Over the last thirty years I have been fortunate to work as a consultant at board-level in many large private and public sector organisations. Looking back much has changed over that time due to the impact of technology and increasing globalisation. But quite a lot – such as the importance of individuals and relationships – has stayed the same. However, it is very noticeable that we are now living in a world which is much more VUCA (Volatile, Uncertain, Complex and Ambiguous) than ever before.
How can today’s leaders respond to these new challenges?
Let’s start by looking at VUCA in more detail.
What is VUCA?
The term was first used by the US War College to describe the world emerging from the end of the Cold War; in a business context the term was widely adopted after the global financial crisis of 2008/2009. It highlights four key challenges which have been ‘dialled-up’ over recent years. Brexit is a good example of VUCA in action; leaders throughout the UK know that they should be planning for Brexit, but what exactly does that mean?
VUCA consists of four dimensions, each with its own difficulties:
Volatility: this is about speed.
The requirement is changing fast and/or it may appear very suddenly. The response required from leaders is often around developing the organisational capability to respond quickly to unexpected challenges – for example by developing flexible skills or stockpiling resources.
Uncertainty: this is about a lack of predictability.
The requirement is understood, but it may not happen in that way or at all, making planning and decision making challenging. The response required from leaders is around developing the organisation’s ability to understand the underlying causal factors and plan for alternative future outcomes.
Complexity: this is about confusion.
The requirement is very complicated and has many interconnected elements or variables. The volume of information or the nature of it is very hard to assimilate and much of the detail is not understood.The response from leaders is about developing the skills or resources required to make sense of the requirement. This may well require enhanced collaboration and team working across the organisation.
Ambiguity: this is about gaps in understanding.
There is plenty of information available, but it’s unclear what it all means. There are multiple options going forward, all of which seem equally possible. Leaders face challenges that have no clear solutions – but they will have to make decisions anyway. This element of VUCA is perhaps the most challenging of the four dimensions and the one where the impact of leadership is often the most important. The challenge for the leader is to manage ambiguity using data and judgement to protect the responsiveness of the organisation to change.
The response to each dimension is different and demands adaptive innovation and experimentation with ongoing changes in people, processes, technologies and structures. There are several important personal skills that leaders must deploy to navigate a VUCA world.
The first is to maintain a strategic perspective. Maintaining a focus on the big picture and the organisation’s longer term goals and aspirations provides a compass that can be used to navigate shorter term turbulence and disruption.
It’s also important to start to think in terms of what’s possible, rather than what’s probable. Leaders have often concentrated on understanding what has happened in the past so that they can apply the learning in the future. A VUCA world demands agility, flexibility and innovation focused on the unexpected. A focus on learning (and ‘unlearning’) is important to drive innovation and new ways of doing things. This is also about being willing to let go of ideas that have worked well in the past, and take measured risks. Successful VUCA leaders drive a culture of innovation, recognise that learning-based mistakes are inevitable and support the team to grow into the new world around them.
The next is emotional intelligence; VUCA places many new stresses on today’s leaders. The challenge is to lead the organisation to manage volatility, counter uncertainty, understand complexity and (most importantly) chart a course through ambiguity. Throughout the process the leader’s role is to provide direction, clarity, reassurance to maintain the engagement and stability of the team. Leaders that can manage their emotions, understand the reactions of others to ambiguity or complexity, and build empathetic relationships can provide the transformational leadership required to guide the organisation towards the future. Emotional intelligence is also a factor in the leader’s ability to stay upbeat, to communicate the positive potential in the turbulence around them and maintain the confidence and enthusiasm of the team.
Finally, in order to build trust and followership in VUCA times leaders must also be authentic and values-driven. This involves being consistent and transparent about their decision making criteria, the challenges facing the organisation and admitting mistakes or problems in a way which inspires confidence and commitment from others. In an environment of rapid change things will always sometimes go wrong; VUCA leaders face disappointments in an honest and authentic way and re-plan their approach to learn from failures whilst not compromising their values.
It’s clear that this VUCA world is here to stay; it’s not something that can be ‘solved’ or changed. Leaders must not allow themselves to be overwhelmed or immobilised and they must do more than just respond piecemeal to individual elements of change. It’s up to leaders to act to equip their organisations and themselves to create their future, by navigating these turbulent times.