Good leadership in a digital world of uncertainty
The notion of VUCA has become a common acronym used to describe the nature of the present world, referring to the Volatility, Uncertainty, Complexity and Ambiguity current characteristics. This world is very difficult to navigate, predictions are hard to make. Technological progress, scientific gains, and increasing socio-political and population complexities, all interact to produce a world where the only certainty is uncertainty and this at a rapid pace – the speed of change itself being a key characteristic of the ‘Fourth Industrial Revolution’.
Our VUCA world demands that businesses must rise above the ever-changing conditions, paving the way for increasingly complex consumer expectations.
What makes a VUCA world so particularly daunting is the sharp upward curve at which the rate of change and complexity both increase and gain momentum.
It has never before in the known history of humans, been anywhere close to present levels.
Unlike previous generations, current management and leadership models are no longer relevant because they fundamentally model a world that is fairly stable and predictable, making directive decisions much easier, given more predictable short to medium term market behaviour. But such fairly standardised parameters with higher dependency and reliability in social, political and economic structures is no longer available. Where does this leave the current world of business? There is not a clear and simple answer – however, what is most broadly accepted and understood, is that the ability to remain competitive in a VUCA world is not possible if an organisation cannot rapidly keep adapting and changing. Staying static and rigid is a sure way to rapidly fall behind and disappear into irrelevance.
Leadership – what is the big deal?
The topic of leadership is very broad and diverse and no one definition or model exists – there are literally hundreds of models, and dozens of well-known theories and typologies of leadership. Often, models are rooted in a specific context (like the frame of a VUCA world in this case) and knowledge paradigms and language makes a single model of truth for defining the ultimate list of leadership attributes and qualities, impossible to attain. Leadership is also always bound up and part of a personality – these in themselves, being unique. The trend is to describe leadership traits at a principle level to try and capture some essence that can be used for understanding good leadership.
The one key element that drives the view of leadership in this publication is not intending to give a comprehensive overview on leadership!
We provide six key considerations which are likely to bode well if demonstrated in a leadership role for a business:
Management and the need to manage people, processes and technologies to achieve production or outputs, is a core function for a business. There are solid and sound reasons where standardisation and repeatable processes (for instance in operational environments), must be achieved and maintained. And being an organisation means that there has to be coherence and co-operation in maintaining order and production capability. Understanding parameters in production and managing exceptions and KPI efficiencies is critical and is a key requirement to ensure effective management.
However, to the detriment of too many businesses, too often this management function of ensuring optimal output and optimising input through processes, is taken as leadership. This is not to say that managers cannot also have incredible leadership abilities. It is always a benefit to a business to attract talent, provided that the business is willing to actually appreciate it and benefit from that talent. Managers can be leaders. But leaders cannot only be managers of operational functions and call it leadership. This is fundamentally incorrect and a dangerous misconception. A leader will encourage an employee to bring talent and use it to aide in creating the conditions needed for adaptation, understanding the benefit it will bring to the business and the consumer.
As humans, we have a capacity to grow and learn. Any manager aspiring to also lead will find a way to grow and acquire those inclinations and abilities. Good organisational who have good leaders, will want nothing less. But leaders who use the decoy of management models as leadership, are likely to fail being able to create conditions for adaptation and change, and mostly because these are created firstly and foremost through understanding that it is done by people. Leaders who do not understand this are likely see the predictable results of employee disengagement, unhappiness, falling efficiencies, and eventually (if they remain in their positions long enough) a decline in the overall performance and market position of the business they are employed by. And there is also a likely competitor, where their good leaders are seeking to bring talent to their organisation. They will do this understanding that it is a key input to a competitive advantage.
A management model alone will never suffice as a replacement for leadership.
People and change – this it would seem are two sides to the same coin. Arguably (and difference of opinion duly respected) the most critical function of leadership is to build and increase capacity for a business to be able to continually adapt to change. People change in organisations, and organisations as ‘living organisms’ made up of sub-systems, must go through continual and often dramatic change to meet the VUCA world’s challenges.
As the velocity of VUCA increases, the change and adaptability capacity of the organisation must keep up. Leaders must understand and fully leverage each and every resource in an organisation or system create those conditions that allow the organisation – through its core asset, it’s people – to be able to meet the need for organisational adaptability and change. Without this, getting to or maintaining a competitive advantage in a VUCA world seems unlikely. Because people are at the heart of this, the more able leaders are to inspire others, to engage effectively, to engender trust, and to navigate and see to the spectrum of group psychological needs that employees might have, the more likely they are to be good and effective leaders.
The idea of having the ability to engage well, read people and situations, show empathy, know how to harmonise people into achieving common goals, manage conflict, allow difference of opinion to become a valuable tool, and a plethora of many other human-to-human engagement skills are critical, and are likely to only become more so. The idea of ‘soft skills’ has become stigmatised and to many suggests that they are fluffy and less important than the ‘real’ or ‘technical’ skills that actually matter. Whilst it is true that the notion of people skills is difficult to lock into a precise definition, this suggests that they are complex, not that they are fluff and unimportant.
The level of technical proficiency needed by businesses can usually be acquired through training – but effective human interaction and engagement skills are not that easy to teach and learn, and if this is found in an individual it is a valuable resource to try and secure for the organisation. Naturally, technical skills are greatly important – but human engagement skills are not less critical in any way. Things such as self-awareness, communication, the ability to connect and influence, and to relate to all the various groups, backgrounds and individuals in an empathetic way, all are essential skills that will be needed daily by leaders. The final point on this is that the world that leaders lead in, is VUCA. This means that leaders must have the ability – both emotionally and cognitively – to understand that they cannot rely on static and predictable models as in the past but must be able to be effective as leaders that are contextually aligned. Point 5 mentions the need for overall functioning and ability that leaders must have.
“Well I thought really long and hard about it” said the newly appointed CEO, “…and I know the people are all expecting an inflation-related bonus, and yes we did make target and all that… but what I realised, is that what they really want, are appendectomies. They just didn’t realise it…”
This fictional CEO is a very accomplished surgeon – in fact, world-class, top three. He pioneered many innovations in surgery and deep specialist skills and industry knowledge. However, in his new role as a large pharmaceutical business CEO. Deep expertise or specialised knowledge, no matter how respected and widely acclaimed, does not necessarily make for amazing leadership. Achievement in one area in life is not universally translatable as a guarantee for leadership.
Many times, organisations don’t have the correct structures to retain and continue to grow their technical experts, so the only way up is into ‘management’ which also is conveniently leadership (see point 1). But a brilliant surgeon, does not necessarily make a state powers into executive, policy, and statutory (law). Because, they are at their core very different and therefore have bad results if mixed together. It is often the same with leadership – leadership qualities make good leaders, not fame or deep technical expertise only. And a good leader with a background in accounting or business management, will know to not attempt to perform an appendectomy on her staff. This leads to the last point on overall functioning of leaders.
Leaders must inspire and envision, strive for something and see the bigger picture. What this does not ask, is recklessness. There is no telling the future, risks are an intricate part of decision making and leading into the future, but a good leader will do their homework and have crafted skills to get to a grasp of the context, the resources, the risks and impacts as far as they can be understood, and critically – the gaps in understanding on what he or she does not know.
All the factors of EQ and SQ (emotional and social quotients), as well as an ability to intellectually and cognitively function effectively in a complex world, and lead in that context, are important. There is not a clear benchmark or rule, but that a business leader must have robustness and personal resources that extend far enough to allow her to function well in the VUCA world and play the role of decision maker and leader, will be demanding on all levels.
A well-developed interpersonal set of resources will therefore be needed and continually developed to stay relevant, for any leader (and generally for people in any sphere or role in the world of work too).
Such leaders will value and rely on inputs, and know how to use these appropriately, and generally be able to rely on resources effectively and appropriately to give steer and direction. They are able to sift through what they hear and see (including clutter and irrelevant information), understand that things are relative and that people (unintentionally or otherwise) have agendas.
Knowing that context matters and having healthy levels of critical questioning and sometimes cautious suspicion which will require more evidence, they will understand that everybody has blind spots.
Good leaders have crafted a skill to manage information in such a way to get to reliable interpretations and know when they hear something that sounds plausible and fair, versus promises of snake-oil. They have cognitive agility, a good ability to handle cognitive complexity and ambiguity, emotional sophistication to relate and care, to be firm but not bruise unwittingly, and are ethically grounded with a concern for people and social responsibility. Needing to be high functioning and fit to handle the demand on them, they’ll need one thing: good judgment, demonstrated through personal and career achievements. Whilst it is not compulsory to have some technical expertise to be leaders (although that could be one of the requirements) most business environments demand a multitude of complex things, and in this way demand a ‘specialisation for business’ over and above leadership qualities.
One of these areas of acumen which is as much a given in a VUCA world as having accounting skills in an exec team is accepted practice, is a senior leader’s ability to be plugged into the world – and this means a good grasp of technology and the opportunities it brings. Because technology is intrinsically part of the VUCA world and foundational to business as we have it today, this is no longer an area of expertise that remains insulated. Instead, it is woven into the day to day activities and structures and is now part of the DNA of how things are. What makes staying close to technology as a leader so important, is that it changes so quickly and drastically, and falling behind with what’s available and how it works is likely to mean that understanding things becomes less, and with that key decisions. The other consequence is that opportunities provided will be missed and will cause a lag to develop in competitive advantage, or missing entirely new business opportunities, in the end.
Leaders don’t have to have the level of skill needed to write code or architect the nuances of an estate, but as active agents of influence over significant resources, they must still make decisions that include complex areas of technology, and not being as informed as possible on current technological information, with a good functional knowledge of the most recent advances, therefore becomes a must-have skill for business leaders.
Allowing a technical expertise to dominate the decisions will, however, not yield best results and such biases of bringing only the models and theoretical frames of the career expertise from past career path and training will inhibit reaching optimal decisions. Therefore, the ability to continually stay fresh, updated and abreast with the VUCA world – in all of its facets, Is the demand that is now shaping the business world of tomorrow.