What is VUCA and how is the concept used in our chaotic times? Nili Goldfein, CEO at NGG Global Learning Solutions, presents VUCA and what it has to do with management and organizations, and proposes a refreshing interpretation of the concept
The term VUCA was first coined by the US military at the beginning of the 21st century. Military officers around the world began to use the term to describe the complexity of modern reality, in which the rules of engagement, intelligence, alliances and even how the enemy is defined, have changed drastically and are changing world order.
VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. The term is used to describe a chaotic, confounded, overloaded and unpredictable world in which leaders struggle to collect data, to observe, analyze and plan. In other words – management has become extremely difficult.
The business sector adopted this term after 9/11, and today it is commonly used in all organizational-business discourse.
As we near the end of the second decade of the 21st century, the business world has begun to address the rapid pace of change – political blocks change quickly; macro-economic permutations occur unexpectedly; hierarchal structures and authority collapse; technology develops at a highly accelerated pace – changing consumption habits, routines, and even who we are. Organizations employ five different generations at a time, including the millennials, the future generation, that challenge the character and preferences of their older and more traditional managers.
Through this sea of uncertainty, managers ponder their future. They are not only concerned for themselves, but also for their employees who follow them and expect to be led confidently and clearly towards their goals, objectives, achievements and a better future.
Coping with these contemporary challenges is no simple feat for most business organizations. Many administrations are paralyzed by their uncertainty, and many others fail to read the writing on the wall and rethink their processes. They continue to work as if classic business management tools such as market mapping-data analysis-five-year plans-deriving annual work plans (linear thinking) are unshakeable, which is of course, a mistake.
Researchers at leading universities in the USA work day and night to find solutions for this chaos (there is no such thing) and to provide clear guidelines (typical American) for managing in modern times. The concept of VUCA Prime was coined there, and attempts to reflect systemic solutions for the problem of leadership within the chaos by paraphrasing the original meaning of VUCA as follows:
V- Vision; U-Understanding; C-Clarity; A-Agility
Vision is what motivates people to identify with their company and what drives them to action. Defining goals properly and communicating them in a way that makes it clear to employees how their work contributes to bettering humanity, can improve their organizational engagement more than any promise of financial compensation.
Understanding is important in order for employees to realize why the company exists, how it works and develops, and to comprehend the part that each and every member of the organization plays in the big picture. This can minimize obscurity and confusion and can significantly enhance effectiveness and performance.
Clarity refers to the ability to see the big picture, the contexts and the challenges that the organization faces. This can reduce the sense of chaos and help increase the employees’ sense of competence, which will ultimately result in better performance.
Agility means quick responses to environmental, regulatory and other changes. This is an important skill in modern management because as Darwin said, “it is not the strongest of the species that survive… but the one most responsive to change”.
Each manager and each organization has its own unique VUCA experience. Therefore all managers and organizations have the right (and obligation) to define and understand the specific extent of confusion, complexity and uncertainty in their environments and to cope with their individual challenges by developing their own, customized VUCA Prime.
My experience with organizations and managers shows that the VUCA challenges faced by Israeli and global companies alike in this day and age can be reflected by changing the original meaning of VUCA to:
Vision | Unity (team work) | Customer (a customer-oriented business) | Adaptive
Vision – When the objectives of an organization are well-defined and well-communicated to the members of the organization is a conceptual, genuine way; when the story is told well and can hold water, both older and younger employees will become more engaged. Human nature drives us to seek altruistic reasons to get up in the morning and make a difference, and making a living is often not enough. This ancient human trait is even more pronounced in the younger generation. They may be spoiled, pampered and addicted to glowing screens, but they want to make a difference. It’s important to them.
Unity – Team work, interaction between teams, embracing diversity and the ability to work with many different types of people may be the greatest challenges in today’s world. Learning to work with the opposite gender, with members of other generations (being less critical of the Y generation), and with people from different cultures or with different personalities is fundamental for creating an excellent, efficient team.
Customer – Organizations must be customer-centric by reaching out to customers over multiple channels, by updating interfaces between the customers, and by understanding their preferences, needs and habits. Understanding what the customer really wants, what the customer needs and how to modify the system based on these entire new perceptions is a great challenge for most existing organizations because no matter how fast they change, they can never keep up.
Adaptive – In order for an organization/manager/perception to prepare for the future (which is already here), it must be able to make rapid changes and take calculated risks. It must have the courage to try new things, to fail (and get right back up), and make mistakes (and learn from those mistake and apologize when necessary), and most importantly – to realize that things have changed forever.
These components are the foundations for the new management theories. Organizations that will succeed in the next decades are those that consciously bear the cost of change and put theory into practice.