WHAT IS VUCA
Business is all about risk taking and managing uncertainties and turbulence.– Guatam Adani, Indian businessman.
The business world has changed dramatically over the last few decades, and we now live in a connected society where change can be fast-paced, constant and unpredictable.
Rapid advances in technology have created an environment where the Internet, smartphones, and social media are ubiquitous, and the 2008 global financial crisis has increased the sense of turbulence, danger and unpredictability in certain areas.
As early as the 1970s, the U.S. stock markets began to struggle, the 1973 oil crisis caused a recession, and personal computing started to become mainstream. A state of flux replaced the sense of certainty, stability and familiarity that people were used to. This type of environment can be described using the “VUCA” acronym, which stands for “Volatile,” “Uncertain,” “Complex,” and “Ambiguous.”
In this article, we’ll explore what VUCA means in more detail, and we’ll look at how you can prepare for and deal with each of its elements, so that you can manage successfully in an unpredictable business world.
What Is VUCA?
The United States Army War College was one of the first organizations to use the VUCA acronym, following the 9/11 terrorist attacks in 2001. Military planners were worried about the radically different and unfamiliar international security environment that had emerged, so they used VUCA to describe it. VUCA stands for:
- Volatile — change is rapid andunpredictable in its nature and extent.
- Uncertain — the present is unclear and the future isuncertain.
- Complex — many different, interconnectedfactors come into play, with the potential to cause chaos and confusion.
- Ambiguous — there is a lack of clarity or awareness about situations.
Bob Johansen, of the Institute for the Future, adapted VUCA for the business world in his 2009 book,Leaders Make the Future. He used it to reflect the turbulent and unpredictable forces of change that could affect organizations, and he argued that you need new skills, approaches and behaviors to manage in the face of the four VUCA threats.
VUCA represents a set of challenges that individuals, teams, managers, and organizations in affected industries all have to face. Individually, these challenges can be significant, but they can be formidable when they’re combined.
Despite its challenges, VUCA may not pose the same threat to all industries. For example, certain business areas may be more stable, protected or regulated. And, when you or your organization are proactive and set the agenda for change, you are less likely to experience the full extent of its threats.
Why Is VUCA Important?
Many people predict that volatility, uncertainty, complexity, and ambiguity are going to become more and more prevalent in the business world. To manage teams in the VUCA age, you should be aware of the changes that this kind of environment can cause.
A VUCA environment can:
- Destablize people and make them anxious.
- Sap their motivation.
- Thwart their career moves.
- Make constant retraining and reshaping a necessity.
- Take huge amounts of time and effort to fight.
- Increase the chances of people making bad decisions.
- Paralyze decision-making processes.
- Jeopardize long-term projects, developments and innovations.
- Overwhelm individuals and organizations.
- Take its toll on internal culture.
- “Bleed” inwards and create VUCA environments within organizations.
If your industry or organization is affected by this environment, you have to reconsider the way you and your business operate.
How to Manage in a VUCA World
Although VUCA might seem inescapable in certain industries, you can manage yourself, your team and your organization to mitigate its effects. You can even use it to your advantage.
The key to managing in this environment is to break VUCA down into its component parts, and to identify volatile, uncertain, complex, or ambiguous situations. Each type of situation has its own causes and resolutions, so you should aim to deal with one at a time.