This is the starting point of a new blog series around the topic of VUCA. This topic is of major personal importance for us, as it’s something we want to help our customers adapt to. We’ll first cover the history of the term, then tell you more about the reasons behind it, move to VUCA 2.0, and finally go into how it has become such an important corner piece in today’s management discussion.
VUCA, an acronym from the words Volatile, Uncertain, Complex and Ambiguous, was born in the U.S. Army War College in the late 80’s to describe the new kind of world that was sprouting after the end of the Cold War. Little did the creators of the term know that it would play a major role when trying to explain the difficulties that the U.S. representatives would have in Iraq twenty years later. Or that the term would eventually move from the combat field into boardrooms around the world. To get started, let's talk more about the four terms that create the acronym.
Volatility, most often used in stock markets to quantify the rapidity and spread of price changes, explains how everything from competitive landscape to risk management has become more unpredictable and unstable. What explains this increasing fluctuation the best, is the fact that we are simultaneously experiencing growing rates of both unemployment and shortage of labour. Traditional industries, companies and job descriptions die younger, and new are born at accelerating speeds. This means that whatever we tell our kids to learn more today may actually be useless in the VUCA world of tomorrow.
The second term behind VUCA, uncertainty, often stems from volatility itself. In its basic form uncertainty means lack of information. Living in the information age, that's actually not the case, even though all of us are experiencing uncertainty all the time. The challenges we face today are a combination of having too much and too little information at the same time. This information overflow is tough to grasp, as it’s in our human nature to try to make sense of what’s going on, and to have a sense of control on our surroundings. Traditional management is all about this control: planning, setting goals and supervising, all happening top-down with vast amounts of hierarchy. For centuries there was no need to change this culture, but nowadays as everything is changing so fast, no C-level knows enough to make all the decisions.
Besides the fact that we want to feel in control, we humans also tend to think that the world around us is simpler than it is. Complexity, the C in the VUCA, tells a different story: because of technology expanding at increasing rates, the possible causes for anything are multiplying. It’s often easy to explain afterwards why something happened, but almost impossible to predict when it’s actually happening. There’s also a term for this phenomenon called the Narrative Bias. It refers to the human tendency of trying to explain our surroundings through stories. As there's quite commonly too much information for us to actually process simultaneously, we're creating a narrative link that fits only between the bits of information that we find suitable for the story. As an end-result, we frame the story so that it's easy for us to understand, but doesn't actually represent the reality.
Ambiguity, the last word of the acronym, means that even in a situation when we have enough information, we still fail to make sense of what that really means. Thus the difference between ambiguity and uncertainty is that in uncertain situations the relevant information is unavailable and unknown, but in ambiguous situations the relevant information is available but the overall meaning is still unknown. As the Narrative bias was trying to explain our actions in complex situations, theres also a framework for ambiguity called the Ambiguity effect.
The subtitle of this chapter is a bit miss-leading, as we're far from the actual conclusion (thus the blog series about the subject). What we can already tell is that VUCA isn’t something you, me or we can get rid of. The pace of e.g. technological advancement, globalisation and urbanisation takes care of that. What we all can do is to try to adapt. And it's actually the only way to go, as those who can't adapt, will be ran out of a job, out of business, and eventually into extinction. The quote below, which by the way isn't said by Darwin himself even though falsely presented like that across the web, sums this up quite nicely.
"It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself"
Nicholas J. Matzke on Charles Darwin's "Origin of Species"
As mentioned in the beginning, this blog post is the first in our VUCA Blog series. For more on this topic, see these four blog posts we've written:
If you want to dive straight into the deep end, you should also download our FREE white paper about the topic:
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