Navigating Our VUCA World

If the board views its role as solely one of compliance and oversight, it's not going to contribute much to organizational agility. Instead, its concept of what constitutes good governance needs to be about more than just having the right structure and procedures in place. It needs to encompass guiding the organization to survive and thrive, helping it to develop the capabilities to become agile, future-ready, and innovative - able to not just navigate the VUCA world but to harness its potential.

That kind of leadership requires collaboration between management and board, each respecting the other’s role yet working in tandem to shape the culture, monitor the environment, make sound decisions, and execute strategy.

 The role of leadership today is to bring clarity in uncertain times. The more uncertain
 things are, the more leadership is required. There is no job description for what you
 are facing, no rule book ... Today’s leaders need to thrive in the face of this
 uncertainty. - Satya Nadella, CEO, Microsoft
      

In a VUCA world, leadership requires the ability to respond to changes in the environment with actions that are focused, quick, and agile. That ability is enabled and supported by these attributes around the board table:

• -- A Shared Purpose. The board needs to define, buy into, and clearly communicate the organization’s purpose. When the seas are storm-tossed, shared purpose is the lighthouse that guides navigators.
• -- Preparedness. Monitoring trends in the environment – both internal and external – can give an early warning of impending change, allowing the organization to anticipate and prepare. The board needs to make sure that the right things are being monitored, and that directors are receiving meaningful data in a timely manner
• -- Adaptability. The very nature of VUCA leadership is the ability to flex, pivot, and adapt as new information is obtained, decisions are made, and opportunities arise. The board can't be stuck in its own a rut, yet still expect management to turn on a dime.
• -- Bias for Action. Directors must accept their imperfect world and make the best choice they can, even though the information available to them may be incomplete and the situation novel.
• -- Diversity. `Best practices` are no longer the right guide for the organization. Instead, the board needs to access innovative thinking from diverse sources to help them respond quickly to the changing reality.
• -- Stakeholder Focus. The board needs to understand stakeholder interests and consider the impact of the organization’s actions on key stakeholders. This is the essence of the board's ESG role.

As a board director who wants to navigate the VUCA world, what personal skills might help? Here are a few ideas gathered from the Investors in People article '6 key qualities for success in a VUCA world,' and adapted for the boardroom.

1. A balanced approach to risk. VUCA requires innovation, which is an inherently risky process. That makes risk tolerance an important mindset, but you need to balance it with a degree of risk aversion. Work at getting a handle on your own natural risk appetite. It will help you spot when it might be getting in the way of a good decision.

2. Comfort with uncertainty. When it’s necessary to try out new ideas, it helps to be able to accept uncertainty and be open to “tinkering.” Work at acquiring the skills to get into this mindset – skills such as re-framing problems, reverse-engineering solutions, and learning from other industries.

3. Self-awareness. Decisions have become more difficult to make, yet good quality decision-making is more important than ever. The good news is that understanding and managing your energy level increases your decision-making capability, as well as leading to a better understanding of other directors and collaborative board relationships.

4. Change readiness. As a rule, we humans don’t react well to change. But as Charles Darwin said, success comes to those who are not the strongest, but the most responsive to change. Accepting change as a constant, and avoiding rejecting and fighting it, is key to navigating the VUCA world.

5. A balanced approach to risk. A growth mindset is the belief that your abilities are dynamic – that you can learn, change, and adapt. A growth mindset, coupled with a curious nature and the ability to learn quickly, gives you the confidence to approach new situations.

6. Ruthless prioritization. Ruthless prioritization is not just about the order of doing things, but also what constitutes “good enough.” Maybe you’re a perfectionist, but you might need to learn to accept “good enough” in some areas for the sake of mission-critical progress in others. Directors need to focus on making progress in those mission-critical areas and avoid getting mired in detail.

One of my most enduring memories from business school comes from a tour of a high tech German firm. Following the tour, the students had a chance to pose some questions to the company’s senior management team. One of us asked, “Who is your competition?” The response, delivered with great pride, was, “We have no competition.”

Think of how different that sentence would have been with the addition of one word at the end. The word is “yet,” as in “We have no competition yet.”

When you hear management assure the board that the organization is not affected by disruption, or that it occupies a protected niche, or that its customers are not demanding new technologies, or that its employees are not looking elsewhere, try silently inserting the words “so far” or “yet.” This mental trick should help you keep your focus on a VUCA future. You may even choose to say it out loud.

The energy of the CEO and the management team can be consumed by what needs to be done in the present and the near future. But a director’s view of the organization and its environment is naturally from higher up (30,000 feet, as they say), and from that perspective, the director’s focus can also be on a more distant – and more uncertain – future. That future is fraught with risks, of course, but it also offers opportunities that may be obscured from management as they deal with today’s challenges.

You can harness the power of questions to help your board refocus and view the organization’s challenges and opportunities in a new way with questions such as these:

-- What can we do to shape the culture?

-- How can we anticipate, embrace, and prepare for the uncertainty inherent in the system?

-- Who are the change-ready leaders in our organization?

-- Who are the change-ready leaders in our organization?

-- How can the volatility of this challenge be used to our advantage?

-- How agile is our CEO’s response to the environment?

-- How can we reframe this challenge so that we see its complexity as an asset rather than a liability?

-- How could we best support the CEO and the management team in navigating our VUCA world?

-- How can we loosen our requirement for predictability so that ambiguity doesn’t matter?

-- Boards and management together can provide leadership in shaping the organizational culture.

-- A shared purpose, a bias for action, and stakeholder focus are just some of the attributes that help a board navigate VUCA.

-- Individual directors can work on building their personal skills to cope with change.

-- Directors can help their boards navigate VUCA by asking great questions.