The VUCA World

The world today is full of uncertainty, surprises and unforeseen challenges. A term often related to such a situation of uncertainty and ambiguity is VUCA. It stands for volatility, uncertainty, complexity and ambiguity and was first coined by the U.S Army war college to describe the complex and ambiguous situations during the cold war. VUCA can be used to describe general situations as well as situations related to the business world. Today’s business scenario has become highly unpredictable. Customer preferences and requirements keep changing. In other words, businesses today operate in a VUCA environment. The situation requires the managers to be on their toes – alert and awake.

The in VUCA stands for volatility. Volatility refers to instability or a tendency to vary frequently. It is an unpredictable change and makes it difficult for business leaders to make decisions based on past data and experiences. The C in VUCA stands for complexity. Businesses operating in the VUCA environment are subject to a multitude of complex factors both inside and outside the organisation. These factors lead to turbulence. The absence of past predictors makes decision making difficult and confusion prevails. The A in VUCA stands for ambiguity or lack of clarity. This ambiguity as Sullivan writes, is because the “causes and the ‘who, what, where, how, and why’ behind the things that are happening are unclear and hard to ascertain’

VUCA, however, is not totally unfathomable. VUCA prime, also regarded as the reverse mirror of  VUCA , is the contribution of Bob Johansen, emerging from his work with corporate, military, non-profit, and government leaders as they navigated their VUCA challenges. It is a set of skills required to successfully handle the VUCA situation. VUCA and VUCA prime exist in dynamic equilibrium – Vision counters volatility, understanding counters uncertainty, clarity counters complexity and agility counters ambiguity.

Business leaders need to pay more attention to certain behavioral attributes, so as to be able to lead effectively in an ambiguous environment. Colonel Eric. G Kail has suggested three such attributes – listening well, thinking with divergence and setting up incremental dividends. All voices must be heard and valued, there should be openness to ideas and suggestions and most importantly, success must be celebrated.

Not just leaders but the employees also are key stakeholders in countering VUCA. This brings to the fore, the importance of talent management in the VUCA world. Christoph Thuma of UBS suggests developing a pool of agile employees, making organisational processes agile and flexible, developing self-reinventing processes, focusing on innovation, promoting emotional intelligence and focusing on analytics as some of the ways that the talent management professionals should be looking at. Other than this, businesses must also accelerate their leadership development process, so that next line of leaders will be ready to take hold as and when required.

Confucius once said, “Only the wisest and the stupidest of men never change.” In a volatile environment, it takes a wise man, to understand what areas of business NOT to change. In order to survive in the VUCA environment, leaders must STOP doing things like seeking permanent solutions in HR, relying on past trends, benchmarking best practices, looking for long term employee retention, and most importantly assuming that one size fits all.

Rajesh Kumar Sinha

PGDM (2017-19) | Admissions & PR committee member | Beyond Management Initiative club Member | Loyola Institute of Business Administration, Chennai