What the VUCA!
VUCA is used to help leaders and organisations understand the world in which their business operates. It is an acronym frequently used at Emerging World and is central to our programme design.The term VUCA, an acronym of Volatile, Uncertain, Complex and Ambiguous was originated by the American military to describe extreme conditions during warfare. VUCA has more recently been adopted by an increasing number of CEO’s and organisations as a framework to approach different types of challenging situations bought about due to external factors such as politics, economics, society, advancing technology and the environment. To provide insight on the relevance of VUCA for today’s leaders, and to highlight the importance of having the ability, skills and mindset to lead in VUCA world, the following list provides examples of each element:
liable to change rapidly and unpredictably, especially for the worse
We are more interconnected on a global scale than ever before and with this interconnectedness comes volatility. A recent example of volatility was seen in how the slowdown in China’s growth impacted financial markets this year and how those same global markets behaved following the UK’s ‘Brexit’ vote. Terrorist attacks are another source of volatility that can destabilize economies and global relationships. For business this financial volatility can affects things like supply chain of products and components bought from overseas priced in local currencies and the selling of products in internationally. As these changes impact the global markets, leaders need be agile and responsive, having strategies in place to manage risk.
not able to be relied on; not known or definite
An example of uncertainty in the business world would be a competitor launching a new product and not understanding how the markets and your customer base will respond, which could impact your own product sales. This is nothing new but the impact of technology which has been a huge disrupter in many industries has meant that competitors are much harder to spot. We recently published a blog the looking at the changing face of Leadership Development, which cites disruptions seen in the taxi industry with the introduction of Uber, and the impact Airbnb has had on the hotel industry. Understanding uncertain challenges, and having a strategy to reduce impact of these situations can reduce adverse effects on your own product sales.
consisting of many different and connected parts
If your business operates internationally, you will be working within many different cultures and unique environments with differing regulations, this is a complex situation as there are many different and connected parts. Working internationally may mean that you need to adapt how your business operates. For example, a business may sell an unregulated product in one region, but in another region that product could be heavily regulated and taxed differently. To be prepared for leading in complex environments, leaders need to be able to see patterns in what’s happening with the bigger picture, as well as being able to understand the details while being agile enough to adapt to individual market needs.
open to more than one interpretation; not having one obvious meaning
This element is all about facing the unknown, in a landscape where there are no simple answers, and multiple layers to problems and situations. There are many contributing factors to ambiguity in the modern world, but one which stands out is the pace of change. An example of this is globalisation which has seen organisations enter new markets quicker than ever before, often expanding in regions or markets unexplored in relation to their products. Dealing with ambiguity in this instance requires leaders to have a clear understanding of hypothetical outcomes, test them, ask questions of stakesholders with different perspectives and not jump to conclusions too quickly.
Learning more about VUCA, can open your eyes to the rapidly changing and interconnected environment of modern business, giving you an understanding of the elements of VUCA that leaders face daily. The increased pressure and expectations placed on leaders to succeed means that they need the appropriate ability and mindset to navigate the challenges. To achieve success in today’s VUCA world, leaders must be agile, emotionally and mentally prepared, and have the appropriate interpersonal skills to manage uncertainty and risk.