Disruptive change is coming at us from all directions: Disruptive technologies - the Internet of Things, big data, cyber-physical systems; Disruptive business models - Airbnb, Bitcoin, Tencent and Uber; Disruptive socio-business interaction - crowdfunding, crowdsourcing, mobile payment.
Added on 20 April 2016 by James Moncrieff,Sharon Olivier,Davide Zaccariello
Add to these political and economic uncertainty: China’s economy, the US election, the UK referendum on Europe, the plunging price of oil, terrorism, refugee migration, Korea’s H-bomb. Mix in the shock waves from exposures like Volkswagen and Mossack Fonseca . . . welcome to the VUCA world.
This acronym originated in the US Military Academies in 1998. It was a description of the battlefield environment which depicted the four most relevant threats on the battlefield:
Volatility - unexpected things happening suddenly and spontaneously
Uncertainty - unknowable futures, unpredictable events and unforeseen consequences
Complexity - interconnected and interdependent networks and systems
Ambiguity - incomplete data, mixed meanings and misreading of indicators and signals
The term has since entered the business world as a description of the environment brought about the disruptive changes mentioned above, and many more. “The world has become more volatile, uncertain, complex, and ambiguous than ever before, certainly than I can remember,” says Unilever CEO Paul Polman (Hult CEO Report, The Age of Upheaval’, 2016).
Interestingly, when VUCA started to be used in other environments, the four elements were still viewed from a threat assessment perspective.
A threat carries with it a fear of harm or loss. It is perceived as bad, evil, wrong and as something to be resisted or overcome. However, the interpretation and application of VUCA’s four elements solely as threats reduces the possibilities for exploring and eventually using these elements in a more positive and creative manner.
From Threat to Force for Change
In aerodynamics, we find the four opposing forces related to flight - weight, lift, drag and thrust. The connotation of these elements as forces has allowed engineers to calculate and build the parts needed to create flying machines. The recognition and acceptance of the four forces of flight has changed the world, and with the advent of reusable rockets, who knows what aerodynamics will bring us in the future.
Volatility, Uncertainty, Complexity and Ambiguity could be viewed as the four forces of today’s relationship between the enterprise and its environment: markets, economies, technologies and society. To recognize them as such is crucial to developing effective strategies and tactics.
From Threat to Opportunity
In a VUCA world, intuition can be more important than analysis because it leads to interpretation and a giving of meaning. Rather than attempt to simplify, this forces us to embrace complexity and to make sense of the collective whole. Just as aerodynamic engineers had to work with all four forces, only by working with all four VUCA elements can we create the business equivalent of flying machines. Volatile, ambiguous incidents will provide opportunities to those organizations that can respond with velocity - speed and direction (intent), and those designed for agility - flexibility and responsiveness, with poise and balance. Uncertainty and complexity will provide opportunities to those organizations that are connected through open architectures and open systems which will facilitate innovation and the ubiquity enabled by the internet of things - global internet presence, omni-channel supply chains, customer chains and distribution chains, without the constraints of location.
All four VUCA elements call for a particular attention to the present moment and the relationship taken to it by the different stakeholders involved. This view acknowledges the anthropological observation of ‘what is happening’ - exploring the situation, listening to the language, patterns and anything relevant to the choices I am about to make. The social constructionist view acknowledges the ‘what is happening to me’ - an empirical view from within the situation itself which is limited by default and usually charged with emotions. Technology today has shown the value of the possibility to see and hear each client’s preference and to shape and customize our services accordingly. Focusing on the present moment unhooks us from ‘what used to happen’ and from ‘what is going to happen’.
The perspective we take makes a great difference to how we present and position ourselves (our organization) in a situation (our market). The VUCA elements are a set of lenses for gathering relevant information useful for profitably navigating through upheaval. The VUCA responses - velocity, ubiquity, connectivity and agility are a set of capabilities that will help us turn threat into opportunity.
For those who believe things will go back to normal, here are some questions to wrestle with:
Is where I am, more important than where I am going?
Will the sense I gave to where I have been, help me go to where I want to go?
How does the knowledge that the only moment that exists is now, affect my behavior?