Few would argue that the business environment today is increasingly volatile, uncertain, complex and ambiguous (or VUCA). This VUCA acronym was first coined by the US war academy to describe the unpredictable security environment of the late 1990s.

Many business leaders today may feel similarly embattled. The statistics back this up:

According to Richard Foster from Yale, S&P 500 companies in 1958 survived on the index for an average of 61 years. By 1980, this figure had dropped to 25 years. By 2011, this figure declined to only 18 years. Companies fell off the index as they declined in market value, were acquired by others or threatened by bankruptcy. Once respected institutions like Enron, Lehman Brothers and Kodak demonstrate how quickly things can change.

Under this pall of gloom, what can organisations and leaders do to not just survive, but also thrive in a hostile world? Our executive roundtable of nine Asia-based business leaders and academics shed light.  

Technology - changing the nature of change

To cope in an era of rapid change, it helps to first understand the root causes of these changes. Some major drivers of change include factors like a widening income gap, increasing urbanisation, as well as changing family structures. There is another factor that is not just driving change, but changing the nature of change itself, making it more disruptive and unpredictable: technology.

Certainly, technology has undergone a dramatic revolution and has deeply impacted our lives in ways we could not have anticipated even 10 years ago. Smartphones, tablets, GPS navigation tools are just some of the technologies that are changing our lives. The challenge is for us to make sense of the implications for our business. For example, Margaret Ong of Hewlett-Packard finds herself asking if printers will still remain relevant, or go the way of the dodo.

The influence of technology extends far beyond gadgets. Technology has also changed the way we communicate, connect and work. With the advent of LinkedIn, Facebook, and YouTube, we have become more interconnected than ever before. There are many benefits of social media, but this increased inter-connectivity has also added to the complexity and volatility of our world. To thrive in a hyper-connected world, we have to overcome some major challenges – here are three.  

1.      The (cold) comfort of Silos

One common challenge that many leaders face is how to promote collaboration within their organisations. All too often, different product lines or functions operate largely in silos – and miss out on potential synergies across divisions. In today’s interconnected world, the challenge is even greater – how do we promote deeper collaboration and trust not just within an organisation, but also across organisations?

Businesses do not operate in a vacuum. They are connected to customers, suppliers, governments and the broader society. This complex web of stakeholders increases business complexity but also contains win-win possibilities. For example, businesses are realising the benefits of having R&D centres connected across the globe, rather than centralising innovation in the headquarters. In terms of structure, some have also evolved from a traditional bureaucracy with silo departments to a matrix of networked organisation.

Walter Kuijpers of CEVA shares another example. His company partnered with the S P Jain School of Global Management to recruit and develop talent in the highly competitive logistics industry, while the latter improved its pedagogy and research relevance with CEVA’s help. 

There may be hope in the often-maligned Gen Y talent pool. Bernard Yeung, Dean of NUS Business School shares a story of seeing his daughter engaging with other teenagers in a virtual chat room. He was surprised that they were discussing and co-solving a complex mathematical problem.

When he was a student, Dean Yeung would hide away in the library, working on complex assignments with total concentration and seclusion. How could his daughter hope to solve such problems amidst the cacophony of a virtual chat room?

They proved him wrong – working collaboratively (and virtually) to solve the problems quickly.  

2.      A deluge of data - a drought of insight

An outcome of increased connectivity is pervasive sharing. We are all recipients of huge amounts of information – be that from Facebook updates or Bloomberg data feeds. This ups the challenge of thriving in the current environment in two ways.

Firstly, the playing field is levelled. It is no longer a competitive advantage just because you have the data. Even if you had this first, the advantage is quickly eroded as interconnectivity quickly turns private information public, and often at no financial cost.

In fact, one of our executives predicts that in the future, systems will be completely open, and anyone will be able to access the data in organisations in real time.

Secondly, while there is pervasive sharing, this is usually of data and information. DuPont’s Peter Ford states that there is market information aplenty, but it is of little help. Instead, organisations struggle with transforming the deluge of data into actionable insight. To separate the wheat from the chaff also becomes more critical as the information available may not even be correct due to lack of quality policing.

Moreover, in an uncertain and complex world where the past is no longer a predictor of the future, judgment as a capability needs to be developed as a necessary differentiator. Unfortunately, instead of making discerning judgments, most of us seem to suffer from paralysis by analysis.

3.      Unrelenting Public Scrutiny

Leaders have long been used to being scrutinised by their stakeholders and employees. But in today’s world, where almost everyone seems to have a smartphone or other video-capturing device, the games have changed. The scrutiny is constant and potentially from the public at large.

Bernard Yeung jokes of his fear of having a “wardrobe malfunction” in a lecture hall of students and the incident going viral online minutes later. However, he notes that Tony Hayward, former CEO of BP possibly did not find it humorous when he was royally lambasted for being seen attending a yacht race during the Gulf of Mexico oil spill.

The BP episode raises an important question. Given the scrutiny of the masses, which is diverse in values, beliefs and perceptions, by whose yardstick do we conclude an acceptable behaviour? For instance, some may think that CEOs also deserve a break to clear their thoughts.

On the other hand, others may opine that given the astronomical paycheque, CEOs should not even be taking breaks during a crisis; more is expected to whom more is given. When the scrutiny is constant and broad-based – you cannot hope to please everyone. Or even 48% of everyone.  Just ask Mitt Romney.  

A trio of guiding principles from Asia

We now know our modern challenges, but how do we overcome them to thrive in this volatile and uncertain world? In many ways, Asia has longed grappled with uncertainty and turbulence. Perhaps the ancient philosophies and wisdom from the various Asian traditions can serve as inspiration to business leaders today.

Here are some guiding principles that may help us overcome the challenges of a VUCA world.  

#1: Emphasize harmonious and long-term relationships Shintaro Mano from Kuraray shares that the first word of Japan’s constitution of law was “harmony”. This has been powerful in shaping the Japanese mindset and culture. For instance, Japanese businesses will favour amicable settlements over litigation in the face of disagreement between parties.

Putting more trust in strong relationships than legal contracts, Japanese businesses cultivate these relationships across their ecosystem:

• To the external supplier, they form close partnerships that have enabled ‘just-in-time’ manufacturing models based on flawless co-ordination.

• To the employee, they offer stable employment regardless of the ups and downs in the business cycle, and receive commitment in return.

• With the customer, reciprocity is similarly practised. Japanese businesses are not opposed to extending payment terms to as much as 90 days, in contrast to foreign multinationals who typically keep to 45 days. In return, their customers reciprocate by increasing purchases during a business crisis.

The point on reciprocity is an important one. The aim of partnering together is not for a one-off transaction, but the longer term. As such, parties may settle for transactions of unequal exchange because they value the relational aspect of the partnership more.

The principle is to think and act collectively. Looking back in history, ancient Chinese and Indian traders shared their trade goods among the ships of all merchants. Their rationale was that when each vessel carried goods from several merchants, the loss of one ship – in the face of rough seas and pirate attacks – resulted in a smaller loss to several traders rather than a devastating loss to one.

For businesses and leaders striving to work collectively with others today, this is a handy reminder. Are you demonstrating genuine reciprocity? Are you building partnerships that last beyond transactional value and are policed beyond the gamut of the law? It will not be altogether easy in reality. Our executives, particularly those in US companies, share that the quarterly reporting has led to great pressure to achieve quick business returns.  

#2: Step back and think holistically

Cross-cultural psychologists have documented that East Asian thinking generally takes into account the overall context (i.e. holistic thinking) while Western thought tends to focus on categorisations underpinned by formal logic (i.e. analytic thinking).

Hence, East Asians are generally more comfortable than Westerners at stepping back to see the “big picture”, and the relations between parties in this picture. They recognise these relations as causes of possible complexities and synthesise multiple perspectives before making a conclusion. Because of the assumption of complexity, East Asians also expect a state of dissimilar fluctuations, unlike Westerners who expect similar patterns of change.

Finally, when presented with two polar opposites, East Asians assume that like the yin and yang, both opposites can be true concurrently and that one may eventually transform into the opposite.

Hence, they are comfortable with contradictory arguments and respond by finding a middle way. This does not force either side of the argument to compromise, and helps in defusing potentially volatile and uncertain situations. 

East Asia’s holistic thinking offers good tips to businesses and leaders on exercising judgment in decision-making. Firstly, when faced with a barrage of separate bytes of information, consider them in totality.

For example, Ling Hai’s team in MasterCard China came up with a new product offering when they looked at the travel data they had on hand differently (see pages 38-41).

Secondly, do not deny complexity or adopt a predictive model of change when planning for the future. Our executives surmise that five-year forecasts should be thrown out. Rather, engage in scenario planning.

Earlier, we mentioned that Margaret Ong wondered if printers would still be relevant. That was not the complete story; what happened was that the Hewlett-Packard team went on a trial of “three days in a world without printing.”

Living such a created scenario helped break assumptions on the relevancy of printing, and also helped the team better imagine the future to prepare for it. 

Similarly, when MasterCard as a company went back to the drawing board to define its business, it realised that it would no longer assume itself as a credit card company, but a payment technology company. This fundamentally changed how it wanted to evolve, and the partners it wanted to work with.

Finally, adopt ayin-yangapproach towards polar opposites. Ling Hai shared that at MasterCard, common lingo included “frenemies” and “co-opetition”. Relationships in today’s volatile, uncertain and complex environment are not clearly demarcated. Apple and Samsung – supplier-customer and competitors at the same time, are a case in point.

If we consider the dilemma raised in the previous section, between building long-term relationships or choosing quick returns, how is this for a solution: it is not a choice of ‘either or’, but recognising that the one feeds into the other. Strong relationships will expedite business performance and returns. Strong business returns will help further strengthen relationships.

#3: Showcase heroes and not just villains

Privacy is no longer an option for businesses and leaders in our modern world today. How can we avoid being at the disastrous end of the constant public scrutiny? Can we do better to convert it into a positive advantage?

We may all hold different values, but there is something in the human nature that recognises and respects heroism when it happens.

Nassim Nicholas Taleb, in his latest book Antifragile: Things that Gain from Disorder wrote that in older societies, a hero is someone who chooses to bear the disadvantage (risking benefits, harm or life) for the sake of others. In short, sacrifice. Conversely, modern societies are establishing the opposite. Their systems put power in the hands of those who “steal a free option from society”.

Taleb puts bankers, corporate executives, politicians, Thomas Friedman and Joseph Stiglitz in this group. In essence, people who talk and perhaps act, but have others bear the consequences.

Of corporate heroism, there can be no better example than the Tata Group’s Taj Mahal Palace hotel in Mumbai, during the terrorist attack of November 2008. Its employees were lauded globally for their dedication to duty and desire to protect guests above personal safety. 11 employees sacrificed their lives while helping more than 1,000 guests escape. Certainly, the Taj Mumbai team stood up to mass scrutiny in the face of fire, literally.

Harvard’s Rohit Deshpandé and Anjali Raina highlight that the hotel’s organisational culture nurtured employees to do so. Firstly, it had in place a values-driven recruitment system. For instance, the Taj Group hires most of its frontline staff from smaller cities and towns in the hinterland of India, where traditional Indian values such as humility, consideration of others, discipline and honesty are still upheld.

For management roles, it sources from lower-tier business schools – and not premier institutions – as they find that such MBA graduates want to build careers with a single company, tend to fit in better with a customer-centric culture, and are not driven solely by money.

Secondly, the Taj Group trains its employees to act for the guests’ interest, and not the company’s. In a counter intuitive spin, but totally falling into Taleb’s definition of heroism, employees have to instead act as the customer’s ambassador, in order to be the best Taj ambassadors.

Finally, employees are personally thanked by their immediate supervisors for their good efforts, very quickly after delivery.

What can we learn from the Taj Group? To thrive in an environment of relentless scrutiny by others, we should not shy away from noble social missions. It is not solely about making monetary profits and maximising shareholder returns, worse if this is done with a short-term orientation.

As a point, Tata Sons, the holding company of the Tata Group, is majority-controlled by trusts, anchored by the founders’ belief that wealth must be shared with society.

In our organisations, we must likewise put in place practices that support our people to be heroes for others. We must also thank our people when they are heroes. The gratitude expressed surely goes a long way in a world where we are more expectant of negative scrutiny than positive.  

Always learn, for your world is never marked with a full stop

Enabled by technology, we live in a web of connectivity, and a world that is increasingly complex, uncertain and volatile. It is a hostile environment that businesses and leaders have to thrive in. There are great challenges and new behaviours to learn and adopt.

Gleaning the best of Asian wisdom, our executive roundtable identified at least three sets of challenges and guiding principles:  

1. Break down silos – both internal and external to your organisation – by demonstrating  a commitment to long-term relationships;

2. Avoid “paralysis by analyses” and apply holistic & contextual thinking. Step back to see the big picture, avoid false dichotomies, and find synergies between opposites;

3. Use social media to showcase heroes in your organisation. Emphasize the social mission of your organisation, and instil integrity in your leaders.

These guiding principles will not be easy to learn. Furthermore, they may become irrelevant in a volatile climate shaped by new challenges. Interestingly, our roundtable concludes the most important competency for leaders today: Lifelong learning.

Our executives feel that this is the best predictor of future success, for our changed – and changing – world and can no longer rely on the formula of past successes. To help leaders along, INSEAD Professor Jean-François Manzoni, points out four key challenges that may impede their lifelong learning, and helpful practices to help them overcome the odds.

For those undecided about such a lifelong undertaking, consider our final nugget of Asian wisdom from the great soul himself – Mahatma Gandhi: “Live as if you were to die tomorrow. Learn as if you were to live forever.” 

This article was first published in HQ Asia (Print) Issue 05 (2013).