Managing in today’s VUCA (Volatility, Uncertainty, Complexity and Ambiguity) business world

Published in Japanese in April 2016 in MUFG’s Biz Buddy


The increasing frequency of new concepts, ideas and technologies in the 21st century has created novel opportunities and challenges for businesses and organisations. Airbnb, BlaBla Car, Uber, Spotify, MPesa are examples which demonstrate how the internet has impacted the traditional model of business in these industries.  Keeping pace is no longer enough; survival and business success cannot be assured by keeping one step ahead. Carefully designed solutions that solve clear and well defined problems are a luxury of the past.

To succeed it is necessary to manage Volatile, Uncertain, Complex and Ambiguous (VUCA) pressures rather than following a defined course of actions to achieve specific goals.

In this three part series we explore aspects of people management in the 21st century. In contrast to the more familiar ’to do’ list, we use techniques that generate awareness and provoke thought. We hope our audience is encouraged to step back and consider how they actually act in a global environment.

PART 1: Culture of Obedience and Leadership

Culture of Obedience

It is fascinating how organisations instil a culture of obedience so that employees come to work and perform their tasks without any questions. Without doubt, a culture of obedience is crucial and no chain of command would be effective if every decision is questioned and debated. Yet, all too often employees take no accountability for their actions other than blindly following orders from above. It is almost as if they have left their individual sense of judgement and consciences at home. Ask any manager or employee how they clarify their doubts at work and they will almost always, check with their immediate supervisor or search the company procedures and policies manual. What happens if the rule book is wrong, out of date or the manager is incorrect?

2015 has been a year where some of the world’s largest and most respected companies have become embroiled in corporate scandals. Although each case is unique and different, these scandals make a mockery of corporate integrity. They are most likely the result of a collective effort involving people across different levels of the business, rather than the work of a rogue employee. As always, these scandals will be thoroughly investigated by professionals and almost all will involve hefty fines or expensive settlements. Very few of these investigations will involve any civil or criminal prosecution of key managers and decision makers. 

2015 has also seen the emergence of the Yates memorandum on 9th September 2015 which allows for the prosecution of individuals in corporate fraud cases. Sally Yates, the US Deputy Attorney General announced that fining businesses will take second place to pursuing civil and criminal charges against individuals and executives. Her memo makes clear that ‘to qualify for any co-operation credit whatsoever, in both criminal and civil cases, corporations under investigation must provide the Department of Justice with all relevant facts about the individuals involved in corporate misconduct’. If implemented rigorously, this will ensure managers cannot hide behind an inscrutable corporate entity. It would be nothing short of a paradigm shift and a bold example to other countries.

A direct consequence of the culture of obedience is that it codifies what is right and what is wrong. It sets fixed boundaries that invoke sanctions if they are crossed. We stop thinking for ourselves and no longer take responsibility for what is actually right or wrong. All we remain focused on is following the rules, procedures or laid down policy, thus avoiding sanctions for disobedience. As a result, we completely lose sight of the initial purpose and intentions of the rules. It is not surprising therefore that we have laws to enforce laws and regulations which lead to more red tape. Big business typifies this; every large organisation has its own set of policies and compliance procedures, all encouraged by its organisational culture. Until investigators tell us otherwise, we will not know if it was just a few rogue employees or the culture of obedience that led to some of this year’s corporate scandals.

Leadership Role

The inevitable question in the context of the Yates memorandum for organisations is how to create a corporate culture where its employees are encouraged to highlight areas that may conflict with the company’s goals without any fear or retribution. This is especially important in those cultures where hierarchy, conformity and loyalty are valued and where individualism is not considered the norm. Whistle-blowing arrangements and hotlines have had limited success. More regulations, policies and audits would only lead to more bureaucracy and innovation and creativity would be affected.  There needs to be another way.

The answer in my view lies in the quality and calibre of leadership that such organisations create. Most leadership models talk about what a leader needs to do and there are numerous aspects of leadership that are laboriously taught in class room settings. All require leaders to demonstrate behaviour that succeeds in generatingfollowers. I believe that this is insufficient. Leaders should be able to engage with employees by involving them in their decision making process by considering any inputs they may have as this will strengthen the overall business response in today’s VUCA environment.

Mature organisations need to think about creating leadership skills that encourage every employee to express their view. Employees should be encouraged to challenge bottlenecks and business risks. Organisations would need to ensure that its leaders encourage and listen to these views. Stifling and dismissing different opinions should not be an option. Leadership must be about doing the right thing; as the legendary Kazuo Inamori has pointed out, the acid test of a leader is the ability to hold one’s head high because one did the right thing. Encouraging opinion and alternative voices is much easier said than done and more so in those cultures where its people are systematically and socially encouraged to follow orders, where ‘reading the air’ and understanding unspoken thoughts and feelings of the manager are valued.

Though difficult, it is not impossible.  Leaders in Europe and USA are familiar with quarterly town hall meetings where every employee participates in a briefing from their senior leadership. Employees are provided a carefully prepared presidential state of the nation address about the business followed by a brief question and answer session.

Some companies have successfully used large group intervention methods to transform such gatherings of its employees into highly interactive and participative events. Specialist group interaction formats like Open Space Technology[1] and World Café[2] physically create time and space for people to engage deeply and creatively around issues that interest and matter to them. These methods ensure participation and enhance collaboration across employees. Passive audiences of town hall meetings are transformed into highly engaged and energetic participants who take collective responsibility for outcomes.

For leaders, mastery of these methods may need some training and skill; the returns however would be well worthwhile the effort. Above all, they would provide confidence to leaders that everyone in their team understands the overall rationale of their actions and commits appropriately to their role.

In Part 2 of this series we will explore how certain aspects of organisational cultures can adversely affect a VUCA response and prevent organisations from making the right choices.

[1] Open Space Technology is an effective format for large groups to physically meet and self-organise to discuss complex and difficult topics in a short period of time. Participants follow their interests and participate in different discussions, swiftly moving across different topics of interest once they have contributed.  

By the end of the session participants have committed to the topics in the discussion.  

[2] World Café is another large group engagement format where participants spend a fixed time discussing their topics of interest. Groups rotate across all topics and by the end of the session a collaborative dialogue with shared and agreed outcomes has taken place successfully.

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