Strategy in a VUCA world: The case for deliberate innovation
By Nyari Muguti
Think about the strategy you started implementing in January 2026 and ponder on the following questions:
- Is innovation explicitly embedded in your strategy (with evidence of new, novel, breakthrough initiatives/products/services)? [INTENT]
- Have clear and measurable innovation outcomes been defined? [RESULTS]
- Which C-suite executive will be evaluated on this outcome?
[ACCOUNTABILITY] - Is innovation underpinned by dedicated funding (not ad-hoc spend)?
[INVESTMENT] - Have you determined where innovation will be driven from in the organisation? [STRUCTURE centralised or distributed]
- How critical is innovation to success in your industry?
Rate: 1–10 (very high) - How strong is your organisation’s innovation capability today?
Rate: 1–10 (very high)
The VUCA (Volatility, uncertainty, complexity and ambiguity) operating environment is the new normal resulting in many organisations retreating in pursuit of a ‘safe’ strategy, that credibly drives for optimisation and incremental improvement. Existing revenue streams delivered by familiar operating models are protected and shareholder value preserved for the next strategic cycle. The stakeholders appear to be happy.
No breakthrough improvement. No disruption. No transformation. Organisations return to the well-trodden path yet again, instead of taking a planned detour onto the ‘road less travelled’ called innovation. Policies and governance mechanisms originally designed to ensure control and accountability become constraints. By prioritising predictability over possibility, organisations end up mortgaging their future relevance. Markets evolve, customer expectations shift and unexpected competitors emerge, while established players are limited by historical assumptions. What began as prudence eventually leads to organisational vulnerability.
In the midst of crafting strategy, leaders ought to be curious and courageous enough to challenge themselves and their peers on what the organisation’s future could look like if they pursued a bolder and more daring strategy? One that called for novelty or reinvention; where innovation was a deliberate strategic choice. The argument for innovation is well documented with BCG stating that “Top innovators outperformed the broader market by an average of 2.4 percentage points annually in total shareholder return” whilst PWC found that “Market winners” (top-performing firms) are twice as likely to report that at least 25% of their revenue comes from entirely new business models”.
Without the willingness to challenge the current business model, structures and ways of working, innovation remain superficial. Strategy that avoids discomfort may preserve stability in the short term, but rarely builds resilience for the long term.
True innovation starts at the top, acknowledging that an organisation’s capacity to innovate will never exceed the ambition and appetite of its leadership. Abdication of ownership at this level by delegating downwards relegates innovation to a peripheral activity where it eventually loses relevance and impact.
Board Stewardship
Boards play a critical role in shaping an organisation’s innovation posture.
Research by Ernst & Young underscores this challenge. When board members representing more than 100 companies were asked how effective boards were at overseeing innovation, the prevailing response was candid: “Not enough for what is happening today and what is coming.” This gap is not due to lack of intent, but rather to legacy governance models designed for predictability, efficiency and risk containment which are conditions that no longer define the competitive landscape.
Boards that focus exclusively on short-term performance and risk containment inadvertently constrain the organisation’s future, resulting in a muted strategy. By contrast, boards that actively engage with a long-range view and strategic optionality create space for innovation to thrive. Does it mean every innovation will succeed? No. However, the organisation develops a competitive advantage for research, collaborative creativity, failing fast and iterating to accelerate speed to market. Adjacent capabilities of becoming a ‘listening organisation’ are developed in concert, fostering an enviable intimacy with customers. Developing such a competitive advantage through innovation positions the organisation to leap-frog its competitors.
The ecosystem
Innovative organisations deliberately cultivate the ability to operate in two time horizons simultaneously. They execute rigorously in the present while actively exploring and shaping options for the future. This requires people (even teams) with both a deep understanding of the business today and a view of emerging trends and technologies in the external environment in addition to shifts in customer behaviour and sentiment. They are capable of exploring alternative realities without losing sight of the current direction of travel.
To embed innovation this forward-looking capability must have a clearly defined structure, be resourced and represented at the highest level. Structure refers to an ecosystem (rather than one team) that nurtures and builds a culture of innovation, where curiosity and creativity are encouraged whilst being a contrarian is not pilloried. There is no one-size-fits-all, hence an organisation may have to iterate a couple of times to determine the right innovation model. In spite of this, the one requirement remains which is to deliver results.
Innovation is still too often treated as a buzzword. It features prominently in strategy documents with leaders proudly endorsing its benefits, yet fades when priorities are translated into operational plans and budgets. Where innovation is genuinely strategic, it is visible in the employment of capital, how talent is developed and how leadership performance is measured. There is clear ownership, focus and explicit links to long-term value creation. Its visibility signals its importance and relevance, without which it remains conceptual rather than a long-term capability.
Innovative organisations are deliberately built
There is no single blueprint for innovation. Innovative companies are rarely innovative by accident. They become so, through deliberate choices and sustained investment. Vision, culture, governance and incentives are aligned around a shared understanding that the future will not simply be an extension of the past. Assumptions are challenged, disciplined experimentation is encouraged and leadership demonstrates the courage to weigh risk and act in the face of uncertainty.
At its core, innovation is an act of leadership. Showing willingness to move beyond comfort and convention in pursuit of enduring relevance. Organisations that innovate have a graveyard of failed products told through a litany of war stories. Such organisations have a higher likelihood of creating the next breakthrough product that could secure the fortunes of the organisation for posterity. Think of Amazon’s Fire phone, which unofficial figures suggest only 35,000 devices were sold versus AWS (Amazon Web services) which is widely regarded as the largest cloud platform in the world today and by all accounts a very successful product.
In a world defined by constant change, the greatest strategic risk is not daring too much, but daring too little. To innovate is to choose the future rather than inherit it. Strategy that embraces this truth does more than respond to change; it shapes it.
Nyari Muguti is a seasoned Strategic Transformation Consultant and Executive Coach with over 20 years of experience, operating across the UK and the SADC region. She brings a wealth of expertise in driving the succfacilitating strategy development and supporting organisations and leaders to transform as they implement their strategies. https://www.linkedin.com/in/nyari-muguti-24998017/ nyari.muguti@shanduko.co.uk
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