How Board Directors Can Tackle A VUCA Environment

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VUCA Environment
For corporate board directors, operating in a VUCA environment is a constant challenge.

VUCA was coined by the U.S. Army in the 1990s to describe the post-Cold War world: volatile, uncertain, complex and ambiguous.

It has since been embraced by leaders in all sectors of society to describe the nature of the world in which they operate: the accelerating rate of change (volatility), the lack of predictability (uncertainty), the interconnectedness, of cause-and-effect forces (complexity) and the strong potential for misreads (ambiguity). For corporate board directors, operating in this environment is a constant challenge.

“We have to stay in front of disruption with our clients. As the chairman, one of the things that actually concerns me a lot is, how do we govern over disruption? It’s hard enough to manage over disruption. How do we govern over it? So, how do I build really nimble leaders to be able to address a little bit of the unknown? That’s why the VUCA analogy resonates with me, because it’s really more about building leadership than it is about building technical skills,” says Mike Fucci, chairman of Deloitte.

So how do corporate directors and their companies understand the challenges of a VUCA environment? We talked with Fucci and five other top corporate leaders from a variety of industries to find out, including Joe DePinto, CEO of 7-Eleven, Bob Leduc, President of Pratt and Whitney, Margaret Keane, CEO of Synchrony Financial; Tony Guzzi, CEO of the construction services corporation EMCOR; and Bob Weidner, CEO of Metals Service Center Institute (MSCI), the trade group representing the industrial metals supply chain in North America.

Build a Responsive Culture

For everyone, the top of is creating, shaping and transforming their organization’s culture to be more responsive. The executives spoke about the values of integrity, trust, empowerment, employee and leader development and learning as being essential in the new normal of VUCA.

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“In the end, the biggest thing you can try to shape is the culture in the organization,” says Guzzi. The executive’s role, says DePinto, is “getting the right culture, setting the right tone, demonstrating… that is the way we want to do things, but it’s picking the right folks and then allowing them the leeway… giving their folks room to run and room to grow.”

Once corporate values are articulated and shared, board directors and executives should reinforce them through personal example and by ensuring they cascade throughout the organization. They also understand they need others to shape and reinforce the corporate culture. They use the values to guide hiring decisions and personnel development processes, and they ensure that all the organizational systems are aligned and synchronized to embody the culture.

Among other values, Leduc stressed empowerment, integrity and employee development at all levels. He also recognized that he could not shape the culture alone. “I can certainly set the tone, but then I need these 225 executives to do that exact same thing. They need accurate senses to find it, they need to model it and they need to embrace and nourish it.”

These corporate leaders did more than formally communicate the company’s values; they were present throughout the organization to encourage and reinforce the values. “You’ve got to be visible, particularly in a franchise business—franchisees have to know that the leadership is available,” says DePinto. “So we are very open, available and accessible.”

At Pratt & Whitney, Leduc reinforced culture and values alignment through periodic conversations at all levels. “We have this thing called performance connections,” he says. “It is different than a performance evaluation. We sit with our direct [reports] three times a year. It’s really, ‘How’s it going? What can I do to help you? Is there anything I can do to make this easier—more money, more capital, whatever it is?’ And also, my question is, ‘What are you doing to change the culture? What have you done in the last four months, since I saw you last, to change the culture?’”

For more on VUCA: Understanding the Challenge of a VUCA Environment

Brigadier General George Forsythe, Ph.D., Karen Kuhla, Ph.D. and Daniel Rice, MBA, are with the Thayer Leader Development Group at West Point, NY.

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