Feature Article
VUCA and Leadership – A New Paradigm Shift?
by Carlos Olabe, EICF Executive Director
nvestment Casting industry has been experimenting a sustained growth since 2009, just following the recovery from the global financial crisis of 2008. Whilst this has been true for most of the different market segments, clearly automotive and aerospace were the driving force in this growth. The Investment Casting growth rates in Europe have been above the average EU, however at the end of 2019 it was observed a significant decrease in the European IC automotive market output in the order of -6,1 % mostly associated to the fall in demand for diesel vehicles and the introduction of APV (alternate powered vehicles) whose IC parts configuration is clearly different. Aerospace though remained strong and continued as the IC driving force. The sudden new scenario created by Covid 19 outbreak has produced an effect of lack of mobility impacting directly and deeply into the two strategic Europe IC market segments, affecting 80% of the European market output. Following the different adjustments from Automotive & Aerospace OEMs (both in airframe and engine) the European IC supply chain, has been receiving a new set of requirements with decreasing numbers in short term demand including some cancellations and an unprecedent uncertainty of the future ahead. This has happened precisely in a moment in which investments were under execution aiming for additional capacity or productivity improvements. Although there are other market segments not being affected by the above (i.e. food industry, defense applications, medical equipment ….) the nature of the impact for the European IC supply industry is being very significant with a recovery expectation uncertain at this stage. This situation recalls the acronym term VUCA to describe or to reflect on the Volatility, Uncertainty, Complexity and Ambiguity elements, present in the context in which organizations view their current and future state. (The U.S. Army War College introduced the concept of VUCA to describe the more volatile, uncertain, complex and ambiguous multilateral world perceived as resulting from the end of the Cold War)*. How it should be the management leadership in our in-
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dustries in a VUCA environment?. What are the elements to be present into the management action in a VUCA environ-
14 ❘ June 2020 ®
ment? . This article does not pretend to provide an answer to those challenging and difficult questions, but certainly tries to give some hints and awareness for our industry leaders to be conscious of the new scenario and the need of action be- yond the traditional managing change approach. The whole strategic planning needs to be reinvented, for many years, strategic execution was all about, “more of what we did last year, just faster and cheaper” **, thus a significant emphasis on efficiency. Strategic execution now requires a focus on adaptability. This involves understanding the different roles of management, focusing on problem-solving and reposi- tioning the value of innovation and the importance of peo- ple identification and commitment to the company goals. In this sense the PAEI (Producer, Administrator, Entrepreneur, Integrator) management model ***, might help us to iden- tify the adaptative mixed course of action for managers and management teams. Producer aims to deliver results, focus in achieving goals. Administrator looks after processes and systems that ensure effective achievements of goals. Entre- preneurs envisage the vision of innovation spotting opportu- nities and threats and helping to configure a shared vision. Integrators bring people together, supporting the creation of a company culture and the building of trust across the com- pany organization.
What is the adequate combination of these management
characteristics or approach of your team? Are you ensuring all those are being put in place at the same time and with the adjusted contribution of each in a flexible manner to nego- tiate the future? Whilst you are busy adjusting the capacity, ensuring cash
liquidity, negotiating the new delivery schedules with your customers, identifying new projects and markets, sustaining people´s motivation, adapting your supply chain orders and stocks…. please have in mind the management roles and how you combine them to overcome the VUCA environment as you will need all of them in adaptative changing propor- tions to navigate this future.
*Wikipedia ** Erik Korsvik Ostergaard *** Dr. Adizes PAEI model
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