VUCA is such a common acronym in today’s managerial jargon that many have lost a full understanding of what VUCA means. So I’ll try to summarise the main aspects of this concept, see how this affect individuals and organisations, and check what can be done about it. A particularly relevant topic as we live through the Covid-19 crisis and discuss Organisational Resilience, the Future of our Work and other changes that affect our lives. Including a very personal one, my own little VUCA.
Where does VUCA come from?
The acronym VUCA was first used by the US Army as of the end of the Eighties, with prof. Herbert Barber being the first, in 1991, to officially use the term. He stated that War College derived these ideas from the book of Warren Bennis and Burt Namus Leaders: The Strategies for Taking Charge. In Military Context the acronym was used primarily to mark the early situation in Afghanistan, where it was difficult to understand the current situation and predict the outcomes of specific actions.
What does VUCA mean?
The acronym stands for the following four words:
- Volatility: 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.
- 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. Indeed uncertain environments are those that don’t allow any prediction, even not on a statistical basis. The more uncertain the world is, the harder it is to predict.
- Complexity: refers to the number of factors that we need to take into account, their variety and the relationships between them. The more elements, the higher their range and the more they are interconnected, the more complex an environment is. Under high complexity, it is impossible to analyse the situation and come to rational conclusions thoroughly. The more complex the world is, the harder it is to explain. It is crucial to notice here that there is a significant difference between Complexity and Complication. Often managers refer to issues that are “complicated” (building an electric car is complicated, but once you get all your engineers down, you will find a way).
- Ambiguity: refers 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 definite 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.
Each of these elements can be seen individually: i.e. we can have a situation that is Volatile but not Complex or Ambiguous. The more of these four elements happen together, the more critical understanding of the scenario and reacting to it becomes.
The VUCA Matrix
VUCA isn’t a tool. It’s more of a checklist of things that your organisation should be considering. That’s why I like the matrix that in 2014 Nathan Bennet and G. James Lemoine published a short article on Harvard Business Review. It portrays the four VUCA elements happen in relationship with each other.
Why it is important
Even though some noted that VUCA is not something new: it has existed for some time. Just having a read at the classic Organisation Research “Strategy and Structure” by Chandler, shows how organisations have evolved mainly by reactions to a certain degree of VUCA. The question is always the metabolic rate that organisations have to learn and adapt. Think for one second of acceleration: the technology revolution over the last few centuries has been by the enablement of faster communication (horses, faster carriages, faster ships, the train, the telegraph, the telephone, internet…). How does an organisation react?
The fact is that VUCA impacts how individuals and organisations make decisions, plan forward, manage risks, foster change and solve problems. We need to consider that we are influenced by fear, comfort levels, optimism, general competencies in our ability to operate in a VUCA world. One of the most significant issues is that we have an educational and reference system that still teaches us predictability, linearity, uniformity, clarity.
This has two consequences. The first is at organisation level: we are very often still stuck with organisation design approaches that are not relevant for a VUCA world. One way of reacting is avoiding the traditional push for forecasting and move into foresight and intuition. We have already seen this element in several of the readings I have done, like Beyond Budgeting. Traditional forecasting models don’t work in a VUCA environment and are mainly a waste of time and energy. In an organisational context, perhaps the most disturbing thing of VUCA is the decentring effect of taking the phenomenon seriously. As a manager, you are not in control, but you may still be in charge. This particularly invests leaders, and although there is no magic recipe, there are many ways in which true leaders can help face a VUCA world.
Which brings us to the second consequence, which is more at an individual level. We need to be and act more like Pirates, a concept we have also encountered in a recent reading: Rebel Talent by Francesca Gino. A Pirate doesn’t plan but can capture the right chance and live in the moment. We need to develop new capacities, learning how to be present in the current scenario, nurturing our networks of interactions and discovering new methods of sense-making. We need to be all right with being afraid of not knowing really what to do but knowing you will do something to the best of your ability with those around you.
Curiosity, Systems Thinking, Learning Agility, Resilience: all become critical competencies for our own environment and our way of thinking and acting. We need them to succeed, not just reactively, but as a way of living well with VUCA. Which also means picking the battle we aim to win: ruthless prioritisation becomes a way to survive in a VUCA world.
A possible response: VUCA 2.0
According to Bill George, a senior fellow at Harvard Business School, there can be an alternative way of thinking for both organisations and individuals. He calls this VUCA 2.0. Using the same letters, but referring to four foundational qualities for the response.
- Courage and
These four modes should apply to every layer of human life, from governments to organisation, to single individuals. And should ensure the Psychological Safety that is required to live through a state of unknown.
Conclusion: me, my dog and VUCA
In every crisis lies an opportunity. Easier said than done, that’s certain. We are so rooted in thinking that life is a linear progression, that we fail to see the beauty of living in the moment and catching what there exists of beauty and chances. To me, this is the most significant learning on how to live in a VUCA world. And after so many times preaching and discussing this subject theoretically, I am living this first hand through a challenging personal experience. In the middle of the Covid-19 crisis, we have discovered that our dog Morgana, a five-year-old Labrador, had aggressive bone cancer. The default therapy is a leg amputation and a cycle of chemotherapy. And above all, the conscience that a dog’s median life after this tumour is of less than one year.
She is now one week after the surgery. And she has taught us so much about resilience that no book would have, as she hops around the house and wants to play as nothing had happened. For my partner and myself, this is a significant change of mindset, as we need to continually live in the moment as we are now conscious that the number of tomorrows might be severely limited.
Against the back of the most massive pandemic of the century, this might seem a trivial issue. But it is part of my VUCA world. I can only choose the best way to go forward, learning something new every day, and hoping to spread the best possible output to the world, which is why I’ve taken heat and mind the idea of Good After Covid-19—taking part in the first fishbowl exactly in the hours when Morgana got her amputation done.
And you? What is your personal VUCA?