Agile Leadership and Organization Performance in the Perspective of VUCA

Introduction

There has been an awareness of the complexity and sustainability of the globally interconnected business world. Some will believe that this is unpredictable and that their situation is changing rapidly, causing existing models to deal with complexity and uncertainty to become obsolete (Mack & Khare, 2016). As the competitive environment of today's business world is more intense and the pace of environmental change increases, companies that can respond to these changes are more likely to produce better business outcomes (Sambamurthy et al., 2007). Therefore, in order for organizations to sustain their performance and business in the VUCA environment and to achieve better organizational performance, the need for effective leadership to transform the organization is increasing day by day. At this point, we find it useful to briefly explain the concept of VUCA. The concept of VUCA, which consists of the initials of the words Volatility, Uncertainty, Complexity and Uncertainty, has taken its foundations from the leadership theories of Warren Bennis and Burt Nanus. Later, with the end of the Cold War in 1991, it was started to be used by the US Army to reveal the multilateral world that had become volatile, uncertain, complex and ambiguous (U.S. Army Heritage and Education Center, 2021; J.Wefald & Katz, 2007).

The hard conditions brought by the VUCA environment can negatively affect business continuity and performance. Hence, organizations should be led by effective leaders when cope with change. These leaders know that the current business environment is different from what it used to be, and that due to the instability and uncertainty in the business environment, making wrong predictions can be costly. Nevertheless, organizations and leaders who fail to recognize, reject and adopt change may face difficulties in maintaining their business. There is also the possibility that these organizations will suffer huge losses and eventually leave the business sector. This reason, an effective leadership style is needed to get rid of the turbulence in the VUCA environment, to focus on the business approach to make the organization flexible, fast and agile, and to increase the performance of the organization in the long run.

All of this brings us to the concept of agility. “Agility” has become a trending word used more and more by organizations in recent years. These organizations are trying to be “agile” and implement agile organizational structures. This means that they have redesigned not only their processes but also their perspective on leadership (Greineder & Leicht, 2020). This leadership perspective will be agile leadership approach that can implement the Agile Model proposal by Horney et al. (2010), in which the VUCA environment and agility are linked, as the business environment has become more volatile, complex and uncertain. The Agile Model, five crucial areas are mentioned: anticipating change, generating confidence, initiate action, liberating thinking and evaluating results. Agile leaders will need to develop their skills by considering these five drivers in order to improve company performance.

Within this new normal, the pace of disruptive change is accelerating as a number of technological and environmental factors converge. Many organizations are struggling to survive and thrive amid these unprecedented changes in business and society (Ragasa & Ragas, 2021). Thus, in this section, we explain the concept of agile leadership and the skills that agile leaders should have in perspective of VUCA. World.