You’ve heard it already, we live in Volatile, Uncertain, Complex and Ambiguous (VUCA) world. But what does that mean for you as a leader? We’ll explore how traditional horizontal approaches to leadership, which focus on understanding the job to be done and the capabilities required to do it, fall short. In a VUCA world, we need to expand our capacity for leadership. To do so requires the development of vertical skills, to help make sense of the complexity that surrounds us and construct meaning within that complexity.
Drawing on the book Upgrade: Building your capacity for complexity, by Richard Boston and Karen Ellis, we’ll link VUCA with the four leadership capacities they identify that underpin vertical skills:
- Sensemaking – Observing, understanding and processing the complexity of a situation e.g. getting your head around all the different interconnected topics, data, issues or causal relationships.
- Perspective-shifting – ‘Zooming out’ to benefit from a more realistic and multifaceted understanding of a situation or relationship e.g. understanding the perspectives and agendas of the various stakeholders.
- Self-relating – Observing, understanding, regulating and transforming yourself e.g. making sense of your own reactions, thoughts and feelings.
- Opposable Thinking – Responding to the dilemmas and conflicting ideas that can create tensions within us and / or between us and other people e.g. working with opposing views.
Table of Contents
- Horizontal skills: leadership and the linear accretion of knowledge
- Vertical skills: leadership and the exponential accumulation of capacity
- Developing your capacity for leadership
- Shifting to a vertical leadership mindset for a VUCA world
- More on Vertical Development
Horizontal skills: leadership and the linear accretion of knowledge
Leadership is traditionally framed in terms of understanding the job to be done and building the capabilities required to do it. Thinking about leadership in this way is fine for building baseline skills but only facilitates linear growth – it takes a complicated, rather than a complex approach to leadership and business building, as opposed to the other way around.
The job of leadership
Technology leadership literature places a heavy emphasis on the job of a leader: leadership as a set of tasks which, when combined, lead to effective insight and action. Fred Wilson wrote the classic on the subject of CEO responsibilities within a high growth technology business (Lux Capital extended the definition in 5 Core Jobs of a CEO, and NFX too in What Makes a Strong Startup CEO).
A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.What a CEO does, Fred Wilson
The good news is that all these responsibilities are task focused, bounded and learnable, albeit not necessarily easily or by anyone. To a large extent, someone with the right experience can teach you these leadership essentials: how to set a vision, to run an effective recruitment process and interview effectively, financial control, cashflow and fundraising. Framing the job of leadership like this also helps new leaders focus on what is and isn’t important.
The bad news is that expressing what leadership is in this way is vastly incomplete. There’s a host of additional capabilities and capacities that leaders need to learn and develop (to the extent that they know or possess them in the first place) in order to be able to do their job effectively.
Capability is the ability to execute on a specified set of tasks and course of action in order to achieve a certain outcome or set of outcomes. Capable people have the potential to acquire more specific skills and abilities in order to help them do this. In doing so, their knowledge and skill set increases and they become more capable at achieving required outcomes.
Developing technical skills, behaviours, adding information and knowledge; these are the more day-to-day, practical aspects of managing and leading people. They include things like running effective meetings, delivering training, conducting one-on-ones, giving effective feedback, coaching your team, conducting interviews, investor and Board updates, designing and implementing new organisational design structures etc. This is the type of learning and skill development that we are used to receiving through school and college, and most traditional talent and leadership development initiatives.
Like the job of leadership, these capabilities are largely task focused, bounded and learnable. The bad news is that expressing what leadership is in this way remains incomplete. That’s because all these interventions help people become more proficient at their job but they expand and enrich leaders only within the context of their current way of making sense of their world and constructing meaning within it. Because we’re hardwired to make sense of the world in a linear fashion, the exponential leadership gap remains as our businesses race away from us.
Vertical skills: leadership and the exponential accumulation of capacity
Developing your capacity for leadership isn’t the same as developing your capability. Advancing your capacity extends your ability to make sense of the complexity that surrounds you and influences the way that you construct meaning within complexity.
Traditional horizontal development, focuses on the acquisition of further knowledge, skills and development of specific personal qualities to become more proficient and experienced in a given aspect of leadership. By contrast, Vertical Development transforms the underlying capacity of the leader to make sense of and respond to situations, working directly on their internal ‘meaning making’, rather than just behaviours or actions. Vertical Development complements horizontal development rather than replacing it – leaders still require the knowledge, skills, competencies and personal qualities to be able to perform effectively at whatever development stage they may be operating. Think of the difference between adding more apps to a leader’s repertoire, and helping them to change their underlying operating system.Vertical Development: building leadership capabilities for the future
Taking another analogy, Nick Petrie imagines the mind as a cup. Existing leadership advice and development is horizontally focused – pouring new content into the leader, focused on the jobs and capabilities already discussed. For new leaders this is helpful and necessary, but the CEOs and leaders of the future will be the ones who don’t just fill up their cup, but make it bigger, allowing them to think and act in more complex, systemic, and interdependent ways. This is Vertical Development, and it’s what’s needed to really help leaders lead people and build businesses in a VUCA world.
Developing your capacity for leadership
Equipping leaders with foundational horizontal leadership is an essential part of their early development. But to navigate a VUCA world requires leaders need to be able to ‘see’ and ‘hold’ the emerging complexity in front of them. In Upgrade: Building your capacity for complexity, Richard Boston and Karen Ellis link VUCA with four leadership capacities that underpin vertical skills – sensemaking, perspective-shifting, self-relating and opposable thinking.
Sensemaking is the process by which people give meaning to their collective experiences. It is the process of “structuring the unknown” by “placing stimuli into some kind of framework” that enables us “to comprehend, understand, explain, attribute, extrapolate, and predict”.
The capacity for increased sensemaking is one of the biggest shifts that I see in founders and new leaders as they personally grow. Early on in their journey, I can feel clients in coaching sessions viscerally grappling with existing frameworks, blueprints, playbooks and mental models. It’s like they’re trying to squeeze their reality through them, until The Correct Answer™ appears (I borrowed this from Cedric Chin, see below). When their reality inevitably doesn’t quite fit, it can lead to confusion and despondence.
As their mental complexity increases they come to realise that building a business is not like building a set of Lego, following the instruction manual to assemble the individual parts provided. Blueprints, playbooks, mental models and suchlike are helpful but they’re just tools in a collective toolbox. No one tool is exactly right for the job, the map is not the territory and all models are wrong, but some are useful.
“I used to think building a company is like building a bridge. You spend a lot of time designing, it’s very prescriptive… What I’ve come to the realization recently is it’s actually more like tending a garden… much more organic. Though you plant certain seeds in the garden, and you fertilize and water them, you don’t actually know what’s going to grow. Tending a garden is encouraging things to grow, giving the right conditions… My job as a leader is to build a bigger garden every year and make sure we have all the right conditions, the right values, the culture, and plant the right seeds of hiring the right employees and giving them the right opportunities. Trying to control things and have a predictable outcome, I’ve given up on that long ago and it’s all about making sure we have the right conditions to grow.”Scott Farquhar, CEO of Atlassian
Reframing the way they we make sense of our reality allows us to create a new relationship with it, that recognises the inherent uncertain and complexity in front of us. Instead of being confused, despondent and fearful, we can embrace our unknowable future, with the knowledge that we’ve enhanced our capacity to deal with it (whilst at the same time adding a few more tools to our complexity toolbox).
Initially… we borrow tools and processes for identifying, analysing and solving problems from the people around us – experts, teachers, parents, siblings, colleagues, mentors and so on. We think in a step-by-step way, one task or sub-goal at a time.
As we progress… we begin to create tools and processes of our own, especially in relation to the things that most interest us – whether that’s innovation, sales or accounting processes, manufacturing improvements, capability frameworks, marketing models or something else. We’re also thinking in a way that is more end-goal directed. We’ll take our objectives and map out a whole trajectory for reaching them. However, once we’re underway we can get blindsided when our carefully designed processes and programmes hit an unexpected snag. So we often resort to simply pushing harder, rather than stepping back and seeking an alternative path or altering the destination to better suit evolving conditions.
We start to notice that there are many acceptable (or good enough) ways of reaching a given objective. As a result, we become less attached to the tools and ideas we lovingly crafted. We’re more willing to improve them, discard them or use them interchangeably with other tools to suit the situation in which we find ourselves. We’re not just able to identify different paths to a given objective, we’re also starting to question the objectives themselves… We’re creating alternative ways of reasoning about a situation or issue – rather than just different arguments within the same way of thinking. We also start to compare the usefulness of those different ways of reasoning, and each approach’s fit with our values.
[The next level] is a watershed in our ability to handle complexity. We suddenly develop new ways of thinking about the multiplicity of possible pathways and desired outcomes. We start to develop our own overall models and frameworks for thinking about the situations or professional domains we’ve been mastering. Were able to gather up hugely diverse sets of ideas and influences into a single map of ‘what’s going on around here’, then use that map to choose strategies, drive decisions and establish what is negotiable and what isn’t.Upgrade: Building your capacity for complexity
More sensemaking resources
In Reality Without Frameworks Cedric Chin explains why frameworks are so compelling to the human mind: “because the mind is a sense-making tool, and sense-making tools abhor not making sense of information. So it shouldn’t be a surprise that frameworks feel like they are the Right Way To Think About Things™.”
Want to be a better tech leader? It’s complex introduces you to Cynefin, a sensemaking tool for VUCA leaders.
Read Taylor Pearson’s introductory guide to the OODA (Observe, Orient, Decide, Act) Loop. The loop is a sensemaking tool developed by military strategist John Boyd to help individuals and organizations win in VUCA environments.
In World Building, Alex Danco introduces systems thinking as a component of sensemaking in a complex adaptive system: “early in your career, you’ll be typically tasked with accomplishing simpler things that require a single-threaded effort, or aim at one specific obstacle. But as you grow and take on more complex responsibilities, or stake out on your own and try to bring your own ideas into the world, you’re going to quickly learn that the actually hard problems in the world worth working on are system problems. Trying to ship something inside a big company? That’s a system. Trying to build a startup that rearranges the world in an interesting way? That’s a system too”.
The ‘same thing’ can look very different to different people, depending on how they are looking at it. That’s because we all see the world through our own lens, hence we make sense of it in different ways. It’s not that one way of seeing world is right and another wrong, it’s just different. Individually, it can be easy to get stuck in a singular, sometimes myopic, way of viewing things. So on a regular basis, we need able to put on a different pair of glasses in order to shift what we are seeing and the way we are seeing it.
Taking multiple perspectives enables people to see a wider range of possibilities, be able to empathize, make deeper connections, and understand the views of others. Even with these benefits, taking multiple perspectives isn’t natural for most people. The brain acts as a filter, keeping from view any ideas or perspectives that might be disconcerting – or that might actually teach us a thing or two. Intentionally taking other people’s perspective stretches the mind and makes it possible to see new options. When someone has the habit of taking multiple perspectives for herself, others begin to sense the openness and begin to offer information that a person with a more closed perspective and affect might never hear. This means that the multiple perspectives begin to be fed from within and from without, and people have greater access to the broader views they need in order to address complex issues.Changing on the Job: Developing Leaders for a Complex World
Ways to shift your perspective
Listen to learn, rather than to convince – “Listening is a key leadership skill no matter how complex the situation is. Listening well gives leaders new information, helps them make better decisions, and builds relationships. Listening is not just an additive skill; It is perhaps the most central of all leadership skills” says Jennifer Garvey Berger, in Coaching for an Increasingly Complex World. She brings this vertical skill to life in this video.
Engage differently, and ask different questions
- Do you have the right people in the room to get a wide variety of opinions and perspectives? Or are you cosying up to your closer inner circle?
- Are you talking to the same people? Who have you not spoken to in your business, our outside of it, who you know you should do? From whom could you learn something new?
- Who have you written off as uninteresting or unmovable? What could you learn by listening to that person rather than trying to tell him something?
- Which people or parts of your business do you know little about and how could you find out more?
- Whose perspectives are you most certain about and how could you be wrong?
Taking existing perspectives, seek new ones, and integrate them – “There’s a complexity gap between the task demands of most leadership roles and the capacities of the leaders. And so we tried to set in and differentiate that complexity gap across a couple of domains. Like where is it, the complexity? Is it that they don’t understand operationally the complexity of the stuff they’re doing? Or is it the social complexity, the perspective taking complexity? We found a lot of differential between people’s ability to handle the kind of, let’s say, engineering problem solving side of their jobs, and that the struggles emerged in the domains of perspective taking, perspective seeking, and perspective integration” explains Zak Stein in this podcast on the history & dynamics of hierarchical complexity & human development.
Don’t surround yourself with people just like you – it is easier to take the perspective of someone who agrees with you than someone who disagrees with you. Our hardwired, homophilic tendencies narrow our own perspectives, distorting our view of the world and limiting our capacity to make better sense of it. That’s just another reason why building diverse, equal and inclusive teams are so important.
Empathy is not the same thing as perspective taking – perspective-taking is an important skill, but it’s not to be confused with empathy, its emotional cousin, says Dr. Gillian Ku, Professor of Organisational Behaviour at London Business School: “Empathy is about feeling the other person’s feelings. Perspective-taking is a cognitive phenomenon, a thought process.” It’s a process that begins in childhood: we start out with a more egocentric worldview then learn to adjust how we see things to accommodate others’ viewpoints.
There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says “Morning, boys. How’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes “What the hell is water?”This is Water, by David Foster Wallace
[Self-relating] summarises our ability to relate directly to aspects of our inner experience – our thoughts, emotional responses, beliefs, gut-feels, historical patterns and habits of mind. These things play out continuously in the internal theatre of our brains and bodies, influencing our actions and decisions whether we are aware of them or not . Capacity for self relating plays a pivotal role when it comes to interpreting and operating in this world. The more we understand the source of our habits, decisions and choices, the less we are at the mercy of unconscious forces and rules of thumb that biases our thinking and can keep us stuck in unhelpful patterns of behaviour, thought and emotional response.Upgrade: Building your capacity for complexity
Robert Kegan talks about us moving from being Subject to our thoughts (those elements of our knowing or organising that we are identified with, tied to, fused with, or are embedded in), to holding them in a more Object way (having the capacity to reflect, handle, look at, be responsible for, relate, take control of, internalise and assimilate them). Like the two fishes, we are ‘had by’ our beliefs when it is like the water that we swim in.
For example, if I am had by my belief that my venture capital investors know much more about my industry than I do, then I might feel torn when I disagree with a course of action they propose because, deep down, I think they’re making a bad call. Afterall, they’ve been doing this for years, right? However, if I’m able to step back, reflect and notice that I have this belief then I can metaphorically hold it up in front of me and explore it from other angles. I might ask if my investors’ expertise is applicable in this complex situation? Are their own biases, and the things they are Subject to, leading them to be over-confident? What other nuanced criteria might I consider?
Developing capacity for complexity
For many years it was assumed that once you reach adulthood, development ceased. You were now an adult! That was until about forty years ago when developmental psychologists like Kegan and others came along and suggested that some humans (though not all) seemed to undergo qualitative advances in their mental complexity akin to earlier leaps from early childhood to later childhood and from later childhood to adolescence. Kegan and colleagues discovered that as adults develop ‘vertically’ we move through some big shifts, and they were able to identify specific stages that we travel through.
We start with a dependant (or socialized) mindset. We take our cues, sense of worth and identity from others – we are dependent. Then we grow to be independent (or self-authoring). Here we have a sense of our own identity and can assess things against an internal compass and values and paradoxically from this base become more consistent and creative. Beyond this, we then grow to integrate the two and become interdependent – part of something bigger [self-transforming]. The big shift most of us (need to) make is from dependent to independent. It’s not easy, humans are social animals and care deeply about how others perceive us, it’s a good thing but this need to fit in can hold our growth back.What does Leadership Development and learning to ride have in common?
In An Everyone Culture: Becoming a Deliberately Developmental Organisation, Kegan and his co-author Lisa Lahey show how each of six people in their 30s (the darker dots) below are at a different place in their level of mental complexity, and some could be more complex than a person in their 40s. People move through these evolutions at different speeds, and many of us, if not most of us, get stuck in our evolution and do not reach the most complex peaks.
Kegan and his colleagues had discovered that adults who continue to develop vertically i.e. their ability to handle mental complexity increases, make for better leaders and they mapped out why. For founders and new leaders in scaling technology companies, by far the biggest observable shift is from a Socialised to Self-Authored form of mind. Arguably, this is one of the biggest developmental shifts that any leader can make. Yet it is the one least discussed in an ecosystem focused traditional notions of leadership appropriate for a linear world.
In a VUCA world, two seemingly alternative things can be true at the same time. The problem is that our brains have evolved to think in more binary terms. Brian Emerson and Kelly Lewis explain the biological basis for this.
From an evolutionary perspective, the brain is masterful at either/or thinking, and it doesn’t like the nebulousness off both/and. From the earliest times, the brain has had to quickly determine if something was safe or dangerous. Seeing things in opposition is hard wired into our brains, which makes it completely logical and understandable that we would have to work harder to hold a both/and mentality.Navigating Polarities: Using Both/And Thinking to Lead Transformation
Yet in business and leadership we are often faced with both/and situations, otherwise known as paradoxes, polarities, dualities, or wicked problems. Developing the capacity to think in a more integrative way is a core vertical leadership skill. Says Roger Martin.
The leaders I have studied share at least one trait, aside from their talent for innovation and long term business success. They have the predisposition and the capacity to hold two diametrically opposing ideas in their heads. And then, without panicking or simply settling for one alternative or the other, they’re able to produce a synthesis that is superior to either opposing idea.The Opposable Mind: How Successful Leaders Win Through Integrative Thinking
He identifies four differences between what he calls conventional and integrative thinkers, which I’ve paraphrased here:
- More salient features make for a messier problem. But integrative thinkers don’t mind the mess. In fact, they welcome it because the mess assures them that they haven’t edited out features necessary to the contemplation of the problem as a whole. They welcome complexity because they know the best answers arise from complexity.
- They don’t flinch from considering multi directional and non-causal linear relationships simple uni-directional relationships are easier to hold in mind, but they don’t generate more satisfactory resolutions.
- They allow complexity to compound as they design their decision’s. The complexity presents a cognitive challenge that integrative thinkers welcome, because they know that complexity brings along in its train an opportunity for a breakthrough resolution.
- They always search for creative resolution of tensions, rather than accept unpleasant tradeoffs.
Emerson and Lewis use the double colon :: to emphasise that these are not either/or choices, nor is it a case of choosing one versus the other. The challenge for the leader is to first identify, then balance both poles and find a ‘Third Way’ through.
Niko Canner talks about this specifically in the context of technology leadership.
Anyone who has built a company knows what it’s like to flip back and forth between just knowing that what they’ve pictured in their head really will get realized in the world – and despairing that the latest just-maybe-insurmountable obstacle could derail the venture entirely. In his Philosophical Investigations, Wittgenstein writes about the “duck-rabbit” picture. We can see either animal at any time, but can truly see it as both at once. Similarly, the practice of entrepreneurship has two sides that can be very difficult to experience together:
1. The conviction that the ultimate goal can and will be achieved, inspiring purposeful, decisive action toward that distant future
2. Self-critical assessment that acknowledges what is likely to be required to achieve the goal—the ability to regard with clinical accuracy the immense gap between those requirements and one’s current resources, capabilities and visionThe “Duck-Rabbit” and the Art of Entrepreneurship
It’s easy to think about decisions as either/or choices. But as we develop this vertical skill, we start to be able to recognise the opposing themes that are in play. This capacity takes time to develop, and starts with first recognising the poles that are in play.
Here’s a few that I’ve discussed with my own clients that may resonate:
Lead with confidence :: demonstrate humility
Lead by example :: delegate effectively
Have the answers :: ask the right questions
Support team :: provide freedom
Be decisive :: be inclusive
Create psychological safety :: not please everyone, all the time
Communicate confidently :: listen intently
Manage complexity :: keep things simple
Execute to plan :: learn & iterate
Drawing on the earlier work of Barry Johnson, Emerson and Lewis have designed an excellent sensemaking tool to help you do this. I use this with clients, but you can download and experiment with it yourself.
Shifting to a vertical leadership mindset for a VUCA world
The leaders of the future need to their mindset in order to be able see and hold the complexity that unfolds in front of them. Whilst the continued accretion of linear horizontal skills is important, it won’t be enough to help leaders navigate a VUCA world. This requires more fundamental vertical shifts in order to be able to:
- Acknowledge our natural human linear thinking biases and increasingly make sense of an exponential world.
- Expand our worldview by seeking, taking on and integrating the perspectives of others around us, particularly our teams, customers and society in general.
- Increasingly look inwards, to self-relate to our inner experience, our thoughts, emotional responses, beliefs, gut-feels, historical patterns and habits of mind.
- Engage in opposable thinking by embracing the messiness of complexity, then identifying and integrating the many polarities that surround us.
More on Vertical Development
What’s the relationship between Vertical Development and age?
Leaders of high growth technology business are often, but by no means exclusively, younger than their traditional corporate counterparts. Below I explore the relationship between Vertical Development and age.
Since Vertical Development is theorised to unfold over time, one might expect a relationship between vertical stage and age. The evidence here is actually mixed, though it’s limited and, so far as I am aware, existing studies have focused on more traditional, corporate business as opposed to startups and high-growth technology businesses. Consider this from controversial management theorist Elliott Jacquues, discussing his theory of the ‘requisite organisation’ as a kind of large-scale device for measuring human potential, based on the amount of complexity individuals can handle.
What does Dr. Jaques’s theory suggest about New Economy businesses? It suggests that companies led by younger people, who haven’t had time to develop complexity, will be in over their metaphorical heads, unless they happen to be led by geniuses. Indeed, that seems to be one of the key dynamics underlying the “children’s crusade” stock fizzle of 1999-2000.Elliott Jaques Levels With You, strategy+business (First Quarter 2001 / Issue 22, originally published by Booz & Company)
Young leaders and stages of adult development
Does the age of a leader hold them back? Again, so far as I am aware, there’s no robust research exploring this link, though anecdotally I’d suggest this can be the case. It’s where leadership development is falling short, and it’s where investors are missing a trick by focusing on the technical aspects of business growth and horizontal development generally (though this could also, of course, be a function of the investor/s capacity). As I write in Want to be a better tech leader? It’s complex, startups and high growth technology businesses, and the competitive ecosystem within which they operate, are the epitome of complex adaptive systems. They require a different approach and mindset to business building and leadership.
All that said, age in itself may be less important to development than experience. Significant life events such as job changes, redundancy, becoming a parent, relationship changes or bereavement can alter our perceptions. So to does exposure to certain kinds of complexity or extremes of innovative thinking (a boon for founders and leaders in rapidly growing technology businesses). Incidents that disrupt habitual ways of thinking, challenging our view of the – what Nick Petrie calls ‘heat experiences’ (see Fast Track: How Top Silicon Valley Companies Accelerate Leadership Development) – can create favourable conditions for Vertical Development.
Another anecdotal personal theory relates to the young founder myth (which has been largely dispelled). A recent study that found the mean age for the 1-in-1,000 fastest growing new ventures to be 45 years. This finding held true across “high-technology sectors, entrepreneurial hubs, and successful firm exits”. The basic idea behind this age-success relationship is that people tend to accumulate skills, resources and experience with age but is it also because they have developed further in vertical terms?
Overall, we see that younger founders appear strongly disadvantaged in their tendency to produce the highest-growth companies. That said, there is a hint of some interesting age thresholds and plateaus in the data. Below age 25, founders appear to do badly (or rather, do well extremely rarely), but there is a sharp increase in performance at age 25. Between ages 25 and 35, performance seems fairly flat. However, starting after age 35 we see increased success probabilities, now outpacing the 25-year-olds. Another large surge in performance comes at age 46 and is sustained toward age 60.Age and High-Growth Entrepreneurship