VUCA stands for Volatile, Uncertain, Complex, and Ambiguous. The world we live in is inundated with chaos and volatility. Unpredictability is the new norm. An incessant change has engulfed modern societies. Technology has taken the center stage. In a world enveloped with VUCA, the very survival and to thrive therein has become a critical issue.
It is incumbent on the world in general and the business world, in particular, to devise concrete roadmap to counter the challenge offered by these four characteristics. Our world is being swept in a way and we have to speed up our preparedness to emerge stronger out of it.
Warren Bennis and Burt Nanus first came up with the acronym ‘VUCA’ in 1987. It was based on the theories of leadership given by the duo. It was first used by the American military on the collapse of the bipolar world order. The goal was to redefine the multilateral world order that had become more Volatile, Uncertain, Complex, and Ambiguous.
Volatility: Volatility is about changes in the economic environment, it’s about realignment in social norms and it’s about changes in the business realm. The more interdependent the nations become the more volatile the world turns. And the more volatility in the world, the quicker things change.
Uncertainty: Unstable environments, complicated structures insinuate uncertainties. And surprising is the fact that Uncertainty happens in spite of having an information overload. A lot of variables are involved and the prediction of outcomes is not the handmaiden of technology or statistical tools alone. Constant adaptation and regular tinkering are the need of the hour to deal with an uncertain macro scenario.
Complexity: The different strata interact differently thus making it very difficult to get an overview of how things are connected. Amid a lot of reactions and counter-reactions, smooth decision-making has been marred with a lot of complexity. Arriving at a collect alternative was never this complex.
Ambiguity: Nothing is that black and white in the modern world. Every perspective comes with its share of grey shades. A very thin line distinguishes the ‘uncertain’ from the ‘ambiguous.’ ‘Uncertainty’ occurs due to lack of information whereas ‘ambiguity’ is the hallmark of too much information. Ambiguity happens when a concrete conclusion can’t be arrived from the mass of information. It is a by-product of information overload. The times that we are in, have uncertainty and ambiguity co-existing concurrently.
Dealing VUCA in a dynamic world: In the wake of a volatile scenario; outdated information, the tendency of risk avoidance, and slower response time present their share of challenges. Uncertainty implores us to get back to older ways of working and the incomplete information makes it even more difficult to operate with certitude. Complexity encourages companies to take short-term solutions. And lastly, Ambiguity may mar our ability in significantly assessing events around us and to take proper recourse for a particular problem.
The Three Horizon Model: There are various alternatives proposed by management thinkers from time to time to take on the VUCA world. And the ‘Three Horizon Model’ is highly regarded and adopted to this regard. As shown below, it presents three perspectives.
(Source: McKinsey's Three Horizons Model)
~The first horizon is where it is realized that the business is not as its usual. At this point, the management begins to tinker with newer sets of ideas and processes.
~ In the second horizon, leaders take tough decisions and do away with the tried and tested ways of working. New-age modes and methods are adopted to chart the course ahead.
~And in the third horizon, innovative ideas and re-engineering efforts that were previously conceptualized are finally translated into live-action and a re-energized entity take shape.
And finally, the VUCA Leadership chart for the 21st century:
(Source: DON CIO Proposed Framework)
We at Advance Agility are uniquely placed to implement VUCA for the companies of the 21st century. Our pedigree here emboldens us to bring the much-needed agile transformation for any business you are in. Do let us know in any way we may catalyze your business.