The US Army coined the acronym VUCA in the late 1990s to depict the radically different military threats that arise when conditions are ‘volatile, uncertain, complex and ambiguous’.
These four words have subsequently been adopted in the workplace, as they neatly encapsulate the turbulent and unpredictable nature of today’s business environment. If your organisation is to survive and thrive in a VUCA world, you need to rethink the way you develop your leaders.
When change was incremental, leaders could learn to prepare for it - and manage it - by utilising their past experience or by following certain rules. As the pace of change increased, many employers introduced new processes and methodologies to help them respond effectively - and leaders had to develop a more flexible and cooperative approach. Now, however, the nature and speed of change have become almost overwhelming, and today’s leadership challenges are characterised by:
- Volatility. With global competition, turbulent financial markets, economic downturns, digitisation and greater connectivity, business markets have become chaotic and increasingly unstable.
- Uncertainty. Forecasting has become extremely difficult, as past issues and events are no longer accurate predictors of future outcomes.
- Complexity. Today’s organisations face multifaceted business challenges compounded by interdependent variables and mitigating factors.
- Ambiguity. Events and actions are open to more than one interpretation and this lack of clarity in markets and in companies increases the potential for misreads and mixed meanings.
The traditional role of a leader is to anticipate change, identify opportunities, create strategic plans, motivate and direct people, manage risks, solve problems and make effective decisions. However, these tasks are made much more difficult in a VUCA context. Volatile, uncertain, complex and ambiguous markets demand a different style of leadership, one which actively engages with uncertainty.
To instil this, organisations will have to look beyond on-the-job training, job assignments, coaching and mentoring. What’s needed now is a new approach to leadership development.
The leadership requirements
VUCA leadership focuses on three key aspects:
1. A shared vision. A clear direction has always been important for organisational success. However, VUCA leadership demands that everyone supports the vision and thoroughly understands their part in it. When the ‘big picture’ is clear and agreed, organisations will be better able to counter market turbulence and withstand volatile changes by responding rapidly with decisions and actions that stay true to the vision.
2. Collaboration. VUCA leaders will need to successfully harness the knowledge, skills, experience and multiple points of view of their staff, if they are to inspire and energise others and achieve the organisation’s goals. They must learn to listen intently to those around them and to build on their ideas (rather than hearing the outline of the idea and fitting it into their own map of the world). They should promote and support internal networks, interconnection and interdependency rather than reinforcing hierarchical areas of functional expertise.
VUCA leadership demands that everyone supports the vision and thoroughly understands their part in it.
3. Fostering an agile culture. VUCA leaders will be keen to assess their corporate culture, to better understand why things happen as they do in the organisation. Ideally, the culture should be respectful, supportive and less about ‘judging’ people, more about encouraging them to be curious about, and open to, new opportunities and new ways to improve. The right culture will promote and reward the desired behaviour and this will help to attract and retain talented employees.
Key development needs
To deliver the above requirements - and to respond effectively to the challenges they’ll face - VUCA leaders will need:
1. A fresh mindset. Our mindset underpins how we behave. Leaders - through their own ego, self esteem or past experience - often feel they need to be strong and decisive but this mindset is not always conducive to a more collaborative leadership style. In a VUCA scenario, leaders will be facing situations they’ve never encountered before, so they’ll need to take the counsel of those around them. To achieve this, their mindset needs to be examined, challenged and - if it’s found to be no longer helpful for the new situation - changed. A leader will never successfully adopt new behaviour if it clashes with their mindset or their values. Leaders need to become more self-aware of the leadership choices they’re making and what drives their thoughts and actions.
A leader will never successfully adopt new behaviour if it clashes with their mindset or their values.
2. New skills. In a VUCA world, information will come from many different sources. Leaders will therefore need to communicate with all levels of employees in their organisation and demonstrate teamwork, collaboration, information gathering, data analysis, listening, facilitation, empowerment and strategic thinking skills, in order to benefit fully from the different opinions and experiences of others. Leaders must develop trust in the specialist expertise and judgement of those around them - and they should ‘contract’ with others to agree how everyone will work together, especially in a crisis. A key benefit of doing this is that it increases the engagement and job satisfaction of employees, if they can see that their views are recognised, valued and implemented. Giving people ‘permission’ to express their opinions creates the sense that everyone in the organisation is ‘in it’ together.
Intellectually, we’re all aware of what good leadership behaviour looks like. It’s relatively easy to achieve when things are going well. But when the world turns VUCA, the increased pressure can cause leaders to adopt unhelpful behaviour. To address this, leadership development should be redesigned to focus on:
1. Leveraging the strengths of leaders. Rather than identifying their weaknesses, leaders can learn to leverage their personal strengths to deal with any new challenges they’re facing. For example, a leader who desires to be calmer under pressure may take inspiration from a different strength that they already have, such as win-win partnering. Thinking about the ‘skills’ they use successfully in win-win partnering - such as detaching themselves from the situation, being curious about new possibilities and asking clarifying questions - can provide practical insights that can help them to stay calm in pressurised situations. Then they must learn to recognise the ‘triggers’ or warning signs that show when the pressure is rising, so they can make a conscious choice to respond and behave differently.
2. Neuroscience. Understanding more about how we learn, why we behave the way we do, and how to make changes, can help leaders to challenge their ingrained habits and adopt new behaviours.
3. Simulations. Leaders can practise moving out of the comfort zone of their default responses if you give them opportunities to experience VUCA situations, in a safe and supportive environment. Leadership teams can undertake this together or leaders can participate with their peers from different organisations on an open programme. They can be given a scenario - which can build to become a full-on VUCA nightmare - and they can review their own performance and gain feedback on how they collaborated and responded to events.
Developing leaders in this new way can not only improve teamwork and relationships in the organisation, it can build resilience, unleash innovation and enhance competitiveness. Ultimately, the organisation will benefit by becoming more agile, a better environment in which to work and better able to counter volatility, manage uncertainty, simplify complexity and resolve ambiguity.