How to Deal with Board Effectiveness - Volatility, Uncertainty, Complexity and Ambiguity

Volatility, uncertainty, complexity and ambiguity (VUCA) are now inherent in business. The business landscape has changed significantly over the past 10 years and is continuing to do so at an accelerated rate, driven by a rapid change in the global economy, technology advancements, and cultural diversity.

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Volatility, uncertainty, complexity and ambiguity (VUCA) are now inherent in business. The business landscape has changed significantly over the past 10 years and is continuing to do so at an accelerated rate, driven by a rapid change in the global economy, technology advancements, and cultural diversity. It is well documented that future leaders will need to deal with far more volatility and uncertainty than leaders of ten years ago had to deal with.

Many economists and businesses believe that leaving the EU would be detrimental and that foreign investors may question their exposure to the UK economy (Andrew Benito, Goldman Sachs). Whilst Civitas studied official trade statistics, and reported that Britain had recorded that the ‘UK export growth was 22.3% lower since joining the single market at the end of 1992 than it would have been had it continued at its rate during the common market between 1973 and 1992’.

The trend of growth in emerging markets like China and the Middle East caused industrial and urban revolutions; quickly shifting the centre of the world economy. Indeed, China is now the second-largest economy and the second-largest importer of both goods and commercial services and so, with their current slump in economic growth, economists believe that the slowdown will have mixed effects on the UK.

Boards are faced with making decisive decisions in the face of such volatility and uncertainty, and perhaps more than ever before will need the right leadership capabilities and behaviours to prevent them from de-railing and making ineffective decisions.

The use of written communication and memorandums have become a distant memory for many, replaced by technological mediums that enable virtual working and instant access to data that can be readily shared.

The speed of technological innovation is alarming to many but exciting to numerous others. It took more than 50 years from the invention of the telephone until half of all American homes had one. Facebook attracted 6 million users in its first year, and then 100 times more over each of the next 5 years. In 2009, developers had created 150,000 smartphone apps, by 2014 that number had hit 1.2m and over 75bn total apps had been downloaded, more than 10 for every person on the planet. However, instant access and increased usage are not without risk of attack. The Department of Business, Innovation & Skills, 2015, reported that cyber-attacks had affected nearly all organisations, with 90% of large and 74% of small organisations suffering a breach in 2014. Yet only 25% of directors are ‘actively involved in reviewing security and privacy risks’ (PwC, 2015 Global State of Information Security Survey).

Whilst it’s still less expensive to use manual labour today, this is predicted to change through a robotic revolution. With big improvements in cost and performance, it is anticipated that in the next ten years, up to 25% of UK jobs will be replaced by robots, and in some industries, more than 40% of manufacturing tasks will be done by robots (Boston Consulting Group, 2015).

Not only is this causing much speculation over the type of roles that are most likely to be made redundant, but also the key skills that will be needed for future talent acquisition and growth. It is crucial that executives ensure that their business is agile and able to keep abreast of such changes. The need to navigate the impact of automation on the workforce requires empathy and understanding, whilst balancing the need to future-proof the organisation, and engage employees during challenging times of transition.

With people living and working longer, organisations will soon have 5 generations in their workforce, an increase from 3 to 4, which looks to continue to increase to 7 generations in the next 10 to 20 years (Forbes, 2015).

Baby boomers no longer have the retirement that previous generations experienced. With pensions hit hard, as a result of the global recession, many are benefitting from the abolishment of the default retirement age, and are continuing to work well beyond the age of 65; or are working part-time or taking time off to look after grandchildren.

No longer is there a ‘job-for-life’ mindset, with employees finding more opportunities to explore different roles in different places than ever before. According to Forbes, 91% of Millennials expect to enjoy 15 to 20 jobs across their career and believe that they will stay in their job for less than 3 years at a time.

There are significant differences between generations in behaviours, attitude, and expectations of their employer. Millennials expect meaningful experiences with high engagement, their talent to be managed and developed, with transparent goals clearly communicated through transformational leadership. And with as many as 73% of 14 to 16-year-olds aiming to achieve more than their parents (Britain Thinks, 2013) the demands of the workforce will inevitably continue to change.

Through greater diversity, varied working practices conducted across different global time zones, and increased talent mobility, leaders must develop their capabilities to effectively lead through continually evolving cultural transformation.

With increasing pace of external and internal change, it is no wonder that 33% of executive's time is spent responding to crises or problems (Entrepreneur). Strategic decisions need to be taken to enable the greatest long-term business resilience possible, with full knowledge that the decisions may be disrupted through volatile and uncertain impacts of economic or technological forces, or diversifying workforces.

“If you embrace disruption, the opportunities are greater than the threats, the companies that will be at risk will be those that resist it”, Jim Moffatt, Deloitte, 2015.

For further information on how we can help your business improve its organisational performance and board effectiveness, please contact Doug Mackay, Managing Director, on 00 (0)1829 732374.

About the author
Doug Mackay
5 min read

Having started his career in Executive Search in 1998, Doug set up Collingwood in 2005 alongside his wife, Claire Mackay.

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