The business environment has changed rapidly in the last few months. Erstwhile strong and agile companies have begun to flounder, crashing into a state of fragility. Research has shown that there are known factors that exacerbate fragility. The United States Army War College, in its acronym VUCA, aptly captures these factors. VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity. Each word in the VUCA acronym characterizes our current COVID-19 situation.
Volatility refers to the nature and speed of change in the market, industry, or world in general. It is often associated with turbulence.
Uncertainty describes a lack of predictability. Since the emergence of COVID-19, the world as we know it has become less predictable by any means.
Complexity indicates the number and variety of issues at play, and the degree of interconnectedness between them, which creates confusion and makes any form of rational analysis challenging.
Ambiguity depicts the vagueness of reality. It is like walking through a fog. It projects a situation where there is little or no information to make logical decisions. Causal relationships are unclear, as there are no antecedents or precedents. We describe this as unprecedented times.
A friend said to me recently that she wonders how the pandemic will play out and what the new normal will be. My response was, “no one knows.” And that is what we know for sure because we are currently experiencing uncontrolled (and uncontrollable) change.
VUCA makes for a fragile environment, which impacts organizations and individuals. We are all grappling and failing in our ability to deal with the myriad of things happening around us. However, it also presents a perfect leadership opportunity. Therefore, leaders should not throw their hands up in the air and blame COVID-19 for corporate failures. They must arise, shake off the debris of fragility, and take their organizations, purposefully, to become agile again. In volatile times agility rules; hence, the COVID-19 induced VUCA demands a strategic response from leaders.
There are a few VUCA response actions that I want to suggest, which can enhance the transition from fragility to agility.
Visualize the future you want to see. How strong and agile do you want your organization to be? Considering all that is happening, what should the organization’s focus be in the future? Reframe the situation and positively anticipate the change that is evolving. Envisioning will guide board composition, employee selection, re-training of employees, as effort may be on new skills (such as problem-solving, critical thinking, technology, risk analysis, etc.) This is a reminiscence of the forward-looking dimension of the five-way-directional model.
Understand the dynamics: A natural response to uncertainty to seek and gather information, and this should yield a better understanding of the market, customers, and competition. Leaders need to obtain relevant information and make sense of the impact on the organization. Begin with factors that are certain, aggregate these factors, and plan with them. Leverage the known, without agonizing over the unknown. Understanding the dynamics at play promotes better decision-making. Some understanding will come through a series of trial and error (some of which may be expensive).
Communicate & Collaborate. Communication in a crisis is challenging but critical. Such a period provides an opportunity to craft and communicate corporate perspectives to the various stakeholders regularly. It is essential to be transparent when communicating during a crisis. And better to over-communicate than under-communicate. Communication offers strategic direction for employees and keeps shareholders abreast of developments too. Communication enhances connections and relationships – even with suppliers and customers, so, effective leaders must strive to cut through the noise and connect with stakeholders. Create an appropriate level of awareness of important matters. Making communication a conversation gives room for people to engage with the vision and provides a platform to explore strategies for collaboration.
Adapt: C.K Prahalad, professor of corporate strategy, proposed that in a volatile world, companies should aim to become “velcro organizations,” in which people and capacity can be rearranged and recombined creatively and quickly without a significant structural change. Effective leaders will simultaneously focus on quality, cost, and efficiency. This is a good summation of adaptability. Leaders need to answer the questions, “What is your adaptability quotients (AQ)? What is the AQ of your employees? What is the AQ of your institution?” The more adaptable you are, the easier it will be to rebound. A high AQ reduces the risk of resistance to change, which blocks the potential to innovate. A high AQ also makes leaders and organizations more resilient.
In this COVID-19 induced VUCA environment, people and organizations are bound to become increasingly fragile. However, effective leaders who want their organizations to survive and thrive will apply VUCA actions (visualize, understand, communicate & collaborate, and adapt) in an intentional manner.
The journey from fragility to agility is more than a cliché. It is an intentional act of strong leaders to infuse strength and spark innovation in the age of change.
Leadership in a VUCA world requires leading with VUCA actions to become agile.
What actions are you taking to improve your organization’s agility?
Dr. Chinyere Almona is a Senior Corporate Governance Officer at the International Finance Corporation and provides a variety of corporate governance interventions to companies, regulators, and market intermediaries across Sub-Saharan Africa. She is based in Lagos, Nigeria.