An acronym for Volatility, Uncertainty, Complexity & Ambiguity, VUCA is a military concept that was adopted by the business community as a way to describe the inherently difficult issues of the modern world. These four words form the lens through which a strategic leader views the rapidly evolving business landscape, and they are also the basis for creating an adaptable and proactive organization with regard to the inevitability of change.
A Little Background on VUCA
The concept of VUCA emerged out of the US Army War College in the mid-to-late 1990s, a time during which the US found itself in relative peace, but with a large standing army distributed across the globe. Without the Cold War focus of Russia to drive strategy and decision making, the army was forced to prepare it’s vast resources for the unknown.
All politics aside, Rumsfeld’s famous (or infamous) quote iconically, if not confusingly, summarizes the concept of VUCA and the reason why it’s so critical:
“…there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”
Strategizing for the Unknowns
With such a vague and ever-changing world, how do we ever prepare? It’s easy to use VUCA as a catch all for the mysterious challenges of the future, and some leaders eschew in-depth strategic planning completely because of it.
However, the true point of the concept is to get us to prepare ourselves through the creation of systems that handle the as yet unforeseen issues we will inevitably encounter. Strategic leadership is about building these systems and preparing for the various facets of VUCA so that an organization is not caught completely flat-footed. We aim to be nimble, adaptive, and proactive where possible.
Start by Empowering Employees
The strategic leader understands the importance of information and ideas, and she realizes her own limitations in both gathering information and generating ideas. She realizes that to tackle the ambiguities of a VUCA world she needs to empower her employees to provide both internal and external insights.
Moreover, she recognizes her employee’s diverse skill sets. A VUCA focused leader knows that employee skillsets expand beyond designated job roles and can form the backbone of a strategic response in the face of a crisis. If your company were to suddenly lose it’s management team, who could step in to provide assistance in various departments? A great way to connect with other people in your organization and gain a deeper understanding of their role, views, and ideas is on what we call a Breakthrough Trek.
Consult Generalists and Specialists
Multiple perspectives are essential in coming up with effective solutions to sticky problems. An effective leader taps into his pool of generalists and specialists, regardless of what parts of an organization a particular problem appears to apply. Specialists will provide nuanced and detailed explanations, theories, and fixes for particular situations, but generalists will help provide the aerial view to make sure the company isn’t too myopic in its response to an issue.
Ask Yourself “What If” Questions Regularly
Develop your creative reaction muscle by asking yourself “What if” questions regularly. It’s easy to feel overwhelmed when a major crisis occurs, but if you regularly talk out potential scenarios, you’re less likely to feel paralyzed if and when something does happen. Here are a few to get you started:
- What if a much larger company launches a competitive product?
- What if one of my largest suppliers files for bankruptcy?
- What if our business tripled overnight due to some publicity?
- What if we found a major defect in one of our products?
- What if we suddenly lost our senior management team due to illness?
Try Some VUCA Scenario Exercises
Using some of the What If scenarios above is a great way to encourage creative, strategic thinking amongst your team. Here at Adventure Associates we ran through an exercise just this morning in which we had small teams tackle the following scenario: what if our company directors were quarantined for an illness during a business trip, right after giving a TV interview which doubled our volume of business?
A whole slew of issues come into play for this scenario, many around business continuity:
- How do we handle an increase in sales calls?
- What happens to the decision making hierarchy?
- How do we finance the short-term costs involved in this sudden growth?
- What could we do to better cross-train employees?
Breaking Down VUCA for Clarity
The VUCA concept is somewhat nebulous when presented as a whole, so breaking it down can help clarify what you need to do next. Nathan Bennett & G. James Lemoine, professors at Georgia State and Georgia Tech respectively, created an excellent framework for VUCA which was published over at the Harvard Business Review’s website. They distinguish the four parts of VUCA and offers insight into what type of response different scenarios might warrant through examples pertaining to each of the four words.
Volatility: You know what might happen, but you don’t know how long or how severe
Scenario: A critical production resource shortage occurs, causing prices to spike for unknown period of time.
Response: Become more agile by stockpiling resources for these types of events. Hedge against these types of situations.
Uncertainty: Things are unclear, and you are lacking information
Scenario: Competitor in your niche launches it’s product.
Response: Gather information, going outside of your normal channels to do so, creating new systems in the process. Information helps combat uncertainty.
Complexity: More and more moving parts are being added to the equation
Scenario: Expanding into new foreign markets, with different tariffs, regulations, and hiring practices.
Response: Aim to simplify systems in the face of complexity.
Ambiguity: Something entirely new is happening, and you can’t predict what might happen
Scenario: You’re a cab company and Uber is coming to town.
Response: Experiment with different responses. Launch an app, try different pricing structures, experiment with carpooling rides to see what might work.
Make VUCA a Call to Action
True strategic leaders think of VUCA as a way to approach business on a daily business. They are constantly thinking of ramifications, possibilities, ways to simplify, places to get information, and systems to process that information. They embrace challenge and the inevitability of change and they prepare themselves and their organizations for the unknown.
Are you prepared for a VUCA world?
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