Understanding the Challenges of a VUCA Environment

“Disruption is as great as we have ever seen it,” says Joe DePinto, CEO of 7-Eleven. “We are seeing all aspects of VUCA.”

VUCA? Yes, VUCA. The acronym was coined by the U.S. Army in the 1990s to describe the post-Cold War world: volatile, uncertain, complex and ambiguous. The idea of VUCA 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).

“There is no question that we are in a VUCA environment,” says Bob Leduc, president of Pratt & Whitney, the $15.1 billion aircraft systems manufacturer. “When you think about our business, we’ve got a very complicated landscape. We have technology moving; we have commercial and military customers redefining what their business models are and what they value now versus what they previously did. So basically, the whole landscape is moving on us in many different directions. Because of that, we actually need to have an organization that can move quickly.”

So how do CEOs and their companies understand the challenges of a VUCA environment? We talked with DePinto, Leduc and four other top corporate leaders from a variety of industries to find out, including Mike Fucci, chairman of Deloitte; 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

Top of the to-do list for everyone we talked to 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.

“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.”

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Once corporate values are articulated and shared, the executives 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 CEOs 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.”