What We Think

April 28, 2020

Business leaders in a VUCA environment

Over the past few years, there has been a collective realisation that the global environment is being characterised even more by Volatility, Uncertainty, Complexity and Ambiguity (VUCA). COVID-19 has been the perfect embodiment of VUCA whereby companies all over the world and entire nations have been faced with the all the elements of VUCA. With no clear end in sight, lots of debate is happening as to what do we need to face such a crisis. The answer is VUCA (2.0) too!

 

What is VUCA?

First introduced as a concept by the American War College to describe the global multilateral situation after the Cold War, it draws upon the leadership theories of Warren Bennis and Burt Nanus, and has over the years, been increasingly used in business management and strategic leadership.

Volatility is a situation with unstable changes, and unexpected challenges that could last for an unknown duration.

Uncertainty is a situation where there is a lack of predictability, even though the basic cause and effect might be known.

Complexity is a situation with countless interlinked variables and factors, with some or all of the information available or predicted, but the sheer scale of it makes it challenging to process.

Ambiguity is a situation where cause and effect are not so clear, there is no prior experience to fall back on, and the management faces an unclear reality or future filled with countless unknowns.

These are all becoming known adjectives to describe various situations business leaders and their Boards face. However, what is need is a way to deal with VUCA which is becoming an ever-more common reality.

The answer in dealing with VUCA rests with VUCA 2.0.

What is VUCA 2.0?

Coined by Bill George, a senior fellow at Harvard Business School; Vision, Understanding, Courage and Agility (VUCA 2.0) are seen as the antidote or strategy that companies and countries should adopt to help them navigate an ever-more VUCA environment

Vision is the ability to see through the fog and plan for ahead for a changed future. Business leaders should use this time to stop, evaluate and plan for the post COVID-19 reality. This phase will pass, and if organisations have planned for what to do when the time comes, they will be anticipating and ready to move ahead of others who have not.

Understanding is where leaders first have to truly understand their organization’s strengths and potential blind spots, in order to pick the best strategies that play to their advantages. In this stage, information gathering is crucial, not only within the organization but also outside, from as wide a spectrum as possible, ranging from employees, to clients, and even about the industry and economy. This is especially evident during this period, seeing how increasingly interconnected the globalised economy has become, with no one emerging unscathed from the COVID-19 virus spread. This crucial understanding and wide-spread information gathering will allow your organisation to better understand the challenges the virus pose, and with that be better able to develop strategies to counter them.

Courage is the audacity during difficult times to make decisions based on calculated risks that could go against all common practice and beliefs. Sometimes, organizations have to consider going against traditionally successful techniques and take risks, because in the rapidly changing world of today, being second to take action could be the difference between survival and failure.

Agility is essentially the need for organizations to be flexible to change and adapt. While mid and long-term plans are necessary, strategies do have to be flexible enough to rapidly adapt to external circumstances, without affecting or changing the organization’s overarching vision and mission.

 

Concluding thoughts

COVID-19 embodies VUCA. As the human and economic tragedy continues to unfold, business and national leaders need to embrace VUCA 2.0 to chart a new way forward for their companies and countries.

To this effect Seed has launched Agile. Perspectives on Malta’s economy post COVID-19 and not only presents a toolkit for companies to implement during these challenging times, but applies VUCA 2.0 on a national level providing the framework for a long-term national vision.

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