February 1, 2018

At a recent conference in Copenhagen I flashed images of the global financial crisis, industrial pollution and global warming, Brexit and the crumbling Euro, and the immigrant crisis. Against this background I asked the audience, “What does it feel like to be leading today?” One person shuttered with a guttural groan as the rest nodded their heads in solemn agreement.

That seems to capture the sentiment I run into working closely with senior managers to help them improve their ability to lead their organizations. Behind closed doors, many executives confide that they sometimes feel overwhelmed by fast-paced change and complexity. They don’t know what to make of new developments. They feel unsure about important strategic decisions. They are frozen into inaction in the face of steep trade-offs between competing goals. They are humbled by a global economy that feels like an international house of cards—where defaults on mortgages in Indiana can topple the economy of Iceland.

Of course, organizations in both the private and public sectors have always had to deal with change, risk, tough choices, and complex systems. But something has happened since the turn of the century, where all of these things have sped up and begun to collide. The hyper-speed of change and expanding complexity is exceeding our ability to keep up: many leaders feel in over their heads. As one executive recently asked, “Everyone is looking to me for answers; who do I look to for answers?”

Organizational thinkers have created a new vocabulary for trying to comprehend this new reality. Charles Handy, the 20th century Irish management philosopher, predicted the 21st century would be the “Age of Paradox”—where conflicting problems could not be simply solved, but would have to be constantly managed. Complexity theorists have modelled butterfly effects and the emergence of order out of chaos. Nassim Taleb popularized “Black Swans” to explain the rise of highly unlikely but highly consequential events that expose the fragility of our understanding.

In the United States, and increasingly in other parts of the world, business people are describing today’s environment as a VUCA world: Volatile – Uncertain – Complex – Ambiguous. The idea comes from the U.S. War College and their efforts to understand how the post-cold war theaters of war are fundamentally different. The fog of war in modern military engagements has become thicker and more confusing with the rise of urban warfare, the proliferation of weapons, and non-state enemies. Existing conceptions of the battlefield are inadequate to explain, for instance, how a Somalian street gang was able to take down advanced weaponry like Black Hawk helicopters in Mogadishu. This is not the world of World Wars I and II; today is a VUCA world.

Business people love to use sports and military analogies. I remember the first time I heard a business executive use the VUCA concept. It was in a large, global powerhouse non-alcoholic beverage company, and the executive exclaimed, “You must understand: the modern soft drinks industry is a VUCA world!” I nearly blurted out, “Come on, Helmand province is a VUCA world—soda is not a matter of life and death!”

But on reflection, I realize that this executive was trying to tell me something important; he was trying to say that his business has gotten so complex and competitive that it was like trying to separate friend from foe and complete an unclear mission in the streets of Helmand province. He felt bewildered by the range of regional tastes and preferences, by the volume of competitors coming from out of nowhere, how regulators and lawmakers were cutting into sales, and how consumers could now buy a machine to mix their own soda at home.

So let’s take this idea seriously, and consider what it means to lead in a VUCA world. Following this line of thinking helps to identify the challenges modern leaders face and, more importantly, what is required for them to navigate their organizations through today’s crazy operating environment.

Volatility refers to how change is coming faster and unexpectedly, with blurring dynamics that catch you off guard. This requires a rapid response and well-honed skills are easier to deploy more quickly. The performance demand is speed.

Uncertainty refers to the lack of predictability, the seeming randomness in how the unexpected can flare up. This inability to know for sure what will happen requires patience and a contingency plan as things unfold. The performance demand is flexibility.

Complexity refers to a multiplicity of interacting parts that affect each other and make it difficult to discern cause and effect. A key principle from systems theory is that such a multitude of variables requires a broad range of response options. The performance demand is breadth.

Ambiguity refers to the lack of clarity and mixed signals in modern problems. Circumstances with multiple meanings and alternative interpretations require objectivity and seeing things as they are, without projecting our biases, previous experience, or wishful thinking to read between the lines. The performance demand is self-awareness.

VUCA performance demands

In other words, to lead in a VUCA world, managers need a broad set of skills that they can deploy fast and flexibly to deal with the deep causes of emerging issues. The practical implications for modern managers, then, is to assess themselves and build up capability where necessary:

  1. Do you have a broad and well-rounded repertoire of leadership skills—can you zoom out to see the big picture but also zoom in to grasp the details? Can you step up and take charge but also stand down and empower others? Can you respond to disruptive change as well as initiate disruption yourself?

  2. Are these skills sufficiently developed that you can use them on short notice? For instance, can you quickly toggle between zooming out and back in?

  3. Do you have the flexibility to change gears and adapt on the fly, using one approach then quickly shifting to another approach as you move from issue to issue—or as the issues themselves change?

  4. Do you know yourself—the preferences, biases, blind spots, and world views that guide your attention, shape what you attend to as well as what you ignore, and influence how you make sense of the world around you?

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