MBA grads and seasoned business managers in all corners of the Earth are presently grappling with understanding the VUCA world (a Volatile, Uncertain, Complex, and Ambiguous business environment).
This struggle to keep up with such rapid changes that are, at best, different from what textbooks and case studies teach is real and tortuously keeping the learner, teacher, and practitioner up at night.
It is no secret that the last decade has brought about swift evolution in the business world just as much as it has played significant roles in shaping geopolitics, global economics, national security, among other macro sectors.
Juxtaposing the recent collapse of century-old Thomas Cook with the rapid expansion of self-booking tourism apps and websites like Airbnb, Hotel.com, among others, may be proof that unless (legacy) enterprises change their business models, they are set up to fail, by and by.
Politics and new technology are changing the world of business
The VUCA world is no more an academic concept; we live in it today, and it is rapidly becoming the major denominator, actively deciding who succeeds and who fails.
Connected to the above, the complex and ambiguous nature of geopolitical and regional uncertainties makes matters worse.
For example, thousands of business outfits are in a state of limbo, literally unsure of how to respond to Brexit, the impending British departure from the European Union bloc.
Similarly, the US-China trade war has resurrected – and further fanned the embers of the Cold-War era rivalry between the two countries, leaving the entire world exposed to unimaginable volatility.
Both superpower nations are flexing muscles over a wide range of industries and trade (dis)agreements as well as multiple strategic national security interests.
From feuding over the who controls the South China Sea to how Hong Kong is administered, to actual trade disagreements with regards to 5G technology, buying and selling steel products, and agricultural produce, the USA and China are taking their complex fight to heights not witnessed since the end of the Cold War.
The fact that both countries jointly control 40.75% of global nominal GDP and as much as 34.27% of global purchasing power parity (PPP), every other country and business concern is keeping a close eye on the increasingly escalating spat, uncertain of what happens next.
Businesses require new leadership models to survive and thrive
Since 1991 when the US Army coined the term VUCA as they actively engaged in the Afghanistan and Iraq-Iran wars, politics and business has never remained the same again – and never will.
Just like stealth bombers, stinger missiles, and hi-tech reconnaissance satellites changed the nature of warfare 30 years ago, so has the rise of the internet changed the face of business today.
In other words, applying old (often successful) business models to solve modern challenges in a bid to achieve expected objectives will not cut it anymore.
To put it in perspective, the top-down leadership approach which helped build the biggest and most successful business outfits of the last century is already obsolete and counterproductive in 2019.
The sacking of Steve Jobs from Apple Computer, the company he co-founded with Steve Wozniak, in 1985, was a signal that the top-down approach had reached its zenith and, as such, business outfits required new models to survive and flourish in a fiercely competitive environment.
Recent events allude to that assertion.
The sacking of four CEOs of several multi-billion dollar companies in just one week is unprecedented in business history.
The top boss at Juul, eBay, WeWork, and Overstock were axed in the last week of September 2019 following poor performance as against expected output (read: shareholders/boards’ disapproval of their leadership styles).
PricewaterhouseCoopers puts a more precise figure to the unprecedented changes.
The consultancy firm reports, after a study, that 17% of CEOs in the world’s top 2500 companies were dismissed in 2018 (39% of this number were fired for ethical or leadership lapses).
The point is clear: shareholders and other concerned entities are no more patient with a leadership that cannot respond swiftly to the demands a VUCA world seeks.
And this is just the beginning.
Going, forward, and with the arrival of 5G, things will change even faster, exposing the underbelly of rigid companies to the vagaries of such cataclysmic disruptions.
Can any business outfit survive in the VUCA world?
A volatile, uncertain, complex, and ambiguous business environment brings with it many challenges as much as it presents lots of opportunities.
Just like the first Industrial Revolution brought about remarkable changes in the manner people conducted businesses, created products, and interacted with the customer, so will Industry 4.0 transform the modern business space.
To keep up, every business leader must develop the awareness to see opportunities, quickly put together a team, and take advantage early enough.
Conversely, such a business leader (or management team) must be able to recognise impending or imminent threats and respond immediately.
In other words, the next decade will be defined by swift action!
Speed will separate “sitting ducks” from winners; how swiftly a manager reacts to events happening in the external business environment will determine how long he or she will remain in that job.
In the same vein, how fast the management upskills its entire staff, imparting in them the crucial and necessary skills to meet modern challenges, will determine how robust and resilient the whole business will be.
The world of business has never been hazier and more unpredictable as it is today, thanks to geopolitical tensions, the internet, and related technologies.
Every business sector and entire industries will be affected by the VUCA environment, now or soon enough.
How the present leadership of such businesses envisage such changes and plan towards them will go a long way to determine how long they last at the head of the table.
On a final note, the VUCA realities provide new opportunities for current students at Business Schools and other such institutions to prepare for a business environment that is different from what the textbooks and scholars have always said, before now.
Other than the crucial business development and management skills schools and books offer, the MBA graduate of today must cultivate the ability to become flexible, responsive, and proactive.
This combination of soft skills is what will make him/her more marketable and valuable for future roles in blue-chip legacy companies, small startups, or big retail chains.