By Stephen DeAngelis
Recently, Thibaud Molin, a partner at the KYU, told reporters at a press conference, “The world has entered a zone of uncertainty.”[1] His observation applies equally to geopolitical and business environments. In the geopolitical sector, some of the uncertainty comes from the fact that 2024 is an election year. Journalist Kelvin Chan reports, “AI-powered misinformation and disinformation is emerging as a risk just as a billions of people in a slew of countries, including large economies like the United States, Britain, Indonesia, India, Mexico, and Pakistan, are set to head to the polls this year and next.”[2] Uncertainty, however, is only one of the conditions today’s political and business leaders must face. They must operate in what has been described as a VUCA environment. VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity. According to organizational consultant Waltraud Gläser, this term was coined in 1985 “by economists and university professors Warren Bennis and Burt Nanus in their book Leaders. The Strategies For Taking Charge.”[3] Each term in the acronym (i.e., volatility, uncertainty, complexity and ambiguity) depicts a specific characteristic of particular environment. Gläser discusses each of those terms:
• Volatility. “Volatility describes the intensity of fluctuation over time.”
• Uncertainty. “Uncertainty describes the unpredictability of events. The more ‘surprises’ the context provides, the more uncertain it is.”
• Complexity. “Complexity is influenced by the number of influencing factors and their interdependence or interaction. The more interdependencies a system contains, the more complex it is.”
• Ambiguity. “Ambiguity describes the [inexactness] of a situation or information. Even if a lot of information is available (in the sense of being secure and predictable), the evaluation of the same can still be ambiguous.”
Attempting to lead when VUCA conditions exists is a daunting challenge; however, INSEAD professor Nathan Furr and entrepreneur Susannah Harmon Furr argue that uncertainty and possibility are “two sides of the same coin.”[4] Journalist Curt Nickisch, in an introduction to an interview he conducted with the Furrs, writes, “For many of us, uncertainty is nerve-wracking. However, many of our best achievements and meaningful experiences come from a trying time of ambiguity. … By learning to welcome and cope with the gray area, an individual can reach better outcomes.”[5] This holds true for both political and business leaders. VUCA-oriented leaders are essential in today’s geopolitical and business environments. In this article, I want to discuss how business leaders can become VUCA-oriented.
Leading in Uncertain Times
Business consultant Bill Schaninger, a Senior Partner at Modern Executive Solutions, writes, “All crucial issues faced by organizations in these times — caring for and inspiring employees; embracing purpose; emphasizing diversity, equity, and inclusion; improving effectiveness — all boil down to one thing: leadership.”[6] Consultants Ana Mendy, Mary Lass Stewart, and Kate Van Akin insist one of the most important capabilities a leader can demonstrate during times of uncertainty is the ability to communicate. They explain, “[Uncertain times] present leaders with infinitely complicated challenges and no easy answers. Tough trade-offs abound, and with them, tough decisions about communicating complex issues to diverse audiences. The good news is that the fundamental tools of effective communication still work.”[7] They suggest leaders use five guiding principles to communicate effectively. They are:
• Give people what they need, when they need it. Whether it’s a crisis or business-as-usual in uncertain times, people need to know what’s happening “to help people make sense of the [situation] and its impact.”
• Communicate clearly, simply, frequently. According to Mendy and her colleagues, “People tend to pay more attention to positively framed information; negative information can erode trust. Frame instructions as ‘dos’ (best practices and benefits) rather than ‘don’ts’ (what people shouldn’t do, or debunking myths). … Keep messages simple, to the point and actionable.”
• Choose candor over charisma. Blind obedience shouldn’t be expected during uncertain times. Leaders need to develop trust with their followers or they should expect to lose their trust. Mendy and her colleagues note, “Be honest about where things stand, differentiating clearly between what is known and unknown, and don’t minimize or speculate. Give people a behind-the-scenes view of the different options you are considering and involve stakeholders when making operational decisions.”
• Revitalize resilience. I have emphasized the importance of resilience for years. Today, most experts insist that, in order to optimize resilience, organizations must be agile. Mendy and her colleagues also stress, “It’s also important to [build] a common social identity and a sense of belonging based on shared values, norms and habits.”
• Distill meaning from chaos. This is harder than it sounds. When volatility, uncertainty, complexity, and ambiguity characterize the global environment, finding meaning can be difficult. That’s one reason Enterra Solutions® created its Enterprise Growth WarRoom™ and Enterra Business WarGaming™ offerings. Leveraging the enormous capabilities of artificial intelligence, historical and real-time data can be analyzed to generate a multitude of what-if scenarios and uncover important insights to help distill meaning from chaos.
Great leaders also help motivate their followers and strengthen their organizations by stressing problem-solving. Former McKinsey & Company analysts Charles Conn and Robert McLean insist, “Great problem solvers are made, not born.”[8] They highlight six practices leaders can use to become great problem-solvers:
• Be ever-curious. Conn and McClean note, “We’ve found that better results come from embracing uncertainty. Curiosity is the engine of creativity.” For more on this topic, see my article entitled “Great Leaders are Curious Leaders.”
• Tolerate ambiguity—and stay humble! According to Conn and McClean, “The real world is highly uncertain. Reality unfolds as the complex product of stochastic events and human reactions. … We have to be comfortable with estimating probabilities to make good decisions, even when these guesses are imperfect. Unfortunately, we have truckloads of evidence showing that human beings aren’t good intuitive statisticians. Guesses based on gut instinct can be wildly wrong. That’s why one of the keys to operating in uncertain environments is epistemic humility.” Artificial intelligence solutions can help ensure organizations are decision-driven using the best available data.
• Take a dragonfly-eye view. “Dragonfly-eye perception is common to great problem solvers,” Conn and McClean write. “Dragonflies have large, compound eyes, with thousands of lenses and photoreceptors sensitive to different wavelengths of light. … The idea of a dragonfly eye taking in 360 degrees of perception. … Think of this as widening the aperture on a problem or viewing it through multiple lenses.” Most innovation gurus recommend people find one or more useful techniques that allow them to look at problem from different perspectives.
• Pursue occurrent behavior. Conn and McClean explain, “Occurrent behavior is what actually happens in a time and place, not what was potential or predicted behavior. Complex problems don’t give up their secrets easily. But that shouldn’t deter problem solvers from exploring whether evidence on the facets of a solution can be observed, or running experiments to test hypotheses. You can think of this approach as creating data rather than just looking for what has been collected already.” Using digital twin technology and simulations can help. For example, the Enterra Global Insights and Decision Superiority System™ (EGIDS™) let’s decisionmakers view a range of possibilities and potential outcomes that could occur as the business environment changes. EGIDS helps decisionmakers examine hundreds of different scenarios at computer speed so that the best course of action can be selected.
• Tap into collective intelligence and the wisdom of the crowd. Conn and McClean explain that believing your team has all the answers is a problem. They write, “Accept that it’s OK to draw on diverse experiences and expertise other than your own.” They suggest looking for the best advice available for solutions to tackling problems you want to solve. The “wisdom of the crowd” is not the same as “groupthink,” which can result when a leader forces their idea as the only way forward.
• Show and tell to drive action. Conn and McClean explain, “As you no doubt remember — back when you were more curious! — show and tell is an elementary-school activity. It’s not usually associated with problem solving, but it probably piqued your interest. In fact, this approach is critical to problem solving. Show and tell is how you connect your audience with the problem and then use combinations of logic and persuasion to get action.”
Concluding Thoughts
I think it’s safe to say that “business-as-usual” is an anachronistic term that should be tossed into history’s dustbin. In a VUCA world, nothing is usual. The late scientist Charles Darwin convincingly made the argument that species best able to adapt are the most likely species to survive. His observation can be aptly applied in the business environment as well. In the years ahead, organizations that can best adapt to the changing business environment are more likely to survive than those that have difficulty adapting. Artificial intelligence is becoming a must-have capability to help organizations find the right strategies as the world changes.
Footnotes
[1] Camille Rustici, “Geopolitical Crises, Climate Change, Shortages: The 10 Supply Chain Risks for 2024,” Direct Industry E-Magazine, 26 January 2024.
[2] Kelvin Chan, “AI-powered misinformation is the world’s biggest short-term threat, Davos report says,” Associated Press, 10 January 2024.
[3] Waltraud Gläser, “Where does the term ‘VUCA’ come from?” VUCA-World, 9 November 2021.
[4] Curt Nickisch, “The Case for Embracing Uncertainty,” Harvard Business Review, July 2022.
[5] Ibid.
[6] Bill Schaninger, “How to lead during uncertain times,” McKinsey & Company, 10 January 2022.
[7] Ana Mendy, Mary Lass Stewart, and Kate Van Akin, “How to communicate effectively in times of uncertainty,” McKinsey & Company, 18 June 2020.
[8] Charles Conn and Robert McLean, “Six problem-solving mindsets for very uncertain times,” McKinsey & Company, 15 September 2020.