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What does VUCA mean for your business?

Ana Nastase
17 Jan, 2022
3 m read

What’s VUCA?

VUCA is an acronym that stands for volatility, uncertainty, complexity and ambiguity, which originated with students in the U.S. Army War College, describing the conditions following the Cold War. In the context of the current business environment, the concept is gaining new meaning, as it has been adopted by businesses and organizations to innovate leadership and strategic planning. 

A VUCA environment can be descibed by a series of different circumstances, as the concept suggests: 

  • Volatile - change is rapid and unpredictable 
  • Uncertain - the future is unkown, which results in the liablity to predic different situations and to act strategically
  • Complex - when many difficult factors come into play, the organization finds itself in a chaotic, hard to manage context
  • Ambiguous - there is a lack of clarity about a specific situation

In other words, VUCA represents a set of challenges that the organisation has to face, no matter of the nature of a certain situation, as “unpredictable events happening outside an organization can be negative or positive, but either present greater VUCA, which makes it more difficult for leaders to make decisions” (source). Being so unpredicatble, a VUCA environment can influence an organization and its employees in different ways, and it can: 

  • Overwhelm people, leading to a huge lack of motivation
  • Destabilize the usual professional flow
  • Paralyze decision-making processes
  • Make adaptability a necessity
  • Affect long-term projects and innovations
  • Take huge resources to solve a crisis

How to survive in a VUCA environment

You know how a VUCA environment looks, but how do you manage in a VUCA world? What measures do you have to adopt? How do you react to challenges? How do you motivate your teams? Well, first of all, we should all accept that change is a constant in this business environment and there’s no reason to deny it. And what do you do in the face of change? You learn to adapt. Here’s a few suggestions of actions that you can take:

  • You create flexible objectives for the team that can be postponed when emergencies appear.
  • You ALWAYS analyze the business environment, stay up to industry news, interpret changes and pay attention to both the competition and your customers. You do not work in a bubble, but in a rapidly changing environment which should be throughly analysed all the time. 
  • You experiment with different situations in a safe environment, to see how you and your teams would react to certain events, using tools such as role playing, scenario planning, and crisis planning. 
  • You should encourage your people to work outside their usual functional areas to create cross-functional teams that can be agile. 
  • Communicate clearly in times of a crisis and develop a collaborative environment in which many employees can help with certain situations, with their various expertise. In other words, "Move from protecting information to democratization of information. To empower employees to make decisions, make communication frictionless. Conduct weekly all-hands meetings" (source).
  • "Move from hierarchy to self-organization. Push decisions down to the edge of the organization, where information is the freshest and most salient: the cash register, the production line, the call center, and sales reps" (source)

You should also know that one of the barriers to managing in a VUCA environment is resisting change, which means that as an organization, you should avoid a traditional approach to management and leadership and to implement agile processes as a day by day working flow.

Some (final) thoughts

VUCA is reshaping the business environment and while it is inevitable, there are still many strategic measures you can implement at the level of your organization to be ready to adapt and react to change.

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