Leadership in the time of VUCA — Four Pillars for Change and Innovation Leaders

philip horváth


What used to seem stable has become increasingly volatile. While we have more data than ever we are more uncertain about the future than ever. In a planetary context, the world has become overwhelmingly complex. Overall, we are less clear about things than ever.

So how do you lead in times of Volatility, Uncertainty, Complexity and Ambiguity?

The military coined a term for this back in the last century: VUCA. Back then, this designated special situations…

Today, VUCA has become the norm.

It seems that nearly every day a new startup is coming up, new research surfaces, new technology breakthroughs are achieved, and new customer trends are developing.

How can you keep up with the rate of change when you are at the helm of a large organization and you are tasked with bringing innovation to your company?

Startups are perfectly positioned to deal with volatility, with velocity, and with uncertainty: For them it is about growing, and growing fast, continuously diminishing uncertainty and pivoting until a value proposition has been found with product market fit.

Once an organization becomes successful and scales, a different dynamic sets in: In a mature organization it becomes about managing complexity and reducing ambiguity. The rate of change slows down. The organization becomes larger and has more components, stakeholders, dependencies and potential points of failure. Risks are greater, which is why there is a strong focus on reducing ambiguity through policies, procedures and metrics.

Both startups and large organizations have advantages for some of the elements of VUCA. Startups deal well with volatility, as they are volatile themselves. Large organizations deal well with complexity, as that is their status quo.

The organization of the future will have to deal with all four dynamics: volatility, uncertainty, complexity and ambiguity.

Today’s and even more so tomorrow’s leadership needs core pillars to address these dynamics. We found that a foundational purpose, an inspiring vision, a stratified portfolio and clear progress indicators support innovation leaders in the context of VUCA:

Volatility — Everything is moving fast.

Things around us are changing faster than ever. We have unleashed exponential developments in technology, environment and consciousness that are now only beginning to unfold. The amount of human knowledge is now doubling every few months. Rapid change is now more norm than exception.

Especially in times like these we need to orient ourselves on something that is fundamental, something that exists beyond time…

That is where Purpose comes in.

Purpose serves as a root.

It is something we are committed to exploring in ever new ways, no matter what our environment looks like. It is the difference between personal mobility and making cars. Making cars is not a purpose, it’s a means of addressing the purpose of providing personal mobility.

Purpose is timeless.

Because of that, it stands up to the test of time, gives us direction even if everything is changing.

Purpose allows every member of the organization to make decisions.

It is short and clear. It is akin to the mantra concept Guy Kawasaki suggested.

Purpose creates urgency.

Urgency is needed to act quickly in times of rapid change. Urgency can come from dread, from fear of failure, or it can be inspired by purpose, by always clearly seeing the next step toward an ultimate goal.

A clear purpose will also allow you to be okay when you get to completely change your business model.

Purpose allows for stability in a volatile world.

Today’s reality: In recent research fewer than 20% of leaders in the US had a clear sense of purpose.

In organizations that lack purpose, focus shifts from commitment to quality products and services to the bottom line, from focus on long-term sustainable growth to short term financial results (as this research from Deloitte shows).

Without purpose leaders drift from one shiny thing to another, they lack the basis for courage to act, to step out their comfort zone, and without purpose leaders lack the passion to persevere in the face of volatility.

Purpose also provides an anchor in a world of uncertainty.

Uncertainty — Nobody really knows what the future will look like.

With the increase in exponential trends and the increase in points of origin for change, more uncertainty has been added to the system. Not just are things changing fast, but they are getting more and more difficult to anticipate. We cannot rely on the past as an indicator of the future. There is less and less certainty in our projections. This uncertainty is terrifying.

While purpose gives us a foundation, we also need to build a container that we feel safe in.

This container is created through Vision.

We want to hear about a possible positive future. We want to learn about what could be.

As a leader, it is your job to inspire vision.

As a leader, you get to create a vision for yourself, and for where you could collectively take your organization. By living and constantly enforcing the vision, you uphold a container of safety for your people, and thus inspire them to create and innovate.

Vision is best expressed and delivered in inclusive narratives.

You get to inspire and spread narratives that allow for enough room for the listener to find themselves in - to identify with an archetypal role in the narrative you are creating as a leader.

Especially when collectively created, visionary narratives allow individuals to see an aspirational version of themselves: who they could become.

By sharing your narratives in a way that inspires trust, your vision becomes the safety that your employees can move within and deal with the uncertainty they are facing in their daily lives.

And together with you team, you get to create a vision for your future customer, which in turn will allow you to create trust in your organization from the outside.

Complexity — We have introduced more points of origin of change.

Change can come from anywhere. An individual today has more power than any individual in the past. We have more information available to us, and a single individual could destroy this whole planet. In their Global Trends 2030 report the National Intelligence Council had already highlighted the shift in power toward the individual. In no other time in history has one individual had as much ability to effect change on this planet as today.

This introduces a whole new order of complexity. We now see more clearly the inter-relatedness of all things. Of our supply chain. Of our purpose, internal culture and brand. Everything is more affected by everything else.

That is where having a simple Portfolio supports us in managing complexity.

There are many initiatives inside of an organization, but they should all fall into a simple portfolio.

Your portfolio of strategic tracks is designed to move you toward your vision and fulfill your purpose.

These overarching umbrella programs will then be executed in a myriad of different activities, possibly too complex to have control over, but they can be guided by clear boundaries of the portfolio. If an initiative doesn’t fall into the context of the portfolio, it probably is not supporting your vision or purpose.

Ambiguity — How do we even know if we succeeded?

In a world where everything changes faster than ever, is more uncertain than ever, and more complex, how do we know we are on track?

If the only variable in my equation is shareholder value, I will make decisions that are not beneficial to other stakeholders, the environment, and even my own organization. Tools like triple and quadruple bottom line are beginning to address this issue.

In order to measure strategic alignment, new kinds of Progress indicators are required.

Goals are hit or miss.

Progress indicators give us the confidence that we are moving toward our vision and are executing toward our purpose, our timeless legacy.

While traditional KPIs measure one aspect of success, that of financial profit, it is a limited view of the world we want to create.

We get to determine additional indicators of success that support us in resolving ambiguity, that will provide us with the feedback we need to have confidence in our actions.

Today’s success is tomorrow’s failure

What works today might not work tomorrow. Things are volatile, uncertain, complex and ambiguous. Nothing can save you from that. Frameworks are not about certainty. They are about supporting you in managing and leading in uncertainty. They are about giving you a foundation for confidence.

Ultimately, confidence is a choice, but in a world of VUCA to know that you are on purpose in your actions, that you are inspired in community by a powerful vision and narratives that evoke that vision, that a clear portfolio is guiding the trajectory of your actions, and that you are seeking and receiving meaningful feedback about your progress — is priceless.

Pillars of Leadership is one of the frameworks we use in our work with LUMAN. Through LUMAN we provide frameworks and training to support visionary leaders in handling volatility, decrease uncertainty, simplify complexity and resolve ambiguity — all the while increasing their personal, team, and organizational capacity for continuous innovation.

We have worked around the world with startups, NGOs and with global Fortune 500 organizations in a variety of industries.

If you want support in leading innovation in your organization, please connect with me via http://luman.io.

We also provide Future-Ready Leadership training for business and social leaders through our not-for-profit project Future Ready Now. Join us for one of our upcoming global trainings! Learn more at http://future-ready-now.io

To find out more about my personal work visit http://philiphorvath.com.

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philip horváth

culture catalyst ★ planetary strategist — creating cultural operating systems at planetary scale — tweeting on #future, #culture, #leadership @philiphorvath