By 
Business leaders strive to understand their environments to develop strategies that improve their organization’s performance and maintain their competitive edge. The increasing complexity, pace, and multitude of challenges and opportunities facing organizations today create ever-increasing needs for innovation, automation, and the ability to derive value from data in order to remain agile, flexible, and able to take on quickly smart risks in today’s changing markets.
VUCA is an acronym borrowed from military terminology, gaining popularity in business strategic leadership theory in the 1990s. The term stands for Volatility, Uncertainty, Complexity, and Ambiguity. It stands for 4 different challenges that demand 4 different modes of response, and it serves to describe the complexity of strategic decision making in operational environments that organizational leaders face.
Volatility signifies an organization’s need to have the agility and flexibility to act quickly and position themselves where they need to be for maximum impact in fast-changing and turbulent environments. This challenge is overcome with organizational vision, solid values and a healthy culture.
Uncertainty characterizes the lack of predictability and the possibility of surprise in changing markets. The US military calls cyberspace the “fifth domain,” after air, land, sea and space. The most successful companies are the ones that can gain a decisive advantage in this fifth domain, by deriving value from their data, giving them a significant advantage in achieving maneuverability, ensuring agility, and keeping the organization agile. “Uncertainty is addressed by constantly creating insights,” says Simon Carpenter, director of customer support for SAP Africa.
The complexity illustrates the myriad of challenges, chaos, confusion and complications facing business leaders today, especially multinational organizations with multiple products in multiple markets dealing with unique cultural values, different compliance regulations and regulatory bodies in the countries in which they operate. According to Carpenter, the strategic solution to complexity may not always be a naive approach to simplicity, but instead requires a more nuanced strategy based on a framework where much can be done to profoundly simplify IT, “by moving much of cloud IT workload we can unlock scarce IT resources to drive innovation within the business. We may not want to be too simple, but using today’s technologies to consolidate resources introduces greater efficiency into the business” .
Ambiguity, which Wikipedia classifies in the VUCA model as “the nebulosity of reality, the potential for misreading, and the mixed meanings of conditions; confusion of cause and effect,” basically characterizes a lack of clarity in conceptualizing threats organizational challenges and opportunities before advancing to fatal levels. A strategic solution to ambiguity is clarity, achieved in large part by extracting value from data to drive environmental positioning toward the desired vantage point.
In his blog series, the late former US Army Colonel Eric Kail outlined the following adaptive leadership tactics for operating in a VUCA world:
For volatile situations…
- communicate clearly
- Make sure your intent is understood
For uncertain situations…
- Get a new perspective
- Be flexible
For Complex Situations…
- Develop collaborative leaders
- Stop looking for permanent solutions
For ambiguous situations…
- Listen well
- think divergently
- Set up incremental dividends
While Colonel Kail’s advice was built within the context of small-unit combat activities in the military, it is easily convertible to applications for organizations of all sizes.
Phil Jones, currently serving as Associate Vice Chancellor at UNC Charlotte after a 29-year career as an engineering officer in the US Army and retiring as a Colonel, explains, “There’s an old saying in the Army: ‘a plan never survives first contact.” Especially true in a VUCA world. Being flexible and adaptable is critical. Using the interrelationship considerations outlined in the VUCA model, strategic leaders can proactively anticipate the effects of second- and third-order operational decisions. Some have described this as “the ability to see around corners,” but it’s really about heightened situational awareness and adapting to uncertainty and ambiguity as the situation dictates.”
Paul Kinsinger, clinical professor at the Thunderbird School of Global Management and executive director of Thunderbird Executive Education recounts in an article on the Thunderbird site: “The need for organizations to adapt is nothing new, and in fact those who point out that humanity has faced even more dramatic adaptation imperatives in the past are certainly correct. That being said, we are where we are in the history of human development and the extent and pace of dynamic change in the marketplace and in our organizations will leave. behind many companies and will leave the human capital potential of their employees untapped”.
VUCA Prime, a popular response to address the root causes of VUCA symptoms developed by Institute for the Future Distinguished Fellow Bob Johansen, can be viewed as the continuum of skills developed to counter the VUCA model by changing the acronym to focus on Vision, Comprehension, Clarity and Agility. Kinsinger writes, “We are moving from a world of problems, which require speed, analysis, and the elimination of uncertainty to solve, to a world of dilemmas, which require patience, sense, and commitment to uncertainty.” Vision, understanding, clarity and agility are not mutually exclusive in the VUCA Prime model. Rather, they are interlocking elements that help strategic leaders become stronger VUCA leaders. VUCA Prime counteracts the effects of a VUCA environment with:
Vision – an intention that seeks to create a future
Comprehension: the ability to stop, look and listen
Clarity: The ability to help make sense of chaos.
Agility: An organization where “cable management” is rewarded above the hierarchy [The operational definition of wirearchy is “a dynamic two-way flow of power and authority, based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology”.]
The value of data in a VUCA world is now being realized from multiple analytical activities. Cybernomics, the ability to analyze and harness big data, digitization, and social media to improve business efficiency, has become more imperative than ever to strengthening an organization’s competitive advantage. Psychometrics, which measures fluid intelligence by tracking information processing when faced with unknown, dynamic, and vague data, can predict cognitive performance in VUCA settings, revealing dynamics that reinforce personality, such as values, beliefs , self-concept and defenses. The biggest breakthrough in deriving value from data may come with the rise of quantum storytelling, a huge and largely unexplored body of work in organization theory that describes how “living stories” affect the future. of companies and their brands. It is argued that learning is the most important factor in the survival and advancement of an organization, helping to reduce volatility, uncertainty, complexity and ambiguity. The bottom line is that without data there is no learning.
Today, the need for leaders to make quick decisions, manage the paradoxes of seemingly conflicting demands, and embrace change is critical to navigating and surviving these turbulent times in a VUCA world. These skills and abilities are markedly different from the more role-specific skills and abilities that leaders needed in the past to be successful. Business leaders must refocus their leadership skills to hone these more strategic and complex critical thinking skills.
Hey, it’s crazy out there! What are you doing differently to adapt to leading in a VUCA world? I’d love to hear the strategies you’ve used to overcome leadership adversity or your thoughts on the importance of applying the VUCA principles to leading your environment in the comments below, because they might help others and who knows, maybe just help you too