Can Business Simulations Help in a VUCA Environment?

By Mike Vaughan - September 06, 2017

In a prior post, we discussed the importance of effective leadership training and the value of business simulations when facing VUCA (volatile, uncertain, complex and ambiguous) environments. To expand on that post, let’s think about how to best manage when VUCA strikes.

Doing nothing is certainly not an option. What is called for is a new mental model that does not rely on the past, on benchmarking others, nor in believing one knows or should know everything.

The solution lies in learning how to think, not what to think.

Recognizing the complex and underlying interrelationships of organizations as systems is key. It’s a way of thinking derived from applying systems dynamics in conjunction with critical and creative thinking. This approach adeptly addresses client organizations’ challenges, while advancing leadership decision-making skills for a VUCA environment to overcome potential derailers.

In the face of challenges stemming from increased volatility, leaders may feel overwhelmed and unprepared to lead effectively. The behavioral response may be fear, risk aversion, and a back-to-basics reaction.

What is needed is greater agility and resilience within the organization. Command and control structures might need to give way to flexible processes and a wider distribution of decision making. Critical thinking and problem-solving skills practiced in a custom business simulation will empower those close to the action to make more effective decisions.  

When the environment is full of uncertainty, leaders are required to act on incomplete or insufficient information. They are more likely to rely on what seemed to have worked in the past, because it becomes difficult to “connect the dots” when there is too much noise and not enough signal.

In looking for a comfortable home for decision making, leaders tend toward an excessive and futile effort at data analysis. The answer is probably not in the data, but in creative and innovative thinking.  

When faced with complexity, it can be difficult to know where to start to affect change. Leaders lack the time to reflect and consider multiple perspectives, and often do not address root causes, which, in turn, makes it difficult to envision, let alone implement the required change.

The danger is in acting too late, implementing short-term solutions, and looking for scapegoats when things don’t turn out. To become more comfortable with complexity, business simulations include a systems dynamic component to enable participants to wrestle with trade-offs and balance various stakeholders in the short and long term. Visibility to outcomes that might not be apparent for months or years are available immediately in simulation training environment.

If the situation is ambiguous, there is a high risk of misinterpreting and ineffectively responding as leaders act on a limited understanding of the event. Doubt, distrust, and hesitancy results. Leaders must be immersed in the source and context of events and that state can be practiced in highly customized business simulations.

Regardless of one’s experience or level of training, leading in a VUCA environment is challenging. Spending time planning and strategizing approaches before you actually encounter the challenge is helpful, as are targeted leadership development training programs that allow for exploration and experimentation with varying management practices.

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