Whether it is through financial crises, global shifts in power, environmental threats, increasing distrust in the media, or our personal conversations, we are witnessing an increasing feeling of uncertainty, change, and turbulence. These feelings have culminated in the notion of ‘VUCA’, that is, the volatility, uncertainty, complexity and ambiguity of the world. It was the US military who first coined the VUCA acronym in 1987, to reflect the strategic shift of military warfare following the collapse of the Soviet Union, and to describe the increasingly volatile, uncertain, complex and ambiguous conditions of conflict.
Today, VUCA has become a widely used acronym, with far reaching applications, ranging from politics to science. ‘VUCA’ has found its way into the business lexicon - increasingly, VUCA has been adopted by leaders and organisations as a framework to approach different types of challenging situations bought about due to external factors - economics, rapid technological advancements, and climate change, to name but a few. And the coronavirus pandemic (and the impending threat of a second peak) has exaggerated VUCA conditions globally, and brought to light the VUCA climate of the future.
Increasingly explored by experts is the role of digitalisation as a catalyst for creating VUCA environments. Volatility is defined by the nature and dynamics of change and its speed of change, be it social, economic, or technological. During times of rapid digitalization, markets and business strategies can look completely different in a year than they do today. Complexity is characterised as consisting of many different and connected aspects, and the relationships between them. The more factors, the greater their variety, and the more they are interconnected, the more complex an environment is. In the digital age, where the world is increasingly determined by data and networks, digital connectivity means an increase in complexity. Whilst we can define and measure volatility and complexity objectively, uncertainty and ambiguity are harder to characterise – some argue they are of a more perceptual nature. Crucially, all four concepts are inherently linked: the more complex and volatile a situation, the more uncertain and ambiguous we perceive it. Equally, whether we experience the world as more uncertain and ambiguous depends to a large extent on our ability to deal with its volatility and complexity.
Crucially, the increasing digitalisation of the world, whether it is rapid technological development, big data, or AI, has increased the VUCA conditions in which we live. Digital transformation is making its way into most companies and industries. We can see the effects of digitalisation on our world, in the form of increased complexity, dynamism, and connectedness. Digital technology has increased volatility for many organisations, whilst greater online connectedness between people and organisations, has increased the complexity in the business world.
On the flip side, however, an increasingly digital world allows us to better deal with this increased volatility and complexity: the enhanced digital connectedness of the world, the instant accessibility of endless information, and the ever increasing speed of networks and computers. We can make more complex analyses and make faster responses than were possible a decade ago. In short, whilst volatility and complexity have increased in a digital age, so has technology’s ability to deal with them.
Bob Johansen, renowned futurist, social scientist, and author of ‘Leaders Make the Future’, has been forecasting the future for over 30 years, within the Institute for the Future, a leading independent, non-profit futures research group. Johansen states that volatility, uncertainty, complexity and ambiguity are the realities of today, and that leaders and organisations must accept and adapt to this reality by adapting a ‘VUCA mindset’. Johansen describes this mindset in terms of vision, understanding, clarity and agility (VUCA) – Vision for creating and contributing to the future, and for predicting it; Understanding by investing – collecting, interpreting, and sharing – information in times of uncertainty; clarity via giving meaning and understanding to complexity; and agility through adaptability and flexibility in response to unprecedented situations.
Similarly, organisational psychologist Dr. David Smith explains that those of us who are open to change and quick to learn from experiences are best equipped to thrive in a VUCA environment, and succeed in tomorrow’s world. Smith refers to these individuals as learning agile – a trait that consists of nine dimensions: flexibility, speed, experimenting, risk taking (both performance and interpersonal), collaborating, information gathering, feedback seeking, and reflecting. In fact, learning agility has been identified as the key requirement for successful leaders (and individuals) in a VUCA world. A 10-year longitudinal study of US sales executives exposed a significant correlation between learning agility and promotion rates, as well as salary increases. Crucially, individuals and businesses that are learning agile don’t feel the need to continue doing things the way they’ve always been done, as this prevents growth.
Ultimately, Johansen, Smith, and other business experts and leaders, explains that the VUCA world of the future will be filled with both risk and opportunity, and ultimately points to the importance of emotional and mental preparedness and agility in achieving success in today’s VUCA world, and that of the future.
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By Effie Webb
University of Oxford
First Published 4th July 2020