Get There Early: The VUCA Opportunity

[This is an extract from Chapter 3 of Bob Johansen's new book, Get There Early: Sensing the Future to Compete in the Present. The previous section is available here; an overview of the book is here. -Ed.]

The VUCA world is sparking new ways of thinking and acting—ways to deal with the original dark meaning. The most successful leadership strategy is to flip the danger, like an aikido move in martial arts where you absorb the attack but redirect the energy of the attack in a positive direction. The martial arts teach a relaxed awareness that allows for appropriate and proportionate response, whether that response is an attack, a retreat, or a clever way to manage the dilemma without resort to violence. Aikido practitioners speak of blending with an attack, flowing with its direction and gently spinning it off in a safe direction. The Foresight to Insight to Action Cycle provides a way of engaging with the VUCA dangers in search of opportunities. Such a turnaround is exactly what leaders must do in response to the dangers of today’s world.

Consider microeconomics as practiced by Nobel Prize-winner Muhammad Yunus in Bangladesh:

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In 1976, Yunus found himself frustrated at existing attempts to bring credit to the poor of Bangladesh. The economic theory he had learned in the United States simply wasn’t working in the VUCA world of rural poverty. Countless numbers were unemployed, unable to make money with their current resources. They needed loans to start small enterprises—loans as small as $20 or even less for investments like buying raw materials for petty trade. Poor people simply couldn’t win in the existing finance system. Banking systems excluded the poor, and loan sharks exploited them. Uncertainties and risks for the poor in agrarian societies, including floods, drought, crop failures, health crises, and so much more, were everywhere in their daily lives.

Yunus plunged into this dilemma and saw that he couldn’t graft the existing financial system onto the circumstances of the poor of Bangladesh. He needed to change the rules somehow. Gradually, through trial and error, he created microfinance and, eventually, Grameen Bank. He visited the villages and spoke with the people. He saw the world from their eyes, and gradually those factors that had once seemed like insurmountable problems became opportunities for innovation.

Microfinance needed to be local, personal, and part of the community. The personal connections created bridges of trust where once there was fear. He organized borrowers into small homogenous groups, with the members being dependent on one another to keep their loans. He used social capital instead of financial collateral. In this way, he used the strong sense of community and social pressure as incentives and sanctions—each person becomes invested in the others’ success, and they all encourage one another. If one person fails, the entire group fails, unless they assist one another. Loans didn’t require collateral, but repayment schedules were strict and extremely regular on a weekly basis— in very small increments.

Grameen also looked at the social conditions—such as shelter, water, sanitation, family planning, education, and other basic needs for survival—that had frustrated past attempts to develop economic self-sufficiency.

Unlike traditional banks, Grameen focused almost exclusively on women, who generally looked out for the health of the entire family and so, family by family, increased the health of the village. Women have much higher repayment rates than men.

Using the new principles of microfinance, Yunus reversed the age-old vicious cycle of low income, low saving, and low investment into a virtuous cycle of low income, injection of credit, investment, more income, more savings, more investment, and more income.

The VUCA world of poverty in Bangladesh is now being turned around with a combination of vision, understanding, clarity, and agility. The challenge is finding a way to engage honestly and create a winning strategy within the chaos that you encounter. Here are some emerging principles:

Volatility yields to Vision. Vision means having a clear intent, a clear direction for your actions. Vision is much more important than foresight, since vision seeks to create a future—not just study the future. With clear vision, creative space opens for innovation within the parameters that you specify. A bold vision sees beyond volatility, with a kind of calm perspective that is not trapped by the assumptions of the present. For example, Muhammad Yunus said in 1996, “One day our grandchildren will go to the museums to see what poverty was.” In a 2006 interview he declared, “58% of the poor who borrowed from Grameen Bank have now risen out of poverty. There are over 100 million people now involved with micro credit schemes. At that rate, we’ll halve poverty by 2015. We’ll create a poverty museum in 2030.”4 That’s vision, and it is important to note that he didn’t begin with this vision: it emerged as he learned in the field. Now, while most people assume a continuing gap between the rich and the poor, Yunus is engaging with that gap and working on practical ways to overcome it. In doing so, he motivates not only his own organization but also many others. That motivation will be amplified by his winning of the Nobel Peace Prize.

Uncertainty yields to Understanding. In the face of uncertainty, listening and understanding can help leaders discover new ways of thinking and acting. Listening leads to understanding, which is the basis for trust. In order to understand, you must learn to listen carefully without judging too soon. The VUCA world creates an urgency to act quickly, but sometimes it is a false sense of urgency. The best leaders have the presence and calm to listen before talking, to open an opportunity for deep understanding. Understanding is a prerequisite to trust, and trust is vital to building community. The Grameen Bank is based on trust, with a reliance on local social networks. Traditional approaches to banking often begin with an assumption of mistrust and create systems of financial collateral to protect themselves against risk. Authentic gestures of trust can be extremely constructive, as Yunus has shown. His response was one of understanding: he went into the villages and listened to poor people—and he asked many questions. He began by loaning $27 to a group of forty-two people. He gained their trust, and in turn they trusted the new system. His understanding and consequent credit strategy became the groundwork for the Grameen Bank and what has now become a worldwide network of microfinance innovation.

Complexity yields to Clarity. Leaders must help others make sense out of complexity. The VUCA world rewards clarity because people are so confused that they grasp at anything that helps them make sense out of the chaos. At times, clarity will be rewarded, even when it turns out to be wrong. Clarity is good, and we should strive for it, but not at the expense of truth. The thoughtful leader’s quest is to be both clear and accurate, simple but not simplistic. Clarity is usually possible, even when there is no control. Muhammad Yunus realized that traditional banking methods didn’t work amid the immense complexity of poverty. Simplistic solutions did not work. Yunus sorted through the complexity and came up with a clear strategy: peer pressure that encouraged them to repay the loans and grow their own communities, and a focus on loans to women, because they tend to benefit the whole family more than do loans to men. The benefits of microfinance are personal, practical, and clear.

Ambiguity yields to Agility. In an ambiguous world, leaders must be ready for surprises. Leaders can’t surrender to ambiguity—that would lead to paralysis and confusion. Rather, leaders must learn how to be agile and responsive to attack. The VUCA world rewards networks because they are agile, while it punishes the rigidity and brittleness of hierarchies. Yunus learned that the hierarchical structures of traditional banking would not work in the developing world. His approach to microfinance is networked and flexible, lightweight, and replicable. Microfinance models have now multiplied across countries, cultures, and circumstances with remarkable agility.

We all have our personal VUCA moments, when our own life becomes volatile, uncertain, complex, and ambiguous. Personal crises hit everyone at some point. In these moments, we are challenged to respond. Absorbing a crisis like losing a child is jarring for anyone, but the most positive response is to engage with the crisis and figure out something— anything—you can do to rechannel that negative energy. The most dramatic example of this rechanneling that I ever saw was provided by the Biehl family from my hometown of Geneva, Illinois. Amy Biehl was a Stanford student who went to South Africa to work with poor people but was killed by an angry mob of the same people she was there to help. Her parents, while still grief stricken, envisioned and worked personally to create the Amy Biehl Foundation to carry on the work of their fallen daughter. In an amazing act of forgiveness, they actually met and worked with her killers to create this amazing turnaround.

The VUCA world is all around us, with more or less intensity. Those of us in the less intense environments can learn from those in the more extreme ones. Here are some examples that show how vision, understanding, clarity, and agility are proving successful for leaders in a variety of different organizations.

Strategic Intent. The military response to the VUCA world relies heavily on “commander’s intent,” sometimes called “strategic intent” (which I prefer), as a way of managing the dilemmas. Strategic intent is a clear, compelling, and concise statement that includes the following:

• Purpose: What do you want to accomplish? How is this purpose related to the larger mission or enterprise?
• Method or task: What needs to be done?
• End state: What ends are we pursuing?

Strategic intent, with decentralized authority to execute and innovate within the boundaries of that intent, provides a practical way to engage with chaotic situations. A strategic intent should cascade across levels in the hierarchy (at least two levels down) and across organizational boundaries to provide a consistent direction and message. A strategic intent statement can be a bridge from the most senior officer to the onthe- ground leader who engages personally with those who must bring the intention to life in a practical way.

At its best, the military’s strategic intent provides consistency without dogma. A strategic intent makes it more likely that a mission can be accomplished—even if the leader is killed or even in the absence of communications.

At its best, strategic intent facilitates agile response to unanticipated events through a consistent take-charge mentality within the framework of the intent. In the military, there is little room to question strategic intent but great flexibility with regard to how that intent is carried out.

Of course, it is not just the army that is experiencing this shift to- ward asymmetrical warfare on the physical and virtual battlefield. John Arquilla, who is professor of defense analysis at the Naval Postgraduate School in Monterey, has become the leading voice exploring the emergent realities of “net warfare,” in which the great wars are between “nations and networks.”5 The world of asymmetrical warfare is obviously different from the worlds of business and nongovernmental organizations (NGOs), but there are important similarities. Competition in business is becoming more asymmetrical. For most companies, their competitors are also collaborators in some arenas. The competitors of today are not likely to be the most important competitors tomorrow.

In this world, nobody is really in control. For people who are experiencing more chaos than they can absorb, who are outside their comfort zone, clarity looks like relief, and the need for relief feels urgent.

But clarity is hard to find in this world, and control is often impossible.

Clarity is good, but not if it is simplistic, not if the clarity is obscured when it comes to important aspects of the truth. The young commander in the story above understood his commander’s intent, which was to make friends with the local religious leaders. He improvised his way out of a very difficult situation while still holding to that intent.

The Army War College teaches leaders that strategy is hard work and that it demands critical thinking—a mix of clarity and complexity. With strategic intent, the vision is clear. The challenge is to develop the agility to respond to the chaotic world within which the intent must be pursued.