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Resilience and Transparency in a Volatile, Uncertain, Complex and Ambiguous World

May 19, 2020 | FEE Content, FEE Posts

 

by Bob Leonard and David Ross

 

In our last post, we discussed the coming reboot businesses will undergo post-COVID, and the need to do so in a way that prepares for a VUCA world… a world that is increasingly Volatile, Uncertain, Complex and Ambiguous. It’s an opportunity to prepare to meet the challenges of our climate crisis.

 

It’s important to understand that, climate aside, we are operating in a VUCA world. Add the mother of all crises already on our doorstep, and it’s obvious this reboot must be carefully planned and executed. This post is the second in a series focused on this topic.

 

 

The world is not going to be the same as it was. Delivering your organization’s climate change efforts in a VUCA world will require resilience and transparency.

 

Resilience

 

Our world is more fluid, unpredictable, less stable and more at risk than at any time since World War II. Planning for resilience in a VUCA world isn’t just an exercise; rather it’s a commercial imperative for ongoing viability.

 

The world is learning a painful lesson about the damage that can come from a lack of resilience. Transformative events on the scale of the pandemic often reveal the need to make structural changes. In a VUCA world, we just don’t know “what we don’t know”. If we prioritize resilience, we can effectively reboot without going back to our previous paradigm, and at the same time prepare for uncertain events on the horizon.

 

In the wake of the pandemic, businesses should build their future using resiliency strategies. It is time to abandon optimization as our default approach. We have removed slack in everything, from supply chains to airline schedules; and we are now living with the harsh consequences. Resilience and the ability to withstand significant impacts should be a core value of business. Relentless optimization results in a loss of flexibility – an essential component of resilience.

 

Businesses seeking long-term viability in the era of climate change can learn from highly reliable organizations (HROs). HROs include entities like aircraft carriers and nuclear power plants that must focus on significant high impact risks. Resilience in environments that are uncertain and high risk require a culture that provides “a licence to think and act”. Command and control, and rigid bureaucracies should give way to more fluid management and decision structures. That has implications for many C-suite teams.

 

Resilience starts in the board room and is much more likely to be successful if it integrates diversity (including of experience and perspective). External advisory boards are an effective tool to help ensure that companies identify and prepare for unexpected events. The view from outside the company enables people to see the forest for the trees, and to make critical comments insiders might hesitate to articulate. Today, especially if there is no internal climate expertise, external climate experts should be engaged. Decision-making is also strengthened by the inclusion of representatives from all stakeholder segments, including empowered middle-managers.

 

Businesses cannot thrive within societies that are failing. New challenges (e.g. a transition to a net-zero carbon economy) must be planned for. In many countries, including the US, the social safety net has failed the test of the pandemic; and COVID-19 has exposed the need to redefine the future of work and leadership, address the needs of workers mislabeled as “disposable”, and to address educational needs in a world that would greatly benefit from critical thinking skills. Investors will want proof that a business has done what it can to be resilient and reliable.

 

Transparency

 

Even just a partially opaque organization (which most are) increases VUCA levels. If stakeholders don’t understand a company’s mission and objectives, if they feel ignored, if problems are hidden from view, they lose trust. They lose enthusiasm. And they lose loyalty. Eventually, they disengage and move on.

 

When transparency is intrinsic to a corporate culture, employees are more engaged and committed to the vision. They understand the mission and feel comfortable sharing ideas, displaying creativity, and innovating to achieve desired objectives.

 

Transparency builds trust. An environment lacking in robust trust fosters ambiguity. Ambiguity produces polarized views and disinformation. Maintaining trust is absolutely vital because, once it is lost, it’s an arduous, time-consuming process to win it back.

 

How does a company deliver the full value of transparency to the workplace? Direct, clear and honest communication… without bullshit. And it’s important that communication is omni-directional (up, down, sideways – every which way). Employees are most engaged and committed to the process when they feel heard. 

 

How do we improve communications? Via an open environment that encourages the sharing of ideas without judgement. While this is not easy, there are training programs designed to improve workplace communications and teach people from all backgrounds to relate to one another without judgement. An open flow of communications prevents bottlenecks and other issues. Senior management must engage employees and relate to them as people.

 

Be proactive… not reactive. In a world that experiences almost exponential rates of change – as observed with the impact of COVID-19 – proactive communication of a company’s vision and mission is vital. Proactive communication of a company’s values clearly conveys the behaviors expected from staff towards each other and to stakeholders. 

 

What we are seeing during COVID 19 – and what we will see in a VUCA world dealing with our climate crisis and many other issues, is that leaders just won’t have enough time to micromanage. Things are happening so quickly, and complexity is experienced across the board. There are “fires” to extinguish even as new business strategies need to be deployed.

 

It is important to let your employees in on company problems. If they’re aware, they will help you find a solution. Staff, and potentially other stakeholders, must feel empowered. They will often have more expertise and experience in the issues they deal with than leaders. If they are given the right conditions, respect and training, they will rise to the occasion.

 

Companies that haven’t been transparent with respect to their climate-related efforts and strategies are now grappling with shareholders and activists who create costly delays and adverse media attention. Increased scrutiny from sophisticated and vocal stakeholders demands transparency and honest accounting of environmental impacts. This should include proactive disclosure of current environmental effects, measures taken to reduce these effects, and policies to transition to net zero emissions. A company that is upfront about its environmental impacts, discloses the countermeasures it has put in place, and can demonstrate its honest commitment to sustainability will improve its relationships with all stakeholders… and it will also minimize the risk of adverse press attention.

 

Transparency doesn’t cost much in dollars. Successful implementation will take time and effort. Start by being honest about what you are doing, and why. Invite stakeholders to help you accomplish transparency. You will see major improvements in your business. True team efforts always produce superior results. 

 

Our next post will focus on scenario planning – a process critical to successfully confronting climate change in a VUCA world.

 

 

 

 

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