Management guru Tom Peters said, “If you’re not confused, you’re not paying attention.” This was in “Thriving on Chaos: Handbook for a Management Revolution” (1987), and it caught the business mood of the time when many corporate norms were undergoing significant changes.
In the post-WWII manufacturing boom, quality control had morphed into quality assurance. Many 1960s team management principles were based on trying to understand people’s motivations through frameworks such as Maslow’s Hierarchy of Needs, Herzberg’s Two-factor Theory and McGregor’s Theory X and Theory Y.
All of these theories, which featured in the curricula of many business schools, and formed part of corporate training sessions, only served to convince supervisors and managers that managing teams of people in the ‘real world’ was not a straightforward process, and that in many cases it could be a chaotic experience.
The realization that systems and organizations were ‘chaotic’ was not a new one. Henri Poincaré, a late nineteenth century French mathematician, explained that “small differences in the initial conditions produce very great ones in the final phenomena. A small error in the former will produce an enormous error in the latter. Prediction becomes impossible.”
He used the metaphor of a butterfly flapping its wings in Brazil (or Tokyo) as being sufficient to set off a set of atmospheric events that could stimulate the formation of a tornado in Texas. While the example is extreme, the idea that unnoticeably small changes in circumstances can lead to unforeseen outcomes is not.
Hence, Peters’ interest in managing in an uncertain and unpredictable business environment. He considers that “in a world turned upside down”, it is necessary for organizations to deal with the uncertainty of competitive markets through empowering people, fast-paced innovation, being responsive to customers, and learning to work in an environment of constant change.
A VUCA world
In other words, we’re trying to manage teams in a world of business that is Volatile, Uncertain, Complex and Ambiguous, or ‘VUCA’.
The “VUCA” acronym originated in the US military to describe a post-Cold War scenario. The four words of the acronym are taken from the strategic leadership theories of Warren Bennis and Burt Nanus in their 1985 book, “Leaders: Strategies for Taking Charge”.
So, what are we to understand by these four terms? In short, VUCA is predicated on the speed and unpredictability of change.
- Volatile: change is rapid and unpredictable in its nature and extent.
- Uncertain: the present is unclear and the future is uncertain.
- Complex: many different interconnected factors are at play, giving rise to the potential for chaos and confusion.
- Ambiguous: there is a lack of clarity or awareness about situations.
Consequences of VUCA
Each of these conditions appears as a potential threat to an organization’s stability and ability to thrive.
Faced with apparent chaos, there is the temptation to give up in the face of a perceived inability to plan ahead for an uncertain future. Decision-making can be paralyzed. Employees may feel overwhelmed by the rate of change, and by the need for constant retraining, organizational reshaping and adjustment to managerial and customer expectations.
Resistance to change and inability to adapt may see the organization shedding staff, losing customers or missing business opportunities.
Responding to the VUCA challenge
On the contrary, a VUCA environment has the potential to unleash creativity and innovation, new markets, and opportunities for collaboration and team building. The key drivers to meeting these challenges is in the ability of team leadership to pivot, flex, and be agile in the face of change.
Thirty years after the recognition of VUCA, the notions of organizational agility, flexibility and pivoting have become almost clichéd. These three terms point to the ability of team leaders and organizations to change direction rapidly in response to the VUCA challenge.
Strategic leaders seeking an EU Business School qualification require the following skills to mitigate VUCA challenges:
- A ‘bias for action’. Creative concepts cannot be realized unless they are accompanied by innovation, which involves making decisions and putting ideas into practice.
- Fostering collaboration and teamwork harnesses the strength and diversity of the cross-functional group, and overcomes a silo mentality.
- Being flexible and adaptable combats the stagnating philosophy of “this is the way we’ve always done it”.
- Sharing a vision and purpose is typically near the top of the list of priorities for most leaders.
- Being fiercely customer-focused is a non-negotiable throughout the VUCA organization, which has a goal of constantly “delighting” the customer.
Change is the only constant
In a world of constant and often unpredictable change, as we have come to experience it, organizational and leadership agility is an essential tool.
EU Business School incorporates these leadership skills in their many course offerings exerting influence directly (though the business school’s pedagogical approach and business model), at a social level (encompassing the society, students, and organizations for which the business school caters) and through affecting far-reaching systemic influence (country-specific influences which have the potential to change national approaches and discourse).
Visit the EU Business School for details of the full range of courses on offer.