Managing “VUCA”

By Edward D. Hess,
Distinguished Executive in Residence and
Adjunct Professor of Management, Goizueta Graduate School of Business

Emory University
Atlanta, Georgia


Volatility, uncertainty, change and ambiguity (VUCA) are the new givens of a globally hyper-competitive business environment. VUCA results from high-speed information availability, instantaneous response times by competitors, and from the commoditization not only of labor and capital, but also of knowledge and intellectual capital.

Lead-times are short – competitor responses or reactions are fast – and with the continued consolidation of most industries, there are two or three very well capitalized behemoths which can crush younger guerilla businesses if they stand still too long.

VUCA can render meaningless traditional five-year strategic plans; and even short-term plans; vitiate the compartmentalization of strategy and tactics; make long-term product development more risky – thus stunting innovation; and necessitates collaborative information sharing and decision processes. VUCA requires a different management style than traditional top-down or command and control styles. VUCA puts a premium on critical inquiry, debate, the full venting of alternatives, and cultures which reward dissent.

Leading and managing people in VUCA environments takes a different mindset, different skills, and requires a collaborative approach. Likewise, in VUCA environments, failures or mistakes are givens and leaders need ways of dealing with failures and learning from them. VUCA requires corporate types to sense and respond like entrepreneurs.

As part of developing our new experiential Leadership Curriculum @ Goizueta Business School, I plus two colleagues spent a day and a half at The United States Marine Corps University and Officer Candidate School at Quantico, Virginia discussing leadership training with the Senior Leadership Faculty of the Marine Corps. Very impressive people – combat veterans with PhDs in Philosophy, Ethics, etc.

The Marine Corps Leadership Model is a values-based Servant Leadership Model – that is, a leader serves his or her followers and upholds certain inviolate values. They believe leaders must have stood in the shoes of their followers in order to lead. I think the business world (and business schools) can learn a lot from the military because it has done the best job of educating leaders to lead people of different backgrounds and economic standing, etc. This is the challenge for business leaders today. So, what did we learn that was surprising and interesting???

FIRST, in VUCA conditions, leaders are trained to seek input from all team members, including the lowest ranking members. Different opinions and viewpoints are encouraged because all need to be taken into account in venting possible courses of actions and the pros and cons. The elite or well educated lead; they do not dictate. Teams own ideas, not individuals. Everyone participates.

SECONDLY, critical inquiry and dissent are part of a teammate’s duty. YES, DUTY. You have a duty to voice your opinion if you disagree with the leader. Dissent is not punished. Although the leader makes the final decision, the PROCESS of debate is encouraged because it is through debating different viewpoints that better decisions can be made. And the debate process educates all players about the reasons for certain courses of actions and better prepares people for the unexpected which will occur not only on the battlefield but in business.

THIRDLY, leaders should try to stay as close to the front lines as possible in order to have better information. Business leaders, too, must stay close to customers – do not lose touch with reality.

FOURTH, GROUP THINK is to be avoided at all costs. In the business world, too, many corporations recruit for, train for, and reward group think. Group think masquerades in those companies as culture. Group think leads to myopic thinking, rigidity, arrogance, and ultimately defeat. Group think also masquerades as the “not invented here” attitude or “ignore him – he is different from us”.

FIFTH, every action is critiqued afterwards in detail in order to learn from the experience…What could we have done better???? What surprised us????? What would we do differently??????? Businesses need to do this more because this is how employees learn. Think about it, you want employees prepared to respond to customers and competitors. How do they learn responses??? How will they learn to respond “on the fly”???????

Lastly, all planning exercises contain a component of how to mitigate against major downsides. If one also reads the decision making process of Robert Rubin, the former Co-Chairman of Goldman Sachs and Secretary of the Treasury, one will find that a key component of his process is evaluating which course of action mitigates the best against a major downside when one is dealing with VUCA situations.

I suggest these principals are applicable to many businesses today. It is this process of inclusion, respect, and diversity of opinions which requires specific management and leadership competencies which many people do not have. Not only will this process produce better venting of courses of action, but also, a key result of this inclusive decision process is that everyone feels a part of the team and has a stake in executing the plan well. People find meaning in being respected, listened to, and accordingly are very loyal to the team and perform well in difficult circumstances. I think the business world can learn something here.

What do you think??????????