In this age of acronyms one of the terms that I have heard more of in recent years is “VUCA”. In short VUCA stands for “Volatility, Uncertainty, Complexity, and Ambiguity”.
It seems to be a phrase designed to capture multiple synonyms for change and chaos, or the conditions associated with chaotic situations. Disarray, turmoil, pandemonium, unpredictability, confusion, and vagueness also capture that sensation of being in an environment that is out of equilibrium in some manner.
In both the personal and professional parts of our lives we are faced with these kinds of challenges each and every day.
Let’s explore more of what VUCA means and how we can better deal with these types of circumstances.
The one thing that is constant is change. While deliberately initiated change creates disruption and further resultant changes, unintended disruptions also create the need to change. It seems to me that VUCA is meant to capture this inevitable reality of perpetual change in our environment.
Mindtools.com defines VUCA as “It describes the situation of constant, unpredictable change that is now the norm in certain industries and areas of the business world. VUCA demands that you avoid traditional, outdated approaches to management and leadership, and day-to-day working.”
Wikipedia states that “VUCA world shows the unpredictable nature of the world … each element of VUCA serves to enhance the strategic significance of VUCA foresight and insight as well as the behaviour of groups and individuals in organizations.” Each element is further defined by Wikipedia as follows:
- V = Volatility: the nature and dynamics of change, and the nature and speed of change forces and change catalysts.
- U = Uncertainty: the lack of predictability, the prospects for surprise, and the sense of awareness and understanding of issues and events.
- C = Complexity: the multiplex of forces, the confounding of issues, no cause-and-effect chain and confusion that surrounds organization.
- A = Ambiguity: the haziness of reality, the potential for misreads, and the mixed meanings of conditions; cause-and-effect confusion.
Forbes helps to illustrate what VUCA means diagrammatically:
The message is clear. VUCA is meant to characterize the ever changing, unpredictable world that we live and work in. In many respects this is not new news. The world has always changed whether through evolutionary or revolutionary stages. But the term does put a name, so to speak, too this environmental reality.
So, with that term defined the question thus becomes, what do we do next having acknowledged this reality?
In Business, in Supply Chain, or in any other professional pursuit, most everyone is faced with VUCA, that is, Volatility, Uncertainty, Complexity and Ambiguity. Very few jobs are so routine and predictable that nothing unexpected or disruptive ever happens. Most jobs have a degree of variability in what happens from one day to the next. This variability runs the full gamut from being minor in scope to being massive and life changing at the other extreme.
Given that VUCA is really just endemic, the question really becomes how do you optimally and effectively deal with these challenges and circumstances.
According to “What VUCA Really Means For You” in the Harvard Business Review there is a way to approach each of the 4 VUCA categories as depicted in the following table:
By way of example, one area of volatility is with respect too forecasting. Poor forecast accuracy can have enormous repercussions and cause irreparable stresses and strains in any organization and with its employees. Many people focus all of their energy in trying to improve forecasts, which is admirable, but it is like chasing your own tail.
A much better approach is to strategize and implement a more robust and resilient Supply Chain that can normally and seamlessly handle extreme variations in forecasting without breaking any processes, systems or morale. That is how to mitigate the implications of VUCA.
Disaster planning, done correctly, is another way of addressing VUCA. Disasters, whether man-made or natural, will always occur. They only thing we don’t know is when or where they will occur. But we do know that they will occur. Real Disaster planning helps to ensure organizational readiness to deploy the necessary actions in real time when these disruptions happen.
The Coronavirus pandemic is another example of VUCA in action. Virtually no one could have predicted that we would have had a global pandemic of this extent. Further the pandemic exposed the true fragility of the global Supply Chain. Despite this lack of expectation and readiness, it is important that going forward we learn lessons from the pandemic so as to improve our ability to withstand the forces of future VUCA events.
Overall the approach to dealing with the inevitable VUCA challenges that will enter your life is nicely captured by flashpointleadership.com as involving: Vision, Understanding, Clarity and Agility.
The niagarainstitute.com states that VUCA leadership includes: Visioning, Preparing for Change, Flexibility and Adaptability, having a Bias for Action and Decision Making, Facilitating Collaboration and Teamwork, and having a Customer Centric focus.
Change happens. It always has and it always will. Sometimes it is initiated. Often it is unexpected. Understanding that it is inevitable is the first step in accepting that reality and then being able to prepare for and dealing with it.
Labelling these circumstances as VUCA doesn’t alter that reality. But the labelling does name the problem that we need to proactively address. When all is said and done, dealing with these challenges begins and ends with proactive and strong leadership and creating a high performance culture, processes and structure designed to effectively deal with change.
One thought on “What is VUCA (Volatility, Uncertainty, Complexity and Ambiguity) ?”
It’s really about being prepared for any eventually regardless of the world economic status.
How does it impact the supply chain of today?
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