Running a Business In A VUCA Environment Depends on Understanding What It Means to Cope with Volatility, Uncertainty, Complex, and Ambiguous Situations
VUCA environments are those which are volatile, uncertain, complex, and ambiguous. Many of us who’ve attended business school or participated in some type of leadership or organizational development training, have likely heard the term. However, even if VUCA environments have been studied to some degree, we often view the idea very differently than what we’ve experienced lately.
In some industries or organizations, we expect VUCA situations to be built into the nature of the business or organization itself. In others, we think we will never—or rarely—experience such issues or have to manage or lead through VUCA environments.
At the very least, for most of us, the idea of managing through severe or serious VUCA environments—especially those where the VUCA influence is being exerted externally, such as with COVID-19 and its associated shelter-at-home and lockdown orders—and having to steer our business through such scenarios, seems like a remote probability.
Yet here we are. 2020 has been a year of VUCA situations over which we have very little control.
In order to help lead our business properly in such times, we first need to understand what the acronym VUCA stands for and means.
V = Volatility
The “V” of VUCA stands for volatility, meaning that the changes that accompany the situation(s) is/are quick and unpredictable both in nature and extent.
U = Uncertain
The present and future are uncertain in VUCA environments.
C = Complex
Often, VUCA situations have multiple challenges and variables and routine or rote decision-making strategies just do not apply or effectively address the obstacles and challenges presented.
A = Ambiguous
In VUCA environments, variables and situational aspects are not clear.
It can be tough enough when one of those elements exists in a situation or scenario. However, when it becomes one or more—and especially, all four—it can feel overwhelming and almost, hopeless.
To best run your business under such conditions, it’s critical to know how these VUCA situations are going to impact your business, including your leadership, your teams, and even relationships with your customers.
Impacts of VUCA environments on a business:
- People become anxious and feel off-centered and nervous
- Motivation is reduced and even depleted
- Productivity decreases because of fear and hopelessness
- Consistent reshaping and retraining becomes necessary
- The opportunity and chances of making bad decisions increases
- Some get paralyzed in decision making
- Long-term goals, projects, and objectives get overlooked or fall by the wayside
- Eventually, bigger psychological problems become more likely and even, possible
- Internal culture is sacrificed and call fall apart
- VUCA can become “contagious” within a business or organization—creating additional VUCA scenarios that build layers of complexity
Again, although we expect VUCA environments in some businesses or industries, for others of us, these features and resultant impacts can be more than just a little challenging.
The first key to managing through such situations, is to remember that navigating through this rocky terrain, begins with you—the leader—your vision, and your leadership en whole.
Next, you should break the VUCA variables down into their component parts and deal with one at a time, trying to mitigate the obstacles, challenges, and risks associated with each one separately. This is simpler and often more effective than attempting to work the entire spectrum or aggregate of issues.
In his book, ‘Leaders Make the Future,’ (2009), R. Johansen offers up a framework for managing in such environments that he calls, “VUCA Prime.”
The basic elements of VUCA Prime—a framework for managing in VUCA environments—includes:
- Volatility: Counter it with vision. This vision should include an acceptance of change, as well as values and a vision that not only accepts change but specifies a vision for navigating through times where rapid and big change becomes necessary.
- Uncertainty: Meet it with understanding. As stated on mindtools.com, “Aim to anticipate possible future threats and devise likely responses. Gaming , scenario planning , crisis planning, and role playing are useful tools for generating foresight and preparing your responses.”
- Complexity: React to it with clarity. Don’t hide from the challenge—instead, address it head on and communicate as openly and clearly as possible with others in your business or organization.
- Ambiguity: Fight it with agility. “Promote flexibility, adaptability and agility . Plan ahead, but build in contingency time and be prepared to alter your plans as events unfold.”