How leaders adopt an agile mindset and make organisations thrive in the VUCA world
Find out why and how leaders adopt an agile mindset in order to make their organisations thrive in the VUCA world in this interview with Pete Holliday, organisational futurist and business agility expert.
The traditional business model that once created growth and stability has become a liability in the VUCA world – today's volatile, uncertain, complex, and ambiguous business environment. Organisations are upgrading their operating system and adopting new principles of working. Yet, many organisations struggle. We have invited Pete Holliday, organisational futurist and business agility expert, to share his experience working with senior leaders. For Mr Holliday, only an agile mindset will allow leaders to continuously upgrade their capabilities. Find out why and how leaders adopt an agile mindset in order to make their organisations thrive in the VUCA world.
Many organisations and their leaders struggle to keep up with the speed and complexity of today's VUCA world. What are they doing wrong?
Pete Holliday: The mindsets of today's leaders – how they think about the world and their own position – is at the core of the problem. I work a lot with senior leaders, who have worked their way up through the junior ranks, the middle ranks, to the senior ranks. When they get into a senior position, they all of a sudden feel like there is no more personal development needed. Metaphorically speaking, they have pedaled up the hill for 20 years and when they finally reach the top of the hill – a senior position – they just expect to be coasting down the hill for the rest of the time. They hold on to what they have known up until this point until they end their career. Their development stops.
However, in the VUCA world where change is constant, we really need to adopt an agile mindset and develop ourselves constantly. A lot of senior leaders do not do that. This also happens at the board level. You end up in a board position traditionally by working your way through organisations. Board members think they can fully rely on their experiences that brought them into that position. But this experience is based on the past, and what happened in the past is not necessarily the way business is going to be in the future.
When leaders are reluctant to adopt an agile mindset, what are the main threats for their organisations?
Pete Holliday: This combination between senior executives with a mindset of 'I have done enough to get here', combined with boards being very risk averse, means that organisations miss a lot of opportunities to transform. This compromises their ability to create value for customers.
There is also a more systemic perspective. Senior leaders with a traditional, non-agile mindset will only approve people that are not going to be a threat to their role. As a consequence, there is a cascade down the organisation limiting the amount of capability you get. I have had experiences where great, forward-thinking leaders with an agile mindset were removed from organisations for pushing the boundaries of senior leadership. These are the people that could help transform an organisation and make it future fit. Yet, those people are being exited because they are asking more of the senior leaders than they want to give. That clearly shows the negative effects these limited mindsets can have.
That is not always the case, obviously. I have worked with organisations where the CEO has a high-level, creative, and agile mindset which sets the context for the rest of the organisation. This frees the organisation to transform and change much easier than in these traditional organisations. Effective senior leaders focus on personal development because they realise it is paramount in a world that constantly changes.
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A Greek philosopher already said that 'change is the only constant', a quote that applies perfectly to today's world. If you had to predict how organisations will be run in 20 years from now, what will be the main change?
Pete Holliday: Much of the constant change that we have in the VUCA world is technology driven. And I think technology will play a massive role in the future. The power of quantum computing is advancing at rapid speed. Right now, the problem is human bandwidth, which means that our ability to access information, for example from our phones, is quite limited. Elon Musk and his neurotechnology business Neuralink have ideas about how we can fix the bandwidth problem in the interface with machines.
Once we fix that problem, we will see a significant transformation in the way organisations will be run because that will free us up to explore different versions of an organisation. Virtual reality will become a standard form of infrastructure for organisations. Once you have a virtual office, would there be a need for a physical presence? If you had really good virtual reality and good bandwidth, you could create a virtual model of your workplace. I could imagine that leadership meetings will be all virtual, where avatars are speaking to each other. If the organisation is run virtually, then constraints around location or culture can be overcome, because we can represent ourselves in a way that is ideally suited to the virtual reality.
What will be the impact of automation?
Pete Holliday: Automation is going to have a major impact. Many people talking about the future of work at the moment are saying 'Oh, do not worry. You will not lose your job to a robot'. I actually think that that is a little bit misleading. Certain roles will be lost to automation. The lower the level of complexity and the less sense making required, the higher is the chance the role will be automated. Law firms working on basic contracting, for example, will disappear because computers will do that work. And they will do it in a way that is far more democratised.
But I also think that for every job that is lost, a new one will be created. These are roles that we cannot even think about yet because they will evolve virtually weekly as computing power and software progress.
The combination of multiple technologies smashing together to create new things will be incredible.
The collision of biotechnology, quantum computing, blockchain, and maybe some other technologies will have the capacity to produce a hundred Microsofts or Google. It will create value that we cannot even comprehend yet.
The major trend will be democratisation: Google democratised knowledge with the internet and browsers. Then we saw money being democratised with blockchain and then transport with Uber. The concept of robo taxis will further push this forward. It will be interesting to see what core function of our society gets democratised next through advancing technology. This gives the appearance of making the system more fair because you have got that distributed capacity for value. Rather than that hierarchical value the way we traditionally had.
How will the structure of organisations adapt to these changes?
Pete Holliday: There is a lot of chatter about deconstructing organisational design and producing much flatter organisations with less hierarchical levels in it. Hierarchies do not do well under complex and fast-moving change. It takes a long time for a decision to go all the way to the top. By the time the decision comes down to the level of execution, the initiative is not even worth talking anymore because the world has moved on. Born out of necessity, we are seeing a lot of experiments in organisational design.
Decision making capability is moved closer to where the work is being done so that decisions can be made faster and as close to real time as possible. But then we come back to the leadership question. We have senior leaders at the top that have been brought up in the command and control period of how organisations are run and therefore they do not want other people to make the decisions. We got a collision between what the market requires and the way that organizations are currently run. There is a constant tension at play at the moment to try and find ways around that.
Through what ways can organisations find the best operating model?
Pete Holliday: Each organisation is different and there is no one-fit-all model. Is copying the Spotify model the right move for an organisation that is not Spotify? You can just grab the key concepts and jettison what does not work for you. Many organisations that want to be fit for the future are currently struggling with finding a good base model. And then going through the journey of finding what they need to get rid of and what they need to keep.
That is an interesting journey. I find myself involved in trying to help businesses show what other companies have done, negotiate the level of exchange with traditional models, and where they want to go and what is right for them. The operating model of those companies that went through these stages already is really a representation of their journey. They have done the hard work already.
A lot of organisations want to skip that journey and just go straight to borrowing a model someone else has created. Nevertheless, most organisations that try and skip that process end up with a negative result. It is a completely interesting time to be alive and to be able to watch the evolution of these organisations and even be involved in it. And that is actually quite a privilege to help people make new sense of the world.
You assist leaders to prepare for the future of work. What are the mindsets and capabilities leaders need in order to thrive in the VUCA world?
Pete Holliday: That is quite literally the 20 million Dollar question. A lot of it focuses on the root causes why the VUCA world is changing so quickly and the agile mindset to overcome these challenges. I think that sense making is really critical. Effective sense making has three main dimensions: system thinking, reducing bias by seeking other perspectives, and eventually coordinating perspectives to create meaning for everyone.
A core skill of sense making in complex environments is becoming really effective in system thinking and working with perspectives. Being able to sit back and look at all the parts that are changing and interfacing with each other and then try and get an understanding of how they are all interacting together. As a leader, we are operating in four dimensions: a mindset (thoughts and feelings), a skillset (actions and behaviours), a culture set (communication and relationships), and a tool set (systems, processes, technology). Effective systems thinking means being able to coordinate these four dimensions successfully. They are all connected, so once you adjust one, you adjust the other one by default. It is about continually balancing those four dimensions all the time to kind of keep them in some form of equilibrium. That is being agile.
Then, we will still have our own biases based on our experiences, our preferences, our personality. So a key skill is that you can seek other perspectives in order to understand whether the assumptions you have drawn from and what you have witnessed is actually correct or not. Thus, you should speak to others and inquire about how they see the world. Do we see the same thing? And it is crucial that we fully understand each other.
Collaboration is really a great example. Everyone talks about collaboration but there are various levels of collaboration. Some people will have already made a decision and understand collaboration as just telling others about it. Some made a decision but want to verify whether it was right. Others would get everyone in the room and co-create a decision together. And then another version might be: 'As a senior leader, I am confident in the fact that you, as my junior leadership team, will be able to make that decision as a collective by yourself. Figure it out and then we will have a conversation about it.' All four of those scenarios mean collaboration somewhere between a traditional controlling leadership mindset towards a more collaborative and trusting agile mindset. So the same word has different meanings to different people. Probably the most powerful question I ask – people who work with me would be sick of hearing it – is 'What do you mean by that?' So I really like to seek clarity. When you say that word, which of the four versions do you actually mean?
When we look at the data around senior leaders, they do quite a good job of taking different perspectives and seeing the pieces moving, but they do a very considerably poor job at seeking other perspectives. They do not go and check their assumptions with other people. They just assume that because they are a senior leader with authority and permission it is the way it is. One of their lowest performing skills is really that ability to go and check with others, lower the level of distortion, and clear up their assumptions.
The third skill is coordinating and prioritising perspectives and putting them together in a clear and comprehensible way that makes sense to others. This will make it easier for them to buy in and understand the proposition. Meaning is essential to get other people's buy in.
These three skills – system thinking, reducing bias, coordinating and prioritising perspectives – are core to enabling effective sense making in organisations.
Business agility has become an important concept to make organisations more responsive to changing business requirements. What tactics can leaders adopt to make the right decisions fast?
Pete Holliday: Many senior leaders and even agile change coaches that I work with do not have a formal decision-making process. So many are driven by intuition and gut feeling about a particular situation. There is no consistency. If you are continually changing the way you are making decisions, you cannot figure out if your decision-making process is effective or not. So a lot of the work I do with senior leaders is trying to design a more formalised decision-making process for them. That gives us a benchmark. Usually it is around taking and seeking perspectives. You need to work your way through different perspectives, understanding them, and coordinating and experimenting with them.
If decisions are made without a formal process, people will interpret that agreement in different ways. Therefore, all teams should have a decision-making framework.
A formal process helps improve coherence, coordination, and cohesion.
I think this is critical for building effective teams in the VUCA world. Coherence means how teams build a collective understanding about the way things are working. Coordination is how work is done collectively. And cohesion is how they bond and how they hold together as a team going forward.
How do you help senior leaders design formalised decision-making processes?
Pete Holliday: When I work with senior leadership teams, I use an instrument called the leadership decision-making assessment. It is an instrument that measures decision-making capability and gives a ranking on how well a leader makes decisions within a certain environment. I use that instrument to work with most of my senior leadership clients. It sets a baseline about how these people think about making decisions in the world. The assessment measures six sub-skills. I run through those and work with both teams and individual leaders to use that process to coordinate the way that they work together and the way that they make decisions both individually and as teams.
You are working on a book which will guide executives to make organisations fit for the future of work. Can you share with us a concept or anecdote of the book?
Pete Holliday: The key concept of the book, which will be called Relevant, draws back to the first question about the speed of business in the VUCA world and how every leader needs to adopt an agile mindset. I say to people: 'Every time you upgrade your iPhone, upgrade yourself.' It is about exponential learning cycles.
If you are a senior leader, you really need to be continually upgrading. The world is moving very, very quickly so in order to remain relevant and to be future fit as a leader, you need to continually upgrade your capabilities.
The iPhone example is really about trying to capture what this practically means for leaders. The rejuvenation cycles of phones is going from 2 years to 12 months to six months. This is how you need to operate your agile mindset as a leader. In the past, you only used to have to do leadership development once every five years. Now it is constant. This can unlock a lot of value that is currently unused.