How do you run a business when chaos is the new normal? We explore what happens when instability becomes a positive force for change in the business landscape.
Economic depression; volatility in emerging markets; currency fluctuations; cultural clashes in global trade. Today’s leaders have plenty to keep them awake at night. Add to the mix the mass digital disruption rendering once ubiquitous products virtually obsolete[i] (Yellow Pages, anyone?), and it’s a wonder they’re getting any sleep at all.
The turbulence characterising today’s corporate world has seen ‘chaos’ become ‘the new normal’[ii] and thought leaders borrow military terminology to define a corporate landscape akin to battle.
It’s a VUCA world, they say. Volatile. Uncertain. Complex. Ambiguous. First coined by US Army War College to define the post Cold War era, the term took on wider meaning during the global financial crisis of recent years. A military strategy manual written by an ancient Chinese warrior over 2,000 years ago (Sun Tzu’s The Art Of War) was one of 2014’s must read ‘business’ books.[iii]
According to the Global Leadership Forecast 2014/2015 of talent management experts, Development Dimensions International (DDI) suggests less than two thirds of leaders describe themselves as ‘highly’ or ‘very confident’ in their ability to meet VUCA challenges; a view echoed by HR colleagues, who rate their organisation’s leaders ‘unprepared’ to meet the challenges of volatility (40%), uncertainty (32%), complexity (36%) and ambiguity (31%). At best, only 18% identified their leaders as ‘very capable’.
Furthermore, as with any chinks in a leadership bench’s armour, VUCA-unpreparedness hits the bottom line. Organisations in the top fifth of financial performers were three times more likely to have VUCA-capable leaders, than those in the bottom 20%.
Embracing volatility: making VUCA work for you
Fighting the business battle doesn’t have to be negative, however. Organisations like Google, 3M and Amazon, who seem to thrive in disruption, put a positive spin on the VUCA acronym; distinguished fellow of the Institute For The Future, Bob Johansen proposes that Volatility becomes Vision, Uncertainty becomes Understanding, Complexity becomes Clarity, and Ambiguity becomes Agility.[iv]
Taking these elements on board saw Unilever change their entire business model to focus on sustainability, founding a clear vision on the very basis of the changing landscape.
“You can say ‘It’s a very tough world,’ or you can say, ‘It’s a world that’s changing fast, and we can help consumers navigate through it,’” said Keith Weed, Chief Marketing and Communication Officer.
“Two-and-a-half billion more people will be added to the planet between now and 2050. The digital revolution, the shift in consumer spending, all this suggests that companies have to reinvent the way they do business.”[v]
Kerry McGuire, Vice President of New Business Ventures at ARM, explained how seemingly disruptive forces, like the arrival of smart phones, have created huge positive changes in how we work together.
“I’ve watched the industry become much more collaborative, not just within organisations, but in how we partner up with other companies, open up our platforms for use by external communities, and interact with start-ups,” she told everywoman.
“I saw a great example of this in action at a technology function hosted by a UK bank. As a collective group we were asked to think about how we’d use technology to change the way banking happens. Competitors and partners worked side by side to solve the problem.”
As Aldous Huxley wrote in Brave New World: “Stability isn't nearly so spectacular as instability.”
[iv] Leaders Make The Future by Bob Johansen (Berrett-Koehler: 2012)
[v] See footnote ii