Technique 2.98 VUCA
Introduction
VUCA was first used by the US military in late 1980s to help define post-Cold War global challenges. Recently it is increasingly used in strategic thinking and risk management across a wide range of industries, as
"...a state of flux replaced a sense of certainty, stability and familiarity that people were used to..."
Mindtools, 2021
Definition
V = volatility (change is rapid and unpredictable in both its nature and extent)
U = uncertainty (the present is unclear and the future uncertain)
C = complexity (many different, interconnected factors come into play, with the potential to cause chaos and confusion)
A = ambiguity (there is a lack of clarity or awareness about situation)
It is a valid description of our world, ie
"...Technology drives volatility and complexity. Economic conditions create uncertainty. All of this is wrapped in ambiguity..."
Jon Mertz, 2014
At times, there seem to be so many trends happening at once that people can get confused and lost.
An alternative VUCA definition:
"...vibrant, unreal, crazy, and astounding..."
Kevin Roberts as quoted by Mindtools, 2021
However,
"... Despite its challenges, VUCA may not pose the same threat to all industries. For example, some business areas may be more stable, protected or regulated. And, when you or your organisation is pro-active and sets the agenda for the change, you are less likely to experience the full extent of its threats..."
Mindtools, 2021
"...A VUCA environment can:
- destablise 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 chance of people making bad decisions
- paralyse decision-making processes
- jeopardise long-term projects, developments and innovations
- overwhelm individuals and organisations
- take its toll on internal culture..."
Mindtools, 2021
These 4 discrete categories have their own distinct causes that require unique, separate responses that should be looked at as opportunities rather than challenges, threats, etc, ie use it to your advantage. Reaping the benefits of an opportunity first requires understanding. This means collecting data, information and knowledge about VUCA, ie it is unpredictable, unforeseen, etc.
"...the key is to ensure that individual answers to each challenge meshed together so that the response is greater than the sum of the parts..."
Nick Petford, 2020
You need to go beyond the 'catch cries' to handle VUCA of 'innovating', 'being creative', 'being flexible' and 'listening more'.
(source: https://hbr.org/2014/01/what-vuca-really-means-for-you )
Distinctions within VUCA framework
| VUCA | What is it | Examples | How to effectively address |
| Volatility
|
relatively unstable, unpredictable change, eg in magnitude, direction and length; information is available; situation is understandable but doubts about outcomes; events are outside your control | fluctuating commodity prices like oil, raw materials, etc that can require measures like stockpiling resources, hedging, etc | shared vision (purpose) for the future; have clear compelling objectives and values; at the same time flexible that can be modified as required so that able to navigate unsettled, unfamiliar situations and react quickly |
| Uncertainty*i
|
lack of adequate knowledge as to whether an event will have meaningful ramifications; cause-and-effect are not understood; unknown if an event will create significant change; future unclear and non-predictable | anti-terrorist activities, ie we can understand the causes of terrorism while lacking the knowledge to know when and how attacks will occur | information to provide better understanding, ie look at existing information differently and seek relevant data from new information networks, sources, stakeholders, etc so as to make an uncertain situation more certain and manageable; regularly review and evaluate your performance, ie what went well, what needs improving, etc; communicate clearly |
| Complexity*ii
|
dynamic networks with confusing/conflicting relationships; many interconnected parts being an elaborate network of information and procedures; often multi-form and convoluted; does not necessarily imply change, volatility, uncertainty, unpredictability, lack of information, etc; a great deal of effort required to collect, digest and understand the relevant information in its entirety | doing business in new countries involves navigating a complex web of rules, regulations, laws, cultural differences, etc | restructuring, ie encourage collaboration with multi-disciplinary, holistic approaches; change internal capabilities to handle and match external environmental complexities, For example, as organisations grow, their operating structure becomes more complex, eg forming departments (finance, operations, marketing, human resources, etc) which in time divide further, eg human resources hire specialists in benefits, compensation administration, compliance, industrial relations, occupational health and safety, etc |
| Ambiguity*iii | unknown, new 'rules of the game' ie lack of precedence; cause and effect are not understood; making accurate forecasts or predictions of what is to be expected is problematic; uncertain outcomes | transition from print to digital media, ie how will customers, like students, general population, history buffs, etc; react to the new technologies | experimentation and being agile (include simulation), ie continually testing different strategies determine the most beneficial for the customer in the changing environment, eg provide alternatives and keep options open; be willing to move away from previously successful approaches; experiment with the unprecedented; a willingness to take risks and to challenge the status quo; adaptable; being resilience; building in contingencies |
(sources: Nathan Bennett et al, 2014; Nick Petford, 2020)
Notes
i) "...Uncertainty is not volatility. A volatile situation is one in which change is likely, but that change can come quickly and at varying magnitudes; and uncertain situation......is not so volatile - in fact, there may be no change inherent in it at all..."
Nathan Bennett et al, 2014
ii) Complexity
"...although effective in volatile situations, stockpiling resources is useless if a firm does not understand where best to allocate them in a complex environment. Similarly, establishing new information networks, as a firm should do in times of uncertainty, risks an even greater degree of information overload, which can cause firms to 'freeze' and not make any decisions at all......the most straightforward way for an organisation to address complexity is to simplify the situation by adapting a structure that mirrors that of the environment......organisation should be structured to align with and take advantage of environmental complexity rather than struggle against it..."
Nathan Bennett et al, 2014
iii) Ambiguity
"...It's not volatile: there is no reason......to expect quick, unpredictable, unstable change. It's not complex: there aren't an overwhelming number of moving parts here, just a lack of understanding as to what will happen next. And that lack of understanding is distinct from uncertainty: in a merely uncertain situation, you could have a good idea of what causes what. An ambiguous situation, on the other hand, typically revolves around a wholly new product, market, innovation or opportunity. In an uncertain situation, you can predict what may happen if you gather adequate information. An unambiguous situation is more challenging because of the newness: there is little historical precedent for determining the outcomes of certain courses of action..."
Nathan Bennett et al, 2014
NB Solution that works for one part of VUCA does not necessarily work for any of the others, ie each element is distinct and unique, and requires a different optimal course of action. For example, stockpiling can work for volatility; gathering information is helpful in uncertainty; restructuring can be helpful in complexity; experimentation can work for ambiguity.
Also, VUCA can help explain the impact of events but does not necessarily give you a picture of where you are in the process or what you can expect going forward.