Nick Walsh explores the leadership theory of VUCA and how it might apply during the current pandemic…
What is VUCA?
First used in 1987, and based on the leadership theories of Warren Bennis and Burt Nanus, VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. It was the response of the US Army War College to the collapse of the USSR in the early 1990s. Suddenly, there was no longer the only enemy, resulting in new ways of seeing and reacting.
Since the early 2000s, it has been applied increasingly to strategic thinking and risk management across a wide range of industries. VUCA brings together four discrete challenges that demand four separate counters.
Volatility refers to the speed of change in an industry, market or the world in general. It is associated with fluctuations in demand, turbulence and short time to markets and it is well-documented in the literature on industry dynamism. The more volatile the world is, the more and faster things change. Change is rapid and unpredictable.
Uncertainty refers to the extent to which we can confidently predict the future. Part of uncertainty is perceived and associated with people’s inability to understand what is going on. Uncertainty, though, is also a more objective characteristic of an environment. Truly uncertain environments are those that don’t allow any prediction, also not on a statistical basis. The more uncertain the world is, the harder it is to predict. The present is unclear and the future uncertain.
Complexity refers to the number of factors that we need to take into account, their variety and the relationships between them. The more factors, the greater their variety and the more they are interconnected, the more complex an environment is. Under high complexity, it is impossible to fully analyse the environment and come to rational conclusions. The more complex the world is, the harder it is to analyse. Many different factors come in to play with the potential to cause confusion.
Ambiguity refers to a lack of clarity about how to interpret something. A situation is ambiguous, for example, when information is incomplete, contradicting or too inaccurate to draw clear conclusions. More generally it refers to fuzziness and vagueness in ideas and terminology. The more ambiguous the world is, the harder it is to interpret. There is a lack of clarity or awareness about situations.
How does VUCA apply to me?
Bob Johansen, of the Institute for the Future, adapted VUCA for the business world in his 2009 book, Leaders Make the Future. He used it to reflect the turbulent and unpredictable forces of change that could affect organisations, and he argued that you need new skills, approaches and behaviours to manage in the face of the four VUCA threats.
VUCA represents a set of challenges that individuals, teams, managers, and organisations in affected industries all have to face. Individually, these challenges can be significant, but they can be formidable when they’re combined.
How do I lead using VUCA?
In his book, Johansen proposes a framework that you can use to respond to VUCA threats, called VUCA Prime.
Accept and embrace change as a constant, unpredictable feature of your working environment. Don’t resist it.
Create a strong, compelling statement of team objectives and values, and develop a clear, shared vision of the future. Make sure that you set your team members flexible goals that you can amend when necessary. This allows them to navigate unsettled, unfamiliar situations, and react quickly to changes.
Meet uncertainty with understanding
Pause to listen and look around. This can help you understand and develop new ways of thinking and acting in response to VUCA’s elements. Make investing in, analysing and interpreting business and competitive intelligence a priority, so that you don’t fall behind. Stay up-to-date with industry news, and listen carefully to your customers to find out what they want.
Review and evaluate your performance. Consider what you did well, what came as a surprise, and what you could do differently next time. Aim to anticipate possible future threats and devise likely responses.
React to complexity with clarity
Communicate clearly with your people. In complex situations, clearly expressed communications help them to understand your team’s or organisation’s direction. Develop teams and promote collaboration.
VUCA situations are often too complicated for one person to handle. So, build teams that can work effectively in a fast-paced, unpredictable environment.
Fight ambiguity with agility
Promote flexibility, adaptability and agility. Plan ahead, but build in contingency time and be prepared to alter your plans as events unfold. Hire, develop and promote people who thrive in VUCA environments. These people are likely collaborative, comfortable with ambiguity and change, and have complex thinking skills.
Encourage your people to think and work outside of their usual functional areas, to increase their knowledge and experience. Job rotation and cross training can be excellent ways to improve team agility. Lead your team members but don’t dictate to or control them. Develop a collaborative environment, and work hard to build consensus. Encourage debate, dissent and participation from everyone.
Reward team members who demonstrate vision, understanding, clarity, and agility. Let your people see what kind of behaviour you value by highlighting innovations and calculated risk-taking moves.
Kevin Roberts of advertising agency Saatchi and Saatchi coined this alternative VUCA definition: ‘Vibrant, unreal, crazy, and astounding’. This describes the kind of energetic culture that can give teams and organisations a creative, agile edge in uncertain times.