Created By: Leila Dalva, Janessa Hastings, Adaora Mba, Alex Smith, & Michael Ugbe
What is VUCA?
VUCA is a term created by the United States Military in 1987 as a descriptor organizations could utilize to communicate, navigate, and facilitate change around varying degrees of difficult corporate/business scenarios. VUCA describes the unknown cause and effects caused from external factors in business decisions. VUCA is an acronym that stands for Volatility, Uncertainty, Complexity, and Ambiguity.
Volatility: refers to when a situation is unexpected, unstable, or changes rapidly. Uncertainty is a lack of information for events, or the outcomes of a situation may be unpredictable. It can be caused from factors such as a company’s share price, or price fluctuations of resources.
Example: Carvana a Used Car-Buying company, closest competitor, is currently facing an extreme volatile financial environment. They’ve experienced lay-offs, closure of corporate offices, and they’ve also taken extreme measures, such as cutting their common par stock price by more than 50 percent. As anyone could imagine, this could produce intense feelings of anxiety and anxiousness for employees of Carvana. How are leaders helping employees navigate these feelings?
Uncertainty: refers to a lack of information for events, or the outcomes of a situation may be unpredictable. Factors such as a competitor introducing a new product, or the effect of newly introduced laws and regulations.
Example: We are currently experiencing a silent recession, there’s a ton of uncertainty and unstableness within our current economic environment. With many companies facing layoffs, how are they navigating their workforce through these peaks & valleys?
Complexity: refers to all the interconnected parts or variables within a situation. A number of external factors that are in some way interconnected or interdependent.
Example: The global supply chain has become complex with interdependent parts, suppliers, and logistics. Disruptions such as a natural disaster can lead to delays and an increase in costs for the customer. The complexity of this situation can make it hard to anticipate or manage these disruptions affecting volatility and uncertainty in the work environment.
Ambiguity: refers to a situation being completely unclear. There is a lack of clarity as there have been no precedents before it. Ambiguity can also be seen if information is being misread or misinterpreted.
Example: During late 2019 and early 2020, many of us had no idea what the end result after the 2020 Pandemic would be, ambiguity refers to that unknowingness. How can we communicate and advocate to groups within our organizations when the unknown is presented?
Why is it important?
VUCA is a powerful tool that can help current and future leaders navigate the precarious business environments organizations face. VUCA is important because it describes the environment that businesses, organizations, and individuals must operate in. It highlights the need for organizations to be agile and adaptive to changing conditions. VUCA prepares organizations to better manage risk and be resilient in times of crisis and change. VUCA is also important because it encourages organizations to focus on developing long-term strategies that consider the ever-changing environment. It emphasizes the need for organizations to continually assess their environment and adjust their strategies accordingly. This means organizations must be prepared to respond to changes quickly and effectively. Finally, VUCA encourages organizations to prioritize collaboration, communication, and innovation in order to stay competitive and successful in today’s volatile and uncertain environment.
How can I use it in my job?
VUCA can be utilized within organizations to help leaders navigate different scenarios presented within their workforce. Understanding the theories that VUCA represents, leaders can be equipped with the necessary tools, resources, and competencies to handle a myriad of different frameworks. VUCA helps innovators adapt to sudden changes, challenges, and opportunities. How these issues present themselves will vary from organization to organization but understanding and equipping oneself with the theories VUCA stands for, leaders will be able to predict, forecast, and respond. COVID was a complex global event, leaders throughout the global market had to quickly adapt to it. Many instituted new policies and procedures that responded to the volatility within the economic market & its effects on their organizations workforce and ROI. Because of the uncertainty and ambiguity of their organization’s economic future, leaders equipped with the tools VUCA stands for, can navigate these scenarios with a sense of importance, urgency, and agility. These leaders will possess the skills and competencies such as “results focus,” “courageous leadership,” “teamwork,” and “analysis and decision making.” These leaders are thoughtful, but analytical, led by example, collaborate, and seek feedback from their counterparts. VUCA equips leaders and organizations with the competencies to handle the various challenges and opportunities that will arise throughout their operation.