Business leaders strive for understanding of their environments to develop strategies that improve their organizational performance and keep their edge on the competition. The increasing complexity, pace and multitude of challenges and opportunities by which organizations are faced today create ever-greater needs for innovation, automation and the ability to realize value from data in order to remain agile and flexible to be able to quickly take intelligent risks in today’s changing markets.
VUCA is an acronym borrowed from military terminology, gaining popularity in business strategic leadership theory in the 1990’s. The term represents Volatility, Uncertainty, Complexity and Ambiguity. It signifies 4 distinct challenges that demand 4 different modes of responses, and serves to describe the complexity of strategic decision-making in operations environments by which organizational leaders are confronted.
Volatility signifies an organization’s need to have the agility and flexibility to act fast in positioning themselves where they need to be for maximum advantage impact in turbulent, quickly changing environments. This challenge is overcome with organizational vision, strong values and a healthy culture.
Uncertainty characterizes the lack of predictability and chance for surprise in changing markets. The US military names cyberspace the “fifth domain”, after the air, land, sea and space. The most successful companies are the ones who are able to win a decisive advantage in this fifth domain, through realizing value from their data giving them a considerable advantage in achieving maneuverability, ensuring agility and keeping their organization lean. “Uncertainty is dealt with by constantly building understanding,” says Simon Carpenter, Chief Customer Officer at SAP Africa.
Complexity illustrates the mass of challenges, chaos, confusion and complications confronting business leaders today, especially multinational organizations with multiple products in multiple markets dealing with the unique cultural values, different compliance regulations and regulatory bodies in the countries which they operate. According to Carpenter, the strategic solution to complexity cannot always be a naïve approach to simplicity, but requires a more nuanced strategy based on a framework where there is much that can be done to profoundly simplify IT, “By moving a lot of the IT workload into the cloud we can unlock scarce IT resources to drive innovation within the business. We may not want to get too simple, but using current technologies to consolidate resources introduces increased efficiencies into the business.”
Ambiguity, which Wikipedia classifies in the VUCA model as, “the haziness of reality, the potential for misreads, and the mixed meanings of conditions; cause-and-effect confusion”, basically characterizes a lack of clarity in the conceptualization of organizational threats and opportunities before advancement to fatal levels. A strategic solution to ambiguity is clarity, which is achieved in large part through realizing value from data in order to drive environmental positioning to a desired advantage point.
In his series of blogs, the late former US Army Colonel Eric Kail outlined adaptive leadership tactics for operating in a VUCA world as follows:
For Volatile Situations…
- Communicate clearly
- Ensure your intent is understood
For Uncertain Situations…
- Get a fresh perspective
- Be flexible
For Complex Situations…
- Develop collaborative leaders
- Stop seeking permanent solutions
For Ambiguous Situations…
- Listen well
- Think divergently
- Set up incremental dividends
While Colonel Kail’s advice was constructed within the context of small-unit combat activities in the military, it is easily convertible into applications for organizations of all sizes.
Phil Jones, currently serving as Associate Vice Chancellor at UNC Charlotte after a 29 year career as an US Army Engineer officer retiring as a Colonel, explains, “There is an old Army saying: “a plan never survives the first contact.” This is especially true in a VUCA world. Being flexible and adaptable is critical. Using the inter-relational considerations described in the VUCA model, strategic leaders can proactively anticipate the effects of operational decisions to the second and third order. Some have described this as “the ability to see around corners”, but really it is about enhanced situational awareness and adjusting to the uncertainty and ambiguity as the situation dictates.”
Paul Kinsinger, Clinical Professor, Thunderbird School of Global Management, and Executive Director, Thunderbird Executive Education relates in an article on the Thunderbird site, “The need for organizations to adapt is nothing new and, indeed, those who point out that humankind has faced even more dramatic adaptation imperatives in the past are no doubt right. That said, we are where we are in the history of human development and in the scope and pace of dynamic change in the marketplace and in our organizations. A failure to meet the challenges will leave many companies behind and the human capital potential of their employees unfulfilled.”
VUCA Prime, a popular response to address the root causes of VUCA symptoms developed by Bob Johansen, distinguished fellow at the Institute for the Future, can be seen as the continuum of skills developed to antidote the VUCA model flipping the acronym to focus on Vision, Understanding, Clarity and Agility. Kinsinger writes, “We are moving from a world of problems, which demand speed, analysis, and elimination of uncertainty to solve, to a world of dilemmas, which demand patience, sense-making, and an engagement of uncertainty.” Vision, understanding, clarity, and agility are not mutually exclusive in the VUCA Prime model. Rather, they are intertwined elements that help strategic leaders become stronger VUCA leaders. VUCA Prime counters the effects of a VUCA environment with:
Vision – an intent that seeks to create a future
Understanding – the ability to stop, look and listen
Clarity – the ability to help make sense of the chaos
Agility – an organization where ‘wirearchy’ is rewarded over hierarchy [The operational definition of wirearchy is “a dynamic two-way flow of power and authority, based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology”.]
The value of data in a VUCA world is now being realized from multiple analytical pursuits. Cybernomics, the ability to analyze and leverage big data, digitization and social media to enhance business efficiency, has become more critically imperative than ever before to strengthen an organization’s competitive edge. Psychometrics,which measure fluid intelligence by tracking information processing when faced with unfamiliar, dynamic and vague data can predict cognitive performance in VUCA environments, bringing awareness of the dynamics reinforcing personality such as values, beliefs, self concept and defenses. The biggest breakthrough in realizing value from data may come with the emergence of quantum storytelling, a huge and largely unexplored body of work in organization theory that describes how “living stories” affect the futures of companies and their brands. Learning is debated to be the most vitally important factor in the survival and advancement of an organization, helping reduce volatility, uncertainty, complexity and ambiguity. Bottom line is no data, no learning.
Today, the need for leaders to make fast decisions, manage the paradoxes of seemingly contradictory demands and embrace change is critical to navigation and survival in these turbulent times of a VUCA world. These skills and abilities are notably different from the more function-specific skills and abilities leaders needed in the past to succeed. Business leaders must refocus their leadership skills to hone these more strategic, complex critical-thinking skills.
Hey, it’s crazy out there! What are you doing differently to adapt to leading in a VUCA world? I’d love to hear about strategies you’ve used to overcome leadership adversities or your thoughts about the significance of the application of VUCA principles to leading your environment in the comments below, because they could help others and, who knows, it may just help you too.