VOLATILITY LEADERSHIP: Leading in the Rapidly Changing Business Environment

Main source: "Leading on the Edge off Chaos", Emmet C. Murphy and Mark A. Murphy, 2003. Executive summary by GIVIS

"Everything depends upon execution; having just a vision is no solution." – Stephen Sondheim

To Lead in Volatile Times You Must:

learn to stay ahead of the volatility curve and its inherent dangers
learn to manage rapid upturns as well as downturns
learn to anticipate and prepare for volatility
distinguish patterns and order amidst chaos

Ten Volatility Leadership Best Practices

Managing the Challenges of a Volatile and Chaotic Economy

Make haste slowly
Partner with customers
Build a culture of commitment
Put the right person, in the right place, right now
Maximize knowledge assets
Cut costs, not value
Outposition your competitors
Stir, don't shake
Cut through the noise
Focus or fail...

Case in Point: BP – Finding an Equilibrium between Chaos and Order

Source: "Managing Complexity", Robin Wood, 2001

When John Browne became head of BP exploration in 1989 he was determined to create more value for both customers and shareholders. Although BP was successful, Browne knew that the world was changing and in the face of an uncertain future, the business had to become more adaptive.

So what did he do? He did not call in the strategic planners or continue to restructure and rationalize assets. Instead, he took a more courageous step and decided to raise the creative tension. Moving with, rather than against, the increasingly heightened turbulence of the early 1990s, Browne established the preconditions necessary for creating such tension and deliberately moved the organization to a situation that was at the edge of chaos. That is, the point at which a natural equilibrium is found between chaos and order, comparable to the conditions in the evolving natural world. Browne and his team were consciously evolving BP into an adaptive organization, one that would be better able to survive and prosper in today's uncertain and turbulent times.

Why Volatility Leadership?

We are living if the new economy characterized by rapid unpredictable change and volatility. Volatility and chaos aren't bad or good – they are just realities. While associated with strife, hardship, and discontent, volatility and chaos are also synonyms for fundamental change, breakthroughs, discoveries, and optimist. "In this new world, leaders must anticipate, rush to think, reach out, build enduring bonds with customers and stakeholders, and get comfortable with leading at the edge of chaos."¹ To guide your organization through volatile times, you must learn how to see the patterns in chaos and take charge, learn how to act boldly to safeguard your organization and lead it to a brighter future, and to alter your strategies to prepare for whatever the world may bring next.