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There have been few business contexts in living memory more challenging than the early moments of the pandemic. Keeping the wheels turning on a globalised economic system whilst borders are closing and national health regulations are confounding businesses, this is the archetypal VUCA environment.What do these kinds of changing new-world contexts, characterised by extreme Volatility, Uncertainty, Complexity, and ambiguity (VUCA) mean for leadership and strategy? And what effect does this have on the role of skills and credentials?

The competitive world of business has, necessarily, always been an arms race. Leaders need to adapt and overcome obstacles, keeping pace with their competitors as well as human development.

Change is not new, says Marco Mancesti, former Research and Development Director at IMD Business School for 10 years.

What is different is that the pace of change, the immediacy, the extent of impact and the number of factors to be taken into account have drastically increased,” Mancesti explains.

 

What does this imply for executive managers?

As a consequence of technological advancement, the business world has far higher complexity than it once did. Business leaders face uncertainty as a result of changing political and regulatory contexts, volatility as a consequence of fleeting commodities prices and shifting markets, and ambiguity due to the emergence of unprecedented situations — Brexit, the pandemic, or the trade war between the US and China being recent examples.

Mancesti argues that this should not lead to despair or the denouncement of norms in strategy and leadership: on the contrary, “strategic thinking becomes an imperative […] Leadership becomes crucial.”

Strategy must be far more frequently assessed in the VUCA environment. And it must be developed and evaluated by far more astute leaders who are capable of “taking a thoughtful position and articulating an agile strategy” in the face of complicating factors.

In a world that is increasingly difficult to understand or predict, there is a second leadership function that is also essential, Mancesti says: the leader’s capacity to maximise the potential of those under their charge.

Decreasing employees’ anxiety in the face of change by proving that challenges can become opportunities is going to be a critical enabler of peak performance and a competitive advantage,” Mancesti insists.

 

Responding to the VUCA world with Vision, Understanding, Clarity, and Agility

One way that leaders can prepare for VUCA environments is by heading off the factors at play, and by counteracting the qualities that make them challenging.

According to Bob Johansen, a distinguished fellow at the think tank Institute for the Future, effective VUCA leaders harness vision, use understanding across the structure, create clarity for their team, and leverage agility to stay on point.

Leaders with certainty of vision, of where they want the organisation to be in the future, better navigate volatility through future-proof decision making.

By understanding events from the perspective of all levels of the team or structure, collaborating and viewing the problem from different angles, leaders can counter uncertainty with multi-dimensional models. At IE Business School , Executive Education they make a point of teaching executives about these particular skills; they typically use the Three Horizon approach to encourage executives to see their own businesses through the eyes of visionaries, the eyes of entrepreneurs and those of a manager having to deal with the short term issues.  These different perspectives often generate relevant future scenarios for executives to develop specific strategies.

Complexity can be tackled through deliberate effort and commitment of resources to disentangle the throng of data and find clarity.

When faced with acute ambiguity, teams must have the agility to pivot on short notice.

While these strategies help executives to tackle VUCA situations, there is also considerable need to foster a learning mindset.

 

The need for lifelong learning

The emergence of the Vuca environment as the norm creates an imperative for executives to continually develop additional expertise. A recent McKinsey survey found that 87 percent of executive respondents either are experiencing skill gaps in their workforce as a result of changing market needs, or expect to experience them in less than five years.

Nick van Dam is the Chief Learning Officer at IE University, Director for the IE Center for Corporate Learning Innovation, and a former CLO and HR Executive at McKinsey & Company. Over 30 years of business experience has led him to consider individual lifelong learning as one of the most crucial practices in the modern business environment.

Van Dam and his colleagues believe that considerable changes need to be made to the business education model to align it more fully with trends in the real world.

At IE University, students experience the Liquid Learning model which makes use of multiple methodologies and platforms, virtual and physical, immersing students in a host of technologies and learning environments. Whether they attend in-person or remotely, IE students are exposed to the latest innovations in artificial intelligence, analytics, gamification, simulators, and communication technology, readying them at a time when these innovations are just starting to make their mark on the workplace.

Building a workforce of such lifelong learners is critical for organizations to respond to a changing business environment. To ensure they have the required skills and talent, companies must create a learning-for-all culture in which people are encouraged and inspired to continue learning new skills,” Van Dam and his colleagues write.

Changes to the world demand new approaches to career planning as well. Technological developments and shifts in society stand to dramatically alter the workplace of the future. Learning must, therefore, align with these workplace needs.

“While this mode of learning has long been in our future, the COVID-19 pandemic has made the transition more urgent. It has shown us that universities must embrace ‘liquid modernity’ — so they can not only meet any crisis that arises, but also prepare students for varied careers over their long working lives,” Van Dam explains.

 

Not only will jobs be lost to automation, Van Dam says, others will change as a consequence, and new jobs will emerge. Crucially, professionals need to be prepared to acquire skills outside their current wheelhouse.

As active lifespans increase, it might be quite ordinary for a person to work into their seventies, changing professional area repeatedly. What this means is that executives will need a drastic change of mindset.

Due to the rapid and continual change in working practices, it will no longer be about acquiring deep knowledge in one particular field, followed by a career spent developing field-specific competencies. Van Dam suggests that changes to the future of work will mean that individuals need to have multiple areas of deep knowledge over their lifetime, combined with a broad spectrum of competencies.

Inevitably, this demands that we all become lifelong learners in order to constantly upgrade our skills and keep up with the adaptations made in business: in fact, this will become a crucial success factor.

At the same time, soft skills, such as emotional intelligence and communication, will increasingly weigh on a professional’s value to teams and projects downstream in their career. As such, learning must reflect this trend.

“The future of learning is liquid. It’s all about the richness of the experience: curricular and extracurricular, social and individual, global and local, […] cognitive and emotional,” Van Dam insists.

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