School Professor Howard Stevenson defines entrepreneurship as "the pursuit of opportunities beyond the resources controlled." This creates a clear demarcation between entrepreneurs and managers. If one focuses predominantly on leveraging resources within an organization, they are a manager. If one seeks opportunities and resources beyond organizational boundaries, they are an entrepreneur.
Thesis No. 3: Distinguishing Between Entrepreneurs and Managers
These differences are not merely semantic. Entrepreneurs and managers often have differing perspectives on the same issues, deploy varied methods and tools, and even possess distinct abilities. In stable times, managers can control an organization effectively using schedules, plans, and rules. But when a 'storm' hits, they find their tools insufficient. It is during these turbulent times that the need for new tools—fit for navigating the storm—becomes apparent.
In 2015, I initiated a research project to explore the high failure rate among entrepreneurs; on average, 7 out of 10 entrepreneurs don't make it past their fifth year. This alarming statistic can be likened to a hospital where only two or three out of 10 patients return home after treatment—the rest end up in the cemetery. Such a dismal record points to systemic issues in entrepreneurship, not just minor flaws that can be rectified easily.
Albert Einstein stated, "One cannot solve a problem at the level at which it was created." If so, what is that next level? My research over the past eight years suggests that entrepreneurial activity is multi-layered, comprising what I refer to as "contexts." These contexts are interconnected and often nested within each other, much like words within sentences, sentences within paragraphs, and so on.
In entrepreneurship, some of these layers are easily visible, while others require additional knowledge and effort to perceive. Problems may manifest at one layer but originate at another. Solutions applied at the layer where the problem manifests could be akin to taking a pill for a recurring headache: they address the symptom, not the cause. The true solution lies in identifying the level at which the problem originates and solving it there.
As we can see, the roles of the entrepreneur and manager are distinct yet interdependent. Recognizing this, and the multilayered complexity of business activity, is fundamental to what I term business intelligence. With well-developed business intelligence, entrepreneurs can identify potential where others see none and can mobilize unique combinations of resources to make their visions a reality.
Business activity is inherently complex, but it can essentially be broken down into three critical layers:
1. The layer of direct activity, which includes the day-to-day operations of the business.
2. The layer that manages these activities.
3. The layer of control over management, which I often refer to as the "development layer."
The development layer is particularly crucial as it is here that many entrepreneurs encounter problems that rarely get solved. This layer governs consumer perceptions, making it systemically significant for the entire business framework.
What's fascinating is that rapid changes in the business landscape, or the "change of worlds," first impact this development layer, leading to a domino effect that also affects the other two layers. In my view, issues like high staff turnover and unsatisfactory financial indicators are symptoms of a more significant underlying issue—namely, the neglect of the development layer.
Entrepreneurs who fail to adapt to the new digital economy often find their businesses suffering. They overlook the reality that consumer preferences are shifting, and global platforms like Amazon and eBay are altering the competitive landscape. In today's world, the value and uniqueness of a local company producing consumer goods are increasingly under threat, as consumers now have a plethora of options available at their fingertips.
Entrepreneurs can quickly become "obsolete," ending up as cautionary tales rather than success stories. What ties the development layer to the broader context of business activity is the specific environment and circumstances in which any business operates. These factors dictate the available resources and the scope for using them effectively.
The mistake that many entrepreneurs make is viewing their business activities too narrowly, disregarding how these activities relate to the overall market environment. Such a limited perspective leads to truncated planning horizons, often as short as one or two years, and the use of simplistic business models that are ill-suited for navigating a turbulent marketplace. As G.S. Altshuller once wrote, 'You can't hunt an elephant, a mouse, or a bacterium with the same weapon.' Similarly, different tools and approaches are needed to address challenges at various levels. This leads us to the next thesis.
Thesis No. 4: The Concept of 'Contextual Analysis.'
Contextual analysis is a methodology designed to solve entrepreneurial challenges amid uncertainty and chaos. The term 'contextual' implies that the focus is on the environment and conditions surrounding the entrepreneur's activities. Different contexts will naturally require varied evaluation criteria and problem-solving methods. The word 'analysis' refers to an in-depth investigation of any state, condition, or phenomenon.
The core of contextual analysis lies in identifying and categorizing what might be termed 'categories of meaning' or 'categories of knowledge' within any activity domain. The world around us is a repository of knowledge, embedded in everything from bicycles and buildings to shoes and chandeliers. This knowledge can be basic or complex, but the crucial point for entrepreneurs is that it falls into specific categories.
Consider someone experiencing bodily pain. The knowledge to alleviate this pain can come from various categories—cardiology, nutrition, physiotherapy, surgery, or even alternative approaches like aromatherapy or hypnosis. Similarly, entrepreneurs offer solutions to customer problems using specific categories of knowledge.
The category of knowledge chosen sets the context for the entrepreneur's interaction with consumers. A surgeon will attract one kind of customer, a nutritionist another, and a fitness trainer yet another. The context not only shapes the entrepreneur's approach but also defines the category of knowledge applied.
If someone leads a fitness group, we can assume their expertise lies in fitness-related knowledge. The interaction between the entrepreneur and consumer produces what we term the 'category of meaning.' For one patient, surgery may be the most meaningful way to alleviate pain; for another, aromatherapy might be more suitable. It is improbable that the same approach would suit all individuals.
Categories of meaning are intricately tied to the third layer mentioned earlier—the developmental layer. To identify early issues at this layer, I have developed a straightforward methodology consisting of four key questions:
1. What client problem are you solving?
2. How has the client observed this problem in the past, present, and future?
3. How can you articulate the origin and persistence of this problem to the client?
4. What solutions can you offer for this client's problem?
Ambiguity or uncertainty in the answers indicates that the developmental layer of the organization may have underlying issues, possibly unnoticed by management. Much like diagnosing and treating medical conditions, timing is crucial. Early identification enhances the likelihood of effective problem resolution.
Author of the book "Business Incognita. How To Push The Boundaries Of Entrepreneurial Thinking".
He is an expert in the field of sustainable development of organizations and discovering new sources of growth. Developer of contextual market research methodology. Member of the international association of strategic and competitive intelligence specialists SCIP (USA).
Personal blog www.BizIQ.ai
Yaroslav Kaplan - President of the consulting company Kaplan Research company, which focuses on market research to improve business performance. In 2015, he founded the Business Intelligence IQ Project to study the phenomena related to the ability of entrepreneurs to set business goals. Member of the International Association of Strategic Competitive Intelligence Specialist SCIP USA. Author of three scientific research papers, the rights to which are registered in 167 countries of the world. Developer of contextual market research methodology. Expert in the field of sustainable development of the organization discovering new sources of growth.