VUCA: Volatility, Uncertainty, Complexity and Ambiguity – an acronym used in 1987 to describe the unpredictability after end of the Cold War and is increasingly used to describe the unpredictable nature of the world today.
Not only has Industry 4.0 rapidly changed the business environment (artificial intelligence, nanotechnology, robotics, biotechnology, the Internet of Things, autonomous vehicles, etc.), but it also influences various aspects of our lives; from politics, terrorist attacks or natural disasters, and catastrophes such as COVID-19. We can hardly anticipate what new business realities will face our future leaders.
What kind of leadership will be most effective in VUCA reality?
Facing more and more uncertainly, leaders must be open to change, flexible to deal with ambiguity, creative, fast learners and risk-takers. There is of course one constant element in the VUCA world: PEOPLE.
Leaders must support their team by remaining focused, fast and flexible. Leaders should coach their employees by enhancing their skills in two of the most significant areas: agility and complex thinking. According to the UNC Kenan-Flagler Business School, HR should create leadership development plans on the assumptions based on:
Volatility can be countered with vision, because vision is even more vital in turbulent times. Leaders with a clear vision of where they want their organizations to be in three to five years can better weather volatile environmental changes such as economic downturns or new competition in their markets, for example, by making business decisions to counter the turbulence while keeping the organization’s vision in mind.
Uncertainty can be countered with understanding, the ability of a leader to slow down, look, and listen. To be effective in a VUCA environment, leaders must learn to look and listen beyond their functional areas of expertise in order to make sense of the volatility and to lead with vision. This requires communication with all levels of employees in their organization, development and demonstration of effective teamwork and collaboration skills.
Complexity can be countered with clarity, the deliberative process to make sense of the chaos. In a VUCA world, chaos comes swift and hard. Leaders, who can quickly and clearly tune into all of the minute associated with the chaos, can make better and more informed business decisions.
Finally, ambiguity can be countered with agility, the ability to communicate across the organization and to act quickly to apply solutions (Kinsinger and Walch, 2012). Vision, understanding, clarity, and agility are not mutually exclusive in the VUCA prime. Rather, they are intertwined elements that help managers become stronger VUCA leaders.
In the Harvard Business Review article, The Most Important Leadership Competencies, According to Leaders Around the World, researcher Sunnie Giles shared the results of “the first round of a study of 195 leaders in 15 countries over 30 global organizations.” In the study, “participants were asked to choose the 15 most important leadership competencies from a list of 74.”
The top 10 competencies were then grouped into 5 themes:
On the top of the uncertainty of the business environment, we have overlap of generational exchange. Contrarily to Millennials, who tend to expect quick success and have less propensity to stay put as they grow up in an age of endless options, the Z generation is even more tech-savvy and high expectation seekers, but they search for job security.
Tomorrow’s leaders need to build trust with their teams. Trust will continue to be the currency of the workplace. Being able to create a safe place for their teams will help Millennial leaders’ priorities to build a culture that appreciates both people and results.
Today’s market environment stresses speed, flexibility, and the ability to lead in uncertain situations.
Tomorrow demands high ethical standards, encouraging openness and great communication skills to managing firms successfully.
Dorota Serwinska, Partner
Anna Rudzinska, Partner