• Rik Berbé

The Big Stress Test

Updated: Jan 29

Every organization is being tested. So, how do we use what we’ve learned?

By Rik Berbé and Jeannette Hanna


Our mettle is being radically stress-tested now. What used to be hypotheticals – “What if our world was dramatically altered?” – have become today’s realities. The global pandemic is just one of a number of social, economic and technological shocks that are creating internal whiplash for businesses and organizations of every stripe and size. The acronym “VUCA” – shorthand for Volatile, Uncertain, Complex and Ambiguous – captures the zeitgeist of the times with uncanny precision.

What organizations need now, more than ever, is “psychological resilience.” The we’ve-got-this confidence that comes from facing tough demands and finding solutions, despite constraints and barriers, is invaluable in the midst of turmoil. Now is the time to capitalize on that experience by intentionally reinforcing and internalizing the key traits of systems that thrive in unpredictable conditions. Now is the best time to “VUCA-proof” your culture.


Confronting multiple major stressors and navigating uncharted territory is always nail-bitingly uncomfortable. Yet, for many organizations and communities, rising to unforeseen challenges has surfaced surprising depths of courage and creativity. Mobilizing teams, implementing new services, fundamentally reconfiguring workflows, tackling logistics, health and safety issues – all at breathtaking speed – has been a powerful affirmation for many teams. The future is unknowable but one thing that is clear – based on the science behind behavioral psychology, biology and complex, adaptive systems – is that a flexible, ready-for-whatever’s-next culture is a huge advantage in terms of long-term sustainability.


Building a shock-proof organization

How do adaptable organizations absorb and respond to the unexpected? Nurturing shock-resistant organizations and cultures starts with understanding the essential capacities that can be actively cultivated to strengthen responsiveness in the face of unknowns. Focus on specific capacities that have been shown to enable teams and organizations to thrive in VUCA environments such as being adaptive, sensitive to subtle changes, resilient, interconnected, diverse and cooperative.

Tools like the VucaCanvas®, a framework that’s been distilled from years of research on the dynamics of biological and social systems, provide organizations with powerful self-assessment tools for calibrating the robustness and flexibility of internal attitudes. While these type of character traits make sense intuitively, these are often the kind of “soft power” skills that many organizations value but don’t operationalize, measure or reward in systematic ways.

Consider how stakeholders would rate these qualities in your organization?

Adaptive

The capacity to easily change direction to suit different conditions is the essence of adaptability. In adaptive organizations, leaders create the right conditions for exploring new approaches, ideas and innovations as the environment evolves. Too often, traditional management sees experimentation as inefficient. Examples of adaptive organizations include Nokia’s evolution from paper manufacturer and tire factory to mobile phones.


Sensitive

No organization can predict the future. However, “sensing” organizations are attuned to early signals and patterns that are harbingers of bigger social and economic shifts. They are disciplined about gathering diverse information as input into scenario planning to explore alternative futures and pre-empt potential threats. Shell is a well-known example of an organization that is highly disciplined in taking the pulse of what’s happening in the world and adapting scenarios and operations accordingly.

Resilience

Resilience is the ability to absorb shocks and recover quickly to original form. Buffers like surplus resources and “rainy day” funds are especially important in VUCA conditions where surprises and shocks are frequent. Many large firms overpay dividends to shareholders, leaving them with less to ability to build cash buffers, support workers and reinvest in the business. Reserve Bank of Australia reports that over the past three decades dividend payouts have trended up to more than 80 cents of every dollar of corporate profits. In some companies, dividends payouts have exceeded 100% of profits.


Connected

A vital organization consists of interconnected units. Modular systems limit the spread of shocks from one part to another, making the overall system more robust. For example, the choice of multiple suppliers in different regions initially seems inefficient but is far more effective for continuity in a crisis. Many countries have suffered the effects of being too reliant on China, for example for PPE equipment.

Diverse

Diversity in an organization stimulates adaptability in a rapidly changing environment by enabling the organization to tap a broader range of partners, perspectives, ideas and innovations. Diversity is also about the mix of people in an organization. You need different perspectives when it comes to dealing with complex challenges. Philips NAT lab is a wonderful illustration of how a business consciously cultivates a diversity of ideas and innovations.


Cooperative

An organization flourishes when people trust and work together on the basis of a clear intention. A group must be able to quickly change direction to determine alternative pathways. When the “intention” is clear and there’s mutual trust, teams can respond quickly and autonomously yet remain in synch. This is especially vital in a VUCA environment. Buurtzorg is a good example of an organization that has developed this capacity flawlessly. Before the Corona crisis reached the Netherlands, health care workers mobilized quickly to source masks and other PPE care material.


Each organization is unique in terms of an ideal mix of these six capacities. There’s no one-size-fits-all best practice – not every capacity must be 100% developed, depending on the type of organization and the ecosystem in which it operates. But, for any institution or business, now is a unique opportunity to map its strengths and weaknesses based on these capacities. Surface and amplify the many powerful lessons learned from being stress-tested. Build internal confidence by showcasing the creativity and ingenuity of teams that represent the best of your culture in action. Identify gaps where VUCA-proofing capabilities need more attention.


Michel Beek, Manager of Nijestee Social Housing in the Netherlands, describes the value of this approach to their business this way: “It's a great way to discover the ability of your organisation to handle surprises. It shows your strengths and weaknesses in dealing with surprises and uncertainties.” For Ron Kersic, Senior Architect of IT Strategy at ING’s Center of Expertise Architects, “The VucaCanvas® makes for a perfect complement to our ecosystem innovation toolbox. It give us the much needed, and often neglected, complexity perspective… taking the complexity out of complexity.”


Organizations that continually reinforce the importance of these types of capabilities are well equipped to consistently generate ideas and strategies on how to strengthen internal agility and target action where it’s most required. No one can predict where the next big stresses will come from. But we can be sure that there are many more surprises on the horizon. The best response to whatever’s next is to build a VUCA-smart organization.


About the authors

Rik Berbé is change guide and founder of ChangeLabs, and concept developer of the VucaCanvas. He is based in Apeldoorn, the Netherlands.


Jeannette Hanna is an author, lecturer and co-founder of the brand strategy firm Trajectory, based in Toronto, Canada.


Copyrights

The material described and shown in this article is protected under Creative Commons license: CC BY-NC-ND 4.0


For further reading


Books

Fragile Dominion: Complexity and the Commons

Rewiring the corporate brain

Embracing Complexity: Strategic Perspectives for an Age of Turbulence

Thinking Big: How the Evolution of Social Life Shaped the Human Mind


Articles

Eisenhardt, K. M. and D. N. Sull, "Strategy as Simple Rules", Harvard Business Review, January (2001) 107–116.

Holland, J.H., Adaptation in Natural and Artificial Systems (Ann Arbor, MI: University of Michigan Press, 1992).

Kaufmann, S. A., At Home in the Universe: The Search for the Laws of Self-Organization and Complexity (New York: Oxford University Press, 1995).

Kay, J. and E.D.Schneider, "Embracing Complexity, the Challenge of the Ecosystem Approach," Alternatives 20, 3 (1994) 32–38.

Middleton-Kelly, E., "Ten Principles of Complexity and Enabling Infrastructures". In E. Middleton-Kelly (ed) Complex Systems and Evolutionary Perspectives on Organizations: The Application of Complexity Theory to Organizations (London: Elsevier, 2003)

Von Bertalanffy, L., General Systems Theory (New York: Braziller, 1968).

Wheatley, M. J., Leadership and the New Science (San Francisco, CA: Berrett-Koehler, 1992).

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