VUCA has become a common acronym used to describe the nature of the present world, referring to its Volatility, Uncertainty, Complexity and Ambiguity as typical features. 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 – which is increasing at a rapid pace. This increase of VUCA characteristics links it to the idea of the ‘Fourth Industrial Revolution’ which we are said to be in.
Our VUCA world demands that businesses must rise above the ever-changing conditions, which often includes highly dynamic and increasingly sophisticated consumer expectations. What makes a VUCA world particularly daunting however, is the sharp upward curve at which the rate of change and complexity gain momentum; never before in our history has there been anything to rival this.
For previous generations management and leadership models worked well. Whilst many of these ways of doing business this is still firmly in place, they are no longer relevant because they fundamentally model a world that is largely stable and predictable, making directive decisions much easier. Such standardised parameters on which these models are built inherently have higher dependency and reliability because they drew on well understood social, political and economic structures – But this understanding is no longer the norm and these models are therefore largely ineffective to deal with VUCA challenges. Where does this leave the current world of business? There is no clear 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 with no single definition. 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 replicating desired leadership qualities.
This piece does not intend to give a comprehensive overview of leadership. Instead, we suggest six key considerations which could help outline the principles of good leadership in a business context.
Management models are not leadership models
The need to manage people, processes and technologies to achieve production or outputs, is a core function in 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 to maintain order and production capability. Understanding parameters in production and managing exceptions and KPI efficiencies is critical 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 beneficial to attract talent, provided that the business is willing to appreciate 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 good leader will encourage employees to bring talent and will use as a resource to help foster conditions to allow adaptation of the organisation, understanding the benefits to the business and ultimately, the consumer base it serves.
As humans, we have the capacity to grow and learn. Any manager aspiring to lead will find ways to grow and acquire those leadership skills – possibly in rival businesses if they are not nurtured by current employers. Organisational with good leadership will make it a key focus to foster growth and talent development and the benefits have been well documented and are understood by the foremost performers in the world. Famously, Richard Branson is known to believe that taking care of employees will mean everything else will take care of itself. Those who use the decoy of management models to masquerade as leadership are likely to fail in creating conditions for people to bring their abilities and be engaged, and in a greater sense, will fail at creating conditions for adaptation and change in general. It all starts and ends with understanding that it is done by people. Leaders who do not understand this create familiar patterns of employee disengagement, unhappiness, falling efficiencies, and eventually (if such poor leadership persists) a decline in the overall performance and market position of the business they are leading. So here’s a simple rule: if an organisation is toxic, and fraught with all kinds of human-related challenges and problems – you can comfortably blame the legacy of poor leadership. Good talent will leave such environments, and there is probably a competitor, where that talent will be put to good use. In a VUCA world, such risks simply cannot be absorbed indefinitely and even one degree of sacrificed competitive advantage could spell disaster. A management model alone will never suffice as a replacement for leadership.
Leading people is inextricably leading change
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 organisational system and create those conditions that allow the organisation – through its core asset, it’s people – to be able to adapt and change as a living, nurtured organism. This means also being custodians to the meaning that will need to adapt and change with it – and again, this falls to leadership. Without this, achieving and keeping competitive advantage in a VUCA world is unlikely because people are at the heart of this. The more able leaders are to inspire, engage effectively, engender trust, to navigate and nurture the creation of meaning, and to be attentive to the spectrum of group-psychological needs of employees, the more likely they are to be good and effective leaders.
Soft skills need a new name – because they are non-negotiable
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 likely to only increase in importance. The idea of ‘soft skills’ has become stigmatised or downplayed as fluffy and less important than ‘real’ or ‘technical’ skills. 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 or unimportant.
Soft skills are really hard to learn for adults! The level of technical proficiency needed by businesses can usually be acquired through different forms of 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 asset to try and secure for the organisation. Naturally, technical skills are very, sometimes critically important – but human engagement skills are no 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, are all essential skills that are needed by leaders on a daily basis. Leadersip in a VUCA world means having physical, emotional and cognitive resilience, because the luxury of relying on static and predictable models no longer exists. Point FIVE elaborates further on this.
Experts and leadership
“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 new CEO of a global pharmaceutical company, is in fact a highly accomplished surgeon – world-class, top three. He pioneered many innovations in surgery and is venerated as a pioneer of certain surgical methods. However, in his new role these specialised skills and expertise – no matter how respected and widely acclaimed – does not necessarily make for amazing leadership. Achievement in one area is not universally translatable as a guarantee for leadership.
Organisations often don’t have the correct structures to retain and continue to grow technical experts, so the only way up is into ‘management’ which also is doubles as leadership (see point 1). But a brilliant expert does not necessarily make a brilliant CEO or leader – these are two skill that are at their core very different, and therefore assuming transferability from acclaimed surgeon to leader as simply a given, is almost as absurd as the other way around… which leads to the last point on overall functioning of leaders.
Judgement and individual functioning
Leaders must inspire and envision, must strive for something and see the bigger picture – and critically, must be able to be lead by the emerging meaning from the system that she leads. This does not mean reckless – having grandiose visions that are ungrounded in context or sense, is not striving for greatness. There is no telling the future and risk and resource is an intricate part of decision making. Leading for the future needs leaders who are grounded and understand the world and its opportunities and constraints with deep insight. These leaders will do their homework – often and frequently, probably daily – and will have crafted skills to get to grips with every context they are confronted with by effectively using resources available to them. They will look at risks and impacts, and critically will fill their own gaps in understanding with expertise, insight and weighted opinion of trusted persons to guide their decisions and course.
All the elements of EQ and SQ (emotional and social intelligence), as well as intellectual and cognitive robustness to effectively function and lead in a VUCA world, are important. There is not a clear benchmark or rule, but that a business leader must have access to strong inner resources which extend far enough to persist in a VUCA world, and play the role of decision maker and leader, will be needed because leading in this world is demanding on all levels. A well-developed interpersonal set of resources will therefore be needed, and will need continual developed for any leader to stay relevant. And probably for most in employment.
Typically, such leaders will value and rely on inputs from others, will know how to use these appropriately, and will generally be able to rely on resources effectively and appropriately to give steer and direction. They understand the boundaries and limitations of knowledge and those who provide it, and are able to sift through what they hear and see (including clutter and irrelevant information) with vigour and precision, understanding 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), they understand that everybody has blind spots. Good leaders craft ways 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.
Leaders that are worth their following, have cognitive agility, and will can handle cognitive complexity and ambiguity, and will possess emotional sophistication to relate and care, to be firm but not bruise unwittingly, and to be 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. Most business environments demand a multitude of complex factors from its leaders, and in this way is in itself a form of ‘specialisation’ for which leadership qualities must be ensured – not assumed.
Leadership and Technology
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 opportunity 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 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 rapidly and drastically that falling behind with what’s available is likely to mean that leadership judgment will become less effective and opportunities might be missed – compromising competitive advantages or entirely new market opportunities.
Leaders don’t need skills to write code or architect enterprise technologies, but as active agents of influence and custodians of significant resources, they must make decisions that include complex areas of technology, and not being informed enoug on current technologies, with a good functional knowledge of the most recent advances, therefore is a must-have skill for business leaders.