In The World Is Flat, Thomas Friedman notes that the rate of change today is very different from that experienced in the past. “But there is something different about the flattening of the world that is going to be qualitatively different from other such profound changes: the speed and breadth with which it is taking hold….This flattening process is happening at warp speed and directly or indirectly touching a lot more people on the planet at once.” This transition to a disruptive new era has culminated in an operating context that strategic business leaders are now commonly referring to as a “VUCA” environment.
Coined in the late 1990’s, the military-derived acronym stands for volatility, uncertainty, complexity, and ambiguity – terms that reflect an increasingly unstable and rapidly changing business world. In light of this accelerating pace of change and disruption, organisations are being forced to re-evaluate their criteria for leadership success. In fact, evidence suggests that talent savvy boards and executive teams are adapting their approaches to leadership selection, development and succession that parallel changes brought about by the environments in which they operate.
According to Horney, Pasmore, and O’Shea (2010), for leaders to be effective in this current context, they “must make continuous shifts in people, process, technology, and structure, all of which require agility and quickness in decision making.” Furthermore, a recent Boston Consulting Group study concluded that organisations today must shift their business models—and their leadership skills—to become “adaptive firms.” Adaptive firms can adjust and learn better, faster, and more economically than their peers, giving them an “adaptive advantage.”
A report by the Centre for Creative Leadership (Petrie, 2011) also notes that today’s VUCA business environment requires leaders to possess more complex and adaptive thinking abilities. Talent management professionals therefore need to reframe traditional leadership development activities to accommodate the faster-paced VUCA world and focus on learning agility, self-awareness, comfort with ambiguity, and strategic thinking.
Ultimately, to survive and thrive in a VUCA world, organisations must do more than hire and develop agile leaders; they must also create an organisational culture that recognises and rewards innovation, agile behaviour, and calculated risk-taking. Additionally, performance management systems should reflect relevant values and attributes. Once entrenched, such cultures will serve to attract and retain the type of innovative and adaptive leadership talent that businesses today are seeking. They will also afford businesses a competitive advantage in our ever-changing global marketplace – which is the ultimate VUCA environment.
The combination of volatility, uncertainty, complexity, and ambiguity inherent in today’s business world is the “new normal”, and it is profoundly changing not only how organisations do business, but how business leaders must lead. The skills and abilities leaders once needed to enable their organisations to succeed are no longer sufficient.