Leading in the VUCA World

 

The VUCA world

In 2020s, there are no hard and fast rules for managing businesses any more — as the world has gone “VUCA” — volatile, uncertain, complex and ambiguous. In VUCA world the hierarchical organization model is finished and new models are emerging but there is no one dominant model that works for everyone. New times call for new rules but there is no thumb rule for every industry and every situation. Out of the five most valuable companies in the world in 2009, only Microsoft still retains a place in the list. In the VUCA world, competency comes with an expiry date, and it is as true for organizations as it is for people.

How VUCA impacts on Leadership?

The technologies that are amplifying change are also the tools to manage it more effectively.

In Deloitte’s “2019 Global Human Capital Trends” survey, 80 percent of respondents agreed that the 21st century has imposed new requirements on business leaders. It is due to various elements of our connected and digital lives. Together, they point to a “VUCA” world that directly challenges the way leaders develop stability and direction for their businesses.

VUCA is dynamic and situational — sometimes things can be fairly clear but then suddenly shift due to outliers, adjacencies, and disruptions. Arguably, leaders today face an extended period of rising VUCA.

The elements of VUCA are not new and they exist since long, but the modern world has amplified them. Amid globalization, instantaneous communications, and innovative ecosystems, leaders are more challenged by continuous change. Watertight Command-and-control management styles appear rigid, unresponsive, and fragile.

Remote management responds to globalized skills, markets, and ecosystems. An effective business finds talent and opportunity anywhere it can, often where it costs the least. Leaders should be comfortable directing across such networks and securing trust without physical proximity. Distributed businesses respond to softer hierarchies and empowerment of teams to act effectively on their own.

This extends to non-humans. A complementary workforce of humans and machines can automate, innovate, and predict at greater scale and complexity. While automation can free leaders from overseeing routine tasks, machine intelligence can help them reckon with complexity.

When change is the only constant, leaders should develop the ability to quickly understand and adapt. Businesses can expand their sensing capabilities — from data analytics and machine learning, to leveraging sales teams and technical support at the edges of the business.

Twenty-first-century leadership may demand greater risk tolerance. A VUCA world almost demands failures, but these can be narrow, measured, and, most important, used to get better information and reduce uncertainty and ambiguity. Leaders may be well-served by anticipating change around every corner, modeling scenarios, and developing agile and adaptive responsiveness, both in their thinking and across their business.

Let’s understand each element and its impact on leadership.

Volatility -V component of VUCA:

It refers to the speed of the change in an industry, market or the world. It is associated with fluctuations in demand and turbulence in the market. The more volatile the world is, the more and faster things change. The question is how to lead in such volatility?

Here are three ways to lead more effectively in such volatile environment:

Train team to provide meaningful information rather than general data: In a volatile environment, quick decisions are the most important tool to give immediate response to any change. In this digital and AI enabled world, all companies are working online and considerable amounts of big data are available for any events and outcomes. However, such data is of no use until it is processed into meaningful and usable information. Such information will help leaders to make quick decisions with probable outcomes.

Clear Communication: We all are aware that communication within the team and with outsiders is very important. The great orator Winston Churchill always focuses on the small words as those are clear. It’s a complex and volatile world and indirect communication generates various meanings as per understanding of listeners. It affects decisions. Hence, clear and focused communication is a great help in between teams. Keep your communication small, clear and to-the point, not be jumbled with jargons and corporate makeover.

Ensure your intent is properly communicated and understood: In any communication, sending a message is one part but it is not complete if the audience is not well received and understands the intent for the communication. Every action, objective or being of person, team or organization is on its own “Purpose” of “Intent”. The challenges inherent to a volatile environment require agile leadership and flexible organizations. If your subordinate leaders fully understand your intent, they’ll be better equipped to appropriately handle violent and unpredicted shifts in the environment

Uncertainty — U component of VUCA :

Uncertainty is a grey area where the predictability of information in events is unknown. Uncertainty often occurs in volatile environments that are complex in structure involving unanticipated interactions that are significant in uncertainty. It happens when people don’t have clear information and their predictions are based on assumptions and opinions. Such uncertainty hinders our ability to conceptualize the threats and challenges facing the organizations we lead. A typical mistake during uncertainty is we thought we had a lot more time than we actually have and the mitigation plan fails due to the same.

Here are three ways to lead more effectively in an uncertain environment:

1. Get a fresh and innovative perspective: Leader has to always try new innovative ways to solve any challenge and check the possibility of all negative outcomes and its solutions before trying these new ways. To always get a fresh perspective, one has to challenge the appropriateness of conventional ways of doing the particular work or solving any problem. In this process, the concept of Red-teaming is very helpful within the team. Red-teaming is the use of a devil’s advocate (one who is always challenging the solutions where the entire team consensus is there) within the leadership team in order to counter the influence of group-think. Red-teamers don’t simply argue in the plan; they think and act as the competition requiring leaders to move beyond “that won’t happen” to “what if this occurs.” The red-team members have no personal investment in the plan, so they don’t have problems exposing weaknesses or single points of failure. Red-team membership should be rotated and leaders must be careful to value and protect red-team members from any perceived resistance from other organizational members.
2. Flexible Planning: To achieve any objective or goal, a well-thought plan is required. However, sometimes organizations suffer the loss as when there might be change in plan required, leaders believe that they have made a well-thought plan which needs to be followed. Such a plan has no capability to address dynamic situations and it leads to failure. In any organization, plan or system is important but it shall be flexible enough that at the time of requirement, it shall be flexible. A plan should incorporate flexibility and options at its inception.
3. Glance back, look ahead. It is prudent to assess the outcomes of our plans and decisions; it’s how we get better individually and collectively. However, every review must be conducted at the right level of detail, with the purpose of making the organization better as it moves forward. They should focus on what could realistically be done better in the future, rather than what could have been done in the past. Hence, a leader shall keep an eye on the past to learn things and on the future to implement those learnings.

COMPLEXITY — C Component of VUCA

It refers to the number of factors that needs to take into account, their variety and the relationships between them. The more factors, the greater their variety and the more they are interconnected, the more complex an environment is. Under high complexity, it is impossible to fully analyse the environment and come to rational conclusions. The more complex the world is, the harder it is to analyse. In complex environments, actions and results are interlinked and affect each other that requires detailed action plan and work allocation. It is like rubik’s cube, where if you focus on a single colour and single side to match all yellow colours squares on one side, you cannot solve the same forever. A one has to see all aspects and dimensions at the same time to solve the same.

Following measures can help you to leading in complex environment:

Collaborative Leadership: Leadership doesn’t mean that leading peers but it is encouraging peers to achieve defined goals, improve their capabilities, learning from each other and make them leaders for next generations. It is called collaborative and inclusive leadership. In such a collaborative team, each team member understands his/her importance and performs his/her role in the team. This approach can multiply the skills and efforts of the entire team which makes complex goals achievable.

Avoid searching permanent solutions: In a complex environment, a team or organization has to work on many fronts at a time and all problems or situations are interrelated. Further, organization has limited resources to deal with the situation. Hence, it is not necessary to seek permanent solutions for every problem and focus on each problem in too many details. There are chances of ignoring other important issues while dealing with one to eradicate completely. Further, the permanent solution is also not permanent forever as the situation and environment is changing fast in the VUCA world. Hence, focusing on important issues and resolving them to a significant extent can help in a complex environment.

Train peers to fit in your Shoe: In a journey of rewarding career, each team member is running his or her own race in his or her own track. In a complex and highly demanding environment, you cannot do everything on your own as a leader. Nowadays, a leader’s most important role is to train future leaders. As a professional, every experienced fellow has his or her own success story to tell others. A leader’s job is to impart training, build up confidence and challenge the team members to conquer the challenge and define their own success story to tell others. Put the right resources into their development now, and don’t be surprised when they amaze you. That’s potential worth investing in. Who knows your peer can dance better than you with your shoe!!

AMBIGUITY — A component of VUCA

A lack of clarity to interpret something is called Ambiguity. An incomplete information which sounds contradictory or inaccurate to draw clear conclusions leads to ambiguous situations. It is also called vagueness in ideas. The more ambiguous the world is, the harder it is to interpret. It is different than Uncertainty. Uncertainty is when relevant information is unavailable and unknown, and ambiguity where relevant information is available but the overall meaning is still not clear.

Leading in Ambiguous environment:

Active Listening: To counter ambiguity, active listening by a leader is most important to understand and analyse the situation. Every subordinate wants to be part of a meaningful work effort and contribute to the team in achieving goals. To maintain and improve this spirit amongst employees, leaders shall draw strength from diversity and listen to every team member. Subordinate leaders will listen to others only as well as we listen to them. Don’t create your own friction by hearing just what you want to hear from diverse voices representing valuable perspectives.

Think divergently and remain open for new ideas: Openness to new ideas is a leadership characteristic highly correlated with effectiveness. Diversity of race and gender are most certainly important in order to provide role models for emerging leaders. But we must look for diversity in other ways as well. The days of one best solution are gone for good; see the second- and third-order opportunities inherent in equally attractive solutions.

Set up incremental dividends: Celebrating success is important, especially in an ambiguous environment. When the way ahead is not clear, it is always good to be reassured to have tangible proof that we are moving ahead in the right direction. Our stakeholders need to know that we can achieve small gains over the long term; setting and achieving incremental dividends is a great way to build and maintain momentum, confidence and trust, in both the leader and the organization.

ALL 4 ELEMENTS DETAILS:

We have understood all 4 terms individually along with what measures are required for effective leadership in individual condition. However, it is just for sake of understanding the same, in the real world all four terms exist at the same time and interrelated. The more complex and volatile an industry is, the harder to predict and therefore more uncertain it will be that creates more ambiguity. Yet, all four represent distinct elements that make our environment — the world, a market, an industry — which is difficult to understand and to deal with.

Thus, we live in the VUCA world where in Business has a very challenging landscape wherein Technology is changing at a pace which was there never before, Redefining Business models, Change in the perspective to measure the value of the product, Cutting Edge innovation.

To address and respond to the VUCA effects, a leader has to build an organization which moves quickly, analyses the situation in the VUCA world and responds with the best possible solution every time. A leader or an organization has to be on its toe and respond to the continuously evolving challenges.

Following measures will help to build such an organization.

1. Build a Responsive Culture

Organizational culture is the face of its value system and it is the identity of any organization. In the VUCA world, organizational culture should be a responsive one and demands agility to respond to the challenges. This activity requires integrity, empowerment, leadership development and continuous learning as the most essential parameters.

To build responsive culture is a leader’s prime objective and every leader has to showcase organizational values by practical example and not by words. Leaders must have to be open, available and accessible all the time to all executives to nourish the culture and help them as a lighthouse of the organization’s values. It requires strategy like “Performance Connect” rather than age old “Performance Evaluation”

1. Create a Learning Organization

Learning is always a continuous process for individuals and the same is true for organizations also. As like Deming’s Plan, Do, Check and Act (PDCA) cycle for quality improvement, I propose Observe, Analyse, Learn, Act, Evaluate (OALAE) cycle for creating learning organization.

Leaders are encouraging experimentation with new products, services and procedures. World leading organizations follow some of the following methods to develop a learning organization and same any small organization can also follow.

a) Investing in small scale projects on cross-functional project teams, to find out ways of doing business within their markets. In these projects, different types of conditions are being created where the organization can learn from experience, making work as a curriculum improvement and innovation.

b) At Deloitte, after-action reviews deployed on a routine basis, where work groups take stock of their collective performance following major events or tasks, looking at what worked, what went wrong and what needs to be improved. Several innovations resulted from this process.

c) Many organizations have a culture that after every meeting they find out and record ‘what went well, what we could have done better and what have we learned from this?’. It will be used as a learning for the next task or meeting.

d) In a learning organization, leadership or management has the main responsibility of keeping trust on the employees. For any good performing organization, it is necessary that any bad news / information of failure shall travel fast from bottom to top and anything which is alarming and needs immediate action shall travel exponentially fast. Leadership shall encourage all employees to give such feedback without fear of any bad reaction from management.

1. Effective People Management and Training:

As parents are investing in the child’s education, skill development, knowledge enhancement and more importantly shape them in a family or social culture. Same care and nourishment is required for employees as well. In the VUCA world, agility in the organization is most important which requires employees who have the knowledge, skills and personal attributes to operate within the corporate culture they are trying to establish. Employee training programs are planned and delivered to create a workforce that embodies the culture. Leader development efforts leverage stretch assignments and work experiences, which are supplemented with supportive coaching and mentoring to grow and expand the leadership batch of potential executives.

Every company has to develop their inhouse training programmes as per organization needs or collaborate with any training institute for developing customized training programmes as per need of the organization.

Such training prepares professionals for the complexity and ambiguity inherent to the business environment and to help clients solve their challenges.

1. Listen, Be Patient and Be Persistent towards goal:

It is last but not the least to listen carefully to all feedback received through employee surveys and customers feedback programmes. It provides indications for how internal and external stakeholders perceive change efforts. They also believe it’s important to be visible and available to employees — listening to employees at all levels share their stories and experiences with change.

They employ “leadership by walking around.” The executives expect the changes to result in better performance of the business. Although they are anxious to see early results, they also understand that many of their efforts will need time to fully blossom. While they understand the importance of patience, they are eager to celebrate early successes and anticipate making great progress.

Perhaps this is the most important takeaway: Excellence in a VUCA environment takes time, requires strong leadership and agile, resilient team members dedicated to being learning leaders who persevere in the face of resistance and setbacks.

In the VUCA world, everything is not unpredictable and following are some of the facts which can be predictable and helpful to leaders to decide strategy. Following are meta-phenomena with trends that exist in the VUCA world.

1. Urban concentrations: The majority of the globe’s population now lives in cities and this will continue to increase in the decades ahead. By mid-century, most of the top 10 megacities in the world will be in the developing world. With urbanization generally come longer life expectancies, lower birth rates, and greater economic prospects.
2. Climate changes: For the sake of counterfeiting impacts of climate change, all political leaders across globe just meet in the conferences with no results and only debating over the exact timing and consequences, the consensus that we are indeed in the Anthropocene era, in which human activity is altering the climate is only strengthening. Sea levels will rise, extreme weather events will multiply, and water sources and agricultural production will be less reliable.
3. Demographic shifts: Globally, the North and West are getting older, and the greatest concentrations of youth will be in the South and East. Tensions are likely to rise as the bulk of economic wealth and opportunity remain beyond the reach of many people.
4. Technology advances: We will be ever-more connected by devices that are smaller, faster, and less expensive. Each of these phenomena can be used as a lens on your business and industry to make it easier to discern what may be coming.
5. Get curious, and get out of your comfort zone. VUCA is a condition that calls for many penetrating, challenging, open-ended, analytical questions. One has to constantly think, innovate and implement new measures to counter the effects of VUCA. One has to come out of comfort zone due to uncertainty. The complexity in VUCA is centered on dynamic relationships in which similar inputs may yield vastly different outputs. It is critical to know which forces are positive, which are negative, and which could go either way. Continually asking questions will help you see patterns and make more accurate predictions. As a leader, you must encourage open, direct feedback as well as ideas that challenge the status quo.

Conclusion:

The meaning and coverage of the term ‘Leadership’ has changed significantly from conventional to Management by Objectives (MBO) to Objectives and Key Results (OKR). But, in VUCA world demands unique and dynamic leadership skills. VUCA allows failures, but these can be narrow, measured, and shall be used to get better learning for the next course of action which in turn reduce uncertainty and ambiguity.

We humans crave certainty and that’s why constant change in the environment sends us on edge. People worry about their jobs, status, and influence. This can hurt engagement, productivity and the willingness to act independently. A leader’s job is to reassure the team through stability and transparency of process. A leader has to be clear about decision-making criteria and signal acceptable tolerance for learning-based mistakes that are inevitable in a fast-changing environment. Leader has to consider failures as a resource and identify the learning out of them. Such leadership creates faith amongst the people and they can perform in a better manner.

VUCA calls for a leadership response — Vision, Understanding, Courage and Adaptability.

All the best to be VUCA ready and VUCA enabled Leadership.

Thanks for reading my blog.

Are you Leading?

Dr. Deepak A. Patil

CEO, Lead ThySelf