23 June 2024

We need agile leaders for a VUCA world


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By Prof Dato Dr Ahmad Ibrahim

VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity. It is common in the military. Business now embraces VUCA to characterize the challenging and rapidly changing conditions in today’s world. Change is the only constant. Volatility concerns the speed and unpredictability of change. This makes it difficult to anticipate and plan for the future.

Uncertainty involves a lack of predictability and clarity about future outcomes. Uncertain situations are characterized by ambiguity and the absence of clear information, making decision-making challenging. Complexity describes the intricate and interconnected nature of problems and systems.

Complex situations involve multiple factors, relationships, and variables that interact in non-linear ways, often leading to unpredictable outcomes. Ambiguity involves a lack of clarity or understanding due to multiple interpretations or perspectives. Ambiguous situations lack clear definitions or boundaries, making it difficult to discern meaning or make sense of events.

Together, they capture the dynamic and challenging nature of today’s world. It requires leaders to develop adaptive and resilient strategies to navigate uncertainty and thrive amidst complexity. VUCA challenges traditional leadership models in several ways. Traditional leadership styles rely on predictability and stability. They function well in business environments where patterns are recognizable and outcomes are more predictable.

However, in a VUCA world, leaders must prioritize adaptability over predictability. They need to be flexible and responsive to rapidly changing conditions, adjusting their strategies as needed. The hierarchical nature of traditional leaderships, where decision-making is concentrated at the top, is unsuited for a VUCA world. While hierarchy can provide structure and clarity in stable environments, it can become a hindrance where complex problems require input and collaboration from diverse perspectives. The preference is for a culture of collaboration and decentralized decision-making, where teams work together to navigate uncertainty and solve problems collectively.

Long-term planning and goal-setting based on stable assumptions is common in the traditional model. However, in a VUCA world, the future is inherently uncertain, and long-term plans may quickly become obsolete. Leaders must balance the need for strategic direction with the agility to adjust plans in response to change. This requires iterative planning processes, rapid experimentation, and the ability to pivot quickly. Traditional leadership models often emphasize control and compliance, with leaders exerting authority to enforce organizational policies and procedures.

However, in a world where change is constant and unpredictable, leaders cannot control every aspect of their environment. They must empower their teams to make decisions autonomously, take calculated risks, and innovate in response to emerging challenges. This requires a shift from a command-and-control mindset to one of trust, empowerment, and support.

Traditionally, leaders create clear goals, plans, and objectives. In a world characterized by ambiguity, leaders must be able to operate in environments where answers are not always clear and outcomes uncertain. They must navigate complex, ambiguous situations. Leaders who can embrace these challenges will be better equipped.. There are examples in both business and society. Fluctuations in stock prices, and currency values can create uncertainty for businesses.

The rapid pace of technological innovation also creates uncertainty, as new technologies disrupt traditional industries and business model. Events such as natural disasters, political instability, or pandemics can disrupt global supply chains, production delays, and logistical challenges for businesses. Political unrest, government instability, or geopolitical tensions can create uncertainty and volatility in society, impacting economic stability, social cohesion, and business confidence. Pandemics, such as the COVID-19 pandemic, can create uncertainty and complexity for society, disrupting daily life, straining healthcare systems, and impacting economic activity.

Climate-related events, such as extreme weather, rising sea levels, or droughts, can create volatility and uncertainty, impacting food security, infrastructure resilience, and public health. These examples highlight how volatility, uncertainty, complexity, and ambiguity can manifest in both business and societal contexts, presenting challenges for decision-makers and leaders.

In such VUCA situations, leaders must be able to adapt quickly, make informed decisions amidst uncertainty, and navigate complex challenges with resilience and agility. As new parameters such as ESG and the pressures to reduce carbon emissions enter the business world, leaders must shift away from the traditional style.

The author is an Associate Fellow at the Ungku Aziz Centre for Development Studies, Universiti Malaya, and Tan Sri Omar Centre for STI Policy at UCSI University.