Challenges of the VUCA world: Line hierarchy cannot deal with complexity.

We know: In the VUCA world, flexible roles replace static positions, shared leadership is replaced by individual leadership, and self-organization takes the place of external organization. However, this cognitive knowledge alone is not sufficient to act accordingly. For people who have grown up in traditional, hierarchically shaped companies, developing agile routines is a mental challenge. Ralph Goldschmidt, born in 1963, economist and sports scientist, entrepreneur, trainer, coach, and passionate speaker, provides an outlook on necessary changes in collaboration and how we can manage this transformation despite internal resistance.

Most companies today are still organized as they were 100 years ago. In short: Thinking happens at the top, doing at the bottom. This was sensible for a long time. But the question is whether this line hierarchy will continue to function today and in the future. Especially given the increasingly complex requirements, products, etc. The answer is: probably not. Why? Because the line hierarchy cannot handle complexity. Reporting lines span across different hierarchy levels upwards, decisions are made slowly, sometimes not at all, and sometimes individuals in higher levels do not fully understand the situation. An experienced field sales representative who knows their customers probably knows best what they want. Employees in research and development surely know more about their tasks than a business economist in the executive suite. But decisions are still made elsewhere. A question posed to me by an apprentice after an event at a company captures the issue nicely: "Why should I ask the boss when I know someone who knows what to do?" Essentially, we need a new organizational operating system to deal with complexity. There will still be hierarchies in the future, but they will be more like circle or team hierarchies. Self-organized networks where organized and spontaneous contacts can be made, and where traditional leaders no longer call the shots, but rather those who are truly knowledgeable in the topics.

Traditional leaders must place themselves more in service of the teams, step back, delegate decision-making powers, and create frameworks in which teams can act and decide autonomously. This will not happen overnight. Because those leaders who, for example, have worked their way up the positions in the 80s or 90s, are socialized in line hierarchies and essentially know nothing else, will find it very difficult. But especially the digitization in all its complexity requires a completely different knowledge than what we have acquired in the last twenty to thirty years. Therefore, it is necessary to have much greater trust in employees and their competencies than today. And as Niklas Luhmann has taught us: Trust reduces complexity. For those who are not considered leaders today, this means that they must contribute more themselves. They must think more, be willing to take responsibility, showcase their professional skills, and have the courage to assert themselves in a project based on their expertise against superiors and stand by their decisions when in doubt. This active contribution will be much more expected in the future.

The willingness to do something and adapt to new realities is certainly present. But progress is currently very, very slow. However, I can understand that. This fundamental willingness to change, which is necessary to truly embrace completely new work and organizational forms, is not something people are familiar with. And there is no model to orient oneself on. There is a saying: The only person who longs for change is a baby in a fully soiled diaper. We humans are evolutionarily conditioned this way. When faced with change, we first look for potential dangers. Inner resistances must be overcome. And once one has decided to implement a small change, they quickly believe it is a major breakthrough. But when looking around and seeing how rapidly new digital technologies are spreading in various fields, the realization follows: Everything is progressing too slowly.

Despite the aforementioned fear of change, the fundamental factor is the willingness to change. And this applies not only to an organization but to each individual. According to TU Munich, only one in five employees actively drives the necessary change processes, while one in two is considered a blocker. As mentioned before, the fear of change is quite natural and must be taken seriously. At the same time, it would help if one consciously asks themselves: What could the change bring personally, and what benefits can I derive from it? The answers can vary widely. One may see themselves as more competitive, another may see the opportunity for a more flexible work life with positive effects on their personal life, and a third may enjoy learning new things and personal development. It is important to keep reminding oneself of the opportunities. Because by doing so, over time, one will notice that the fear diminishes.

Structurally, we need to move away from the line hierarchy, individually towards more willingness to change, and culturally build a new culture of trust. Especially in the latter aspect, we are all ultimately challenged.

Ralph Goldschmidt