The past few years have shown us in no uncertain words how volatile our world is. Every week brings new changes and most of us are unable to make any plans because we don’t know what next week will bring us.
This is encapsulated very well in the acronym VUCA which stands for Volatile, Uncertain, Complex and Ambiguous which stands for what our world is today. First used in 1987, the acronym draws on the leadership theories of Warren Bennis and Burt Nanus, to describe or to reflect on the volatility, uncertainty, complexity and ambiguity of general conditions and situations. 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 and more frequent use and discussion of the term VUCA began from 2002. It has subsequently taken root in emerging ideas in strategic leadership that apply in a wide range of organizations, from for-profit corporations to education.
The deeper meaning of each element of VUCA serves to enhance the strategic significance of the VUCA foresight and insight as well as the behaviour of groups and individuals in organisations. It discusses systemic failures and behavioural failures, which are characteristic of organisational failure.
V stands for Volatility which is the nature and dynamics of change, and the nature and speed of change forces and change catalysts. It refers to the speed of change in an industry, market or the world in general. It is associated with fluctuations in demand, turbulence and short time to markets and it is well-documented in the literature on industry dynamism. The more volatile the world is, the more and faster things change.
U is Uncertainty or the lack of predictability, the prospects for surprise, and the sense of awareness and understanding of issues and events. Uncertainty refers to the extent to which we can confidently predict the future. Part of the uncertainty is perceived and associated with people’s inability to understand what is going on. Uncertainty, though, is also a more objective characteristic of an environment. Truly uncertain environments are those that don’t allow any prediction, also not on a statistical basis. The more uncertain the world is, the harder it is to predict.
C means Complexity which is the multiplex of forces, the confounding of issues, no cause-and-effect chain and confusion that surrounds organisations. It refers to the number of factors that we need to take into account, their variety and the relationships between them. The more factors, the greater their variety and the more they are interconnected, the more complex an environment is. Under high complexity, it is impossible to fully analyse the environment and come to rational conclusions. The more complex the world is, the harder it is to analyse.
And lastly, A stands for Ambiguity which encompasses the haziness of reality, the potential for misreads, and the mixed meanings of conditions and the cause-and-effect confusion. These elements present the context in which organizations view their current and future state, present boundaries for planning and policy management and come together in ways that either confound decisions or sharpen the capacity to look, plan and move ahead. It points to a lack of clarity about how to interpret something. A situation is ambiguous, for example, when information is incomplete, contradicting or too inaccurate to draw clear conclusions. More generally it refers to fuzziness and vagueness in ideas and terminology. The more ambiguous the world is, the harder it is to interpret.
The particular meaning and relevance of VUCA often relate to how people view the conditions under which they make decisions, plan forward, manage risks, foster change and solve problems. In general, the premises of VUCA tend to shape an organisation’s capacity to anticipate the issues that shape, understand the consequences of issues and actions, appreciate the interdependence of variables, prepare for alternative realities and challenges and interpret and address relevant opportunities. For most organisations, VUCA is a practical code for awareness and readiness.
So how can we try and navigate a VUCA World? Though it may seem inescapable in certain situations and industries, one can use it to advantage. The key to managing is to break VUCA down into its parts and to identify volatile, uncertain, complex, or ambiguous situations. Each type of situation has its causes and resolutions, so one should aim to deal with one at a time.
- Counter volatility with vision. Accept and embrace change as a constant and don’t resist it.
- Create a strong, compelling statement of objectives and values, and develop a clear, shared vision of the future. Have flexible goals which can be amended quickly.
- Meet uncertainty with understanding which can help understand and develop new ways of thinking and acting in response to VUCA’s elements.
- Make investing in, analysing and interpreting business and competitive intelligence a priority, so that one doesn’t fall behind. Stay up to date with industry news, and listen carefully to find out what others want.
- Review and evaluate performance. Consider what one did well, what came as a surprise, and what one could do differently next time.
- Simulate and experiment with situations, so that one can explore how they might play out, and how one might react to them in the future. Aim to anticipate possible future threats and devise likely responses. Gaming, scenario planning, crisis planning and role-playing are useful tools for generating foresight and preparing responses.
- Communicate clearly because in complex situations, clearly expressed communication help to understand direction.
- Develop and promote collaboration. VUCA situations are often too complicated for one person to handle, so strong teams that can work effectively in a fast-paced, unpredictable environment is essential.
- Fight ambiguity with agility by promoting flexibility, adaptability and agility. Plan, but build in contingency time and be prepared to alter plans as events unfold.
- Hire, develop and promote people who thrive in VUCA environments as these people are likely to be collaborative, comfortable with ambiguity and change, and have complex thinking skills.
- Encourage people to think and work outside of their usual functional areas, to increase their knowledge and experience. Job rotation and cross-training can be excellent ways to improve agility.
- Lead teams, but don’t dictate to or control them, instead develop collaborative environments and work hard to build a consensus. Encourage debate, dissent and participation from everyone.
- Embrace an ideas culture. Reward team members who demonstrate vision, understanding, clarity, and agility.
When one is affected by VUCA, one has a choice. Either one allows VUCA to manage, overload and overwhelm them, or they accept and manage it so that they can mitigate its effects. When one decides to accept VUCA, they choose to make themselves and others less vulnerable and empower everyone to deal with uncontrollable, unpredictable forces.