The last years have seen radical change to the environment in which businesses have had to operate for success. The field is increasingly grasped by VUCA – volatility, uncertainty, complexity and ambiguity. Digitalization, globalization and growth of networking generate a degree of complexity that is increasing exponentially and is no longer manageable by traditional methods of leadership and cooperation. This alters the fundamental rules of creating and gathering value.

At the same time, businesses find themselves engaged in a War for Talent in light of a growing scarcity of skilled workers. Employer amenity and employee retention are ever more intensely crucial competitive advantages. Young members of the oft-cited Millenials and Generation Z have raised expectations of their employers. Against the background of an overall cultural development that increasingly emphasizes a striving for autonomy and individualism, they want their experience of life to be a lifetime of learning under ideal work conditions marked by intrinsic motivation and meaningfulness without dominance from above.

Success for a business is therefore defined by that company’s answer to the following two questions: How do we add value by distributing and efficiently tackling tasks under most complex conditions? How can the human factor be reinforced in the company and the potential of intrinsic motivation be meaningfully raised?

The role of management is central to this context. In a new form, it can provide the basis for enabling the above-named two-fold creation of value. Motivational research has identified meaning, autonomy and the sense of improvement as crucial factors of intrinsic motivation (see, for example, Dan Pink). The same factors at the same time support complexity manageability. It is therefore a pivotal component of agile management to design an environment that provides for these three factors to have a maximum impact for the people as well as the success of the company.

Purpose and framework: guides amid complexity

In the VUCA situation, clarity is eradicated by the complexity of stakeholder interests and demand, employees face a new situation every day: clear and firm goals as well as sticking to rules and processes are no longer effective. Instead of a firm distant goal that cascades ‘top down’ along a hierarchy, agile leadership raises an open field of goals that is iteratively approached and becomes more concrete with every step. Always applying the currently most attractive factors, a nearby goal is brought into focus and approached in the short term, to be reached with a precise method. Of crucial significance for the employees in this context is purpose: a clear and stable vision that provides direction and meaning without cutting available freedoms. As it adds meaning as well as value, purpose provides employees not only with a direction but also with intrinsic motivation and strong identification. Agile leadership replaces strict rules and rigid processes with frameworks and principles. Frameworks demarcate the space within which employees can autonomously create meaning and add value. Principles define a clear scope of behaviour within which it is still possible to react to individual situations.

Enabling self-organization in order to tackle complexity

Following Ashby’s Law of Requisite Variety, a more complex environment demands greater management complexity in order to be tackled. In VUCA situations, the classical hierarchical model with one top manager in charge of all decisions is prone to difficulties. The expert at the top becomes a bottleneck; the hierarchical model is too ‘plain and simple’ to match the complexity of the situation. It is therefore the central task of agile leadership to build up self-organized teams who can take decisions by themselves in autonomous processes. Self-organized teams massively increase the modality range of (temporary) leadership, cooperation and decision-finding, so that complexity is more likely to be mastered. At the same time, the autonomy entailed in self-organization is intrinsically motivating. Agile management must therefore enable and empower self-organized teams and keep them accountable.

Creating a system of continuous learning

In simple and straightforward environments, it is a proven method to first analyse a situation and then proceed to meaningful action on the basis of that evaluation. The VUCA situation undermines this process and drains its efficiency: complexity and dynamics radically shorten the lifespan of an analysis. In these kinds of situations, greater success has been achieved with a different process, namely to act first and create an empirical basis of experience, then evaluate in the short term which action was successful (and which was not) and eventually optimise the efficiency of each action and creation of value. It is a continuous learning curve, in which the experience of learning and helping others along become pivotal factors of success and essential motivators. The implementation of regular reviews (regarding the product/concept), retrospectives (regarding the type of cooperation) as well as permanent identification of impediments and clear feedback (regarding achievements and relationships) are crucial tools of agile leadership. All that cannot be achieved without establishing a learning culture in which mistakes are considered valuable opportunities for learning and put to good use. Fail fast is the central mission statement of agile management.

Cultivating Leadership

Traditional hierarchic organizations take the manager to be the driver who directly designs attainment and treats the field under their management as a machine to be perfectly configured and kept regulated, on course and well-oiled. The dominant metaphor for agile management, on the other hand, is that of a gardener who ensures that a living ecosystem continues to prosper and thrive. Agile management designs the environment, establishes the conditions, removes impediments, supports drive, fosters synergies, etc. Thereby, it acts first and foremost indirectly. It empowers and commits employees to be held accountable without abandoning them to their tasks. It makes sure that employees can adequately handle stress, conflict and tensions by themselves. It helps people help themselves. Agile leadership is therefore always also cultural and developmental work.

Agile transformation

The paragraphs above deal with the agile management of teams; the same holds true for the management of whole organizations. Instead of changing organizations towards a tightly set and long-term goal by way of hierarchically directed change management from A to B, agile leadership will keep its own company in a constant process of transformation as a learning organization guided by the leading light of a clear purpose. In the past, strategic topics were driven into the company in top-down deployment. Now, in the VUCA situation, agile leadership ideally lets them emerge out of the self-organized potential of all employees; business fields are born co-creatively, tested on a small scale, then developed step by step and, if successful, enacted in the large scale. As in traditional organizations, agile management functions as a model: if you wish to introduce agile values such as commitment, openness, focus, courage and respect into the company, you must first and foremost integrate these into your own management work and bring them to life in your own behaviour.

Johannes Ries
Photo: Hanna Göhler

Post Scriptum: This text was initially sketched out in the context of an ongoing co-creative initiative on Agile Leadership by Robert Bosch GmbH and SYNNECTA. This blog will continue to report the outcomes of this initiative. The author wishes to thank the members of the Co-Creation Team, Michael Knuth, Jörg Jockel, Dennis Heine and Martin Hurich, as well as Christian Fust for their valuable contributions.