Partner Article

Getting to grips with a VUCA environment

Today we live in a constant period of uncertainty, fuelled by factors such as globalisation, worldwide economic challenges and climate change, to name but a few. As a result, many organisations and indeed, senior level executives, are struggling to stay afloat and aligned in what is increasingly being referred to as the VUCA (volatile, uncertain, complex and ambiguous) nature of today’s global business environment.

Constant and evolving influences are putting pressure on decision-makers to act in much shorter timescales than most leaders would like. The ‘interconnectedness’ of business, driven by globalisation, means that something happening in one part of the world can have an immediate impact on organisations elsewhere. An event occurring in one country is instantly reported around the world and stories are accessible via the internet in real time. The net result is that there is frequently little or no opportunity for reflection before important decisions need to be made. The challenge of leadership is made more acute by the modern day mantra of ‘doing more with less and quicker’, which means that outcomes need to be delivered with significantly fewer resources and show a much faster return than would have been the case in the past.

To succeed in this ‘new’ environment, leaders must make continuous shifts in people, processes, technology and structure. This requires great flexibility and pace in decision-making. A recent Boston Consulting Group (BCG) study suggests that organisations today must shift their business models and their leadership skills to become “adaptive firms.” By achieving this, businesses can adjust and learn quicker than their peers, giving them an “adaptive advantage.” Examples of adaptive firms that have done this very well are Apple, Google and Amazon.

But surely in our modern, technology-savvy businesses we have management practices and theories in place that can help us deal with a VUCA environment?

The sad reality is that many of our management principles are based on outdated learning and old-fashioned rules. In general, management principles are quite crude and simplistic, and we typically use deduction and assessment as a way of determining outcomes or to describe and justify situations.

So, whilst one can argue that the basic function of management does not change, the way it operates and the techniques it uses must. In order to deal with the multifaceted challenges that VUCA presents today, organisations need to embrace it rather than try to impose rigid controls and management practices that are unlikely to work. Now more than ever, we’re moving away from cause and effect situations where the management process is predictable, repetitive and the response is borne out of traditional thinking, to those that are complex where many causes, often of differing magnitudes, interact and interweave together to produce a unique end result, the like of which may never evolve again. Here we have to probe situations, sense what’s happening and then respond. These are the hallmarks of an adaptive organisation.

And it’s that adaptability that sustains innovation. Trying to innovate based on rigid deduction and assessment techniques is no longer an option in this new business playing field. Successful organisations will adopt a ‘safe to fail’ approach to innovation, where traditional forms of thinking and management approaches are challenged, adapted or ignored; where creative teams are funded to experiment and where failure is accepted as part of the learning process, rather than seen as a trigger for blame.

So what are the key steps to success in a VUCA world?

Ultimately some leaders are born to cope with VUCA and others have VUCA thrust upon them. Whatever the scenario, there are a number of techniques that leaders can utilise to make sensible decisions in a VUCA environment:

• Volatility can be countered with vision. Leaders with a clear vision of where they want their organisations to be in six months, a year or five years’ time, can better weather volatile environmental changes in their markets by making decisions to counter the turbulence while keeping the organisation’s vision in mind.

• Uncertainty can be countered with understanding, the ability of leaders to make sense of the multifaceted factors that both drive and impact their organisation. To be effective in a VUCA environment, leaders must also learn to reach beyond their functional areas of expertise. This requires leaders to communicate and collaborate effectively with all levels of employees in their organisation

• Complexity can be countered with clarity, derived from an abductive process that enables leaders to probe complex situations, sense how to react and respond accordingly. Leaders who can quickly and clearly tune into all of the minutiae associated with complexity and understand what’s happening can make smarter, better informed business decisions.

• Finally, ambiguity can be countered with agility, the ability to communicate across the organisation and adapt quickly to deliver new solutions to changing scenarios.

Organisations that can foster adaptability, innovation and agility in their leaders will see tangible rewards. Arguably, this also comes down to maintaining business confidence and a winning mind-set. Small steps are important and it is vital to recognise your wins, no matter how small they may seem. More than ever, in a VUCA environment it’s vital to keep moving, or risk being left behind by more nimble competitors.

I would urge organisations to plan for a VUCA environment, to invest in developing the leadership skills required, and above all have the courage of their convictions, as change is the norm in this new VUCA business landscape. If you are interested in reading more about this topic, why not download our business paper: Planning for success in the new VUCA business environment.

This was posted in Bdaily's Members' News section by Andrew Moore, COO, DAV Management .