I remember back in 2006, at the end of a job interview for a risk management position at a bank, the CEO asking me the following question, jokingly: what is the only investment that is guaranteed never to lose? I didn’t have a shrewd answer immediately, so he volunteered: an airplane.
VUCA, a term introduced in the early 1990’s and used by strategic business leaders to describe turbulent environments affecting businesses, still lived in the realm of one impactful event with large – yet contained – repercussions: the burst of the internet bubble in 2001, the crash of the Twin Towers on September 11, 2001, the financial crisis of 2008. These tumultuous moments affected a specific set of industries, businesses and inhabitants, as life went on somewhere else in the world.
V for Volatility is the magnitude and speed of an unexpected change. Innovation and technology were the main drivers of this component until COVID-19 shuffled all the cards. Never has the world seen record high volatility measures as those of the past few weeks.
U for Uncertainty, and unreliability in predicting the future based on the past, is a direct result of volatility and a basic premise in corporate finance. What cash flows can companies project? What rate of increase, decrease, or stagnation could they forecast? Worse still, until when?
C for Complexity is the addition of new layers of inputs before coming to a decision: which company ever considered having an “all-employee leave” at the same time, while the debate on maternity and paternity leave was still incomplete?
A for Ambiguity is the difficulty in understanding a situation, sadly evidenced by the fear and anxiety affecting humanity.
It isn’t until today that this VUCA concept touched the life of every single human being on planet earth: COVID-19 is not “an event”. It is “the event” that was able to bring the world to a stop, lock people down, halt production, destroy industries, ban social contact, and make (even) airplanes a losing investment.
Is your company prepared to navigate such an environment?
In his book, 4D Leadership, Dr. Alan Watkins assures corporate leaders who are navigating this VUCA environment that “no business is immune from neither the opportunity nor the threat this ‘new norm’ presents”, and that “with the right attitude, leaders can leapfrog the competition, if they know how”.
What’s happening today, evidenced by the slaughter in the financial markets, sounds like the voice on judgement day asking: “So, how have you prepared for this day?”
Thought-leaders and university white papers in the field of leadership management agree that there should have been two elements to prepare for this environment – the “being” and the “doing”.
Most companies have perfected the “doing” portion, by focusing on “how to do what”, creating close-to-perfect processes, tight KPIs, detailed assessments, and constant performance measurements and reviews; in summary, controlling the physical environment.
The differentiating element, and the answer to the existential question above, depends on the following 4 questions:
1- Have you invested in your company’s vision, which will act as a lighthouse for your focus during these turbulent times?
2- Have you crafted a company culture of collaboration and individual leadership, and fostered an environment of diversity, integration and collective power?
3- Have you cultivated a safe space for yourself and your team to “come back to center”, refocus and think collectively about the appropriate next steps?
4- Have you nurtured agile leaders who can survive complexity and chaos and move swiftly and courageously, with their teams?
If the answer is “yes”, you are safe. If the answer is “no”, it is probably not too late to pause and ponder.
I consider this time a chance given to those leaders who didn’t know how or when to pause, or who did not believe in pausing at all. Now is the time for precious and honest self-feedback to appreciate the power of slowing down and immersing in silence and introspection. Before shooting the arrow, we “draw”, we pull it back and only then, we let go.
Those who will choose reactivity and focus on the “what now?” place themselves at higher risk. Those who will be courageously active, standing up to the challenge and willing to retrospect, take responsibility, and aim, will win in the long run. They will win the loyalty and appreciation of their greatest asset: their employees. They will get to redesign the cultures they want to lead. They will build relationships with various stakeholders in their business. They will have purposeful legacies in a well-engineered “better world”.
These difficult times carry plenty of opportunities for those who want it. It will separate the good from the best, the perfectionist from the excellent, and the active from the wise.
Whether you are leading a company of 10,000 employees, a household of 5 persons, or just yourself through this tough time, you always have a choice.