VUCA, so what?!
Do you already know VUCA? The acronym stands for the volatile, uncertain, complex and ambiguous world in which we live. If you don’t know VUCA yet, let me compliment you: I think you have missed little. However, if you have already come across VUCA (several times), I would like to describe in the following why you should rather concentrate on individual topics and find solutions to concrete challenges than deal with VUCA.
The beloved Buzzword
Aren’t buzzwords something great? I like buzzwords. They provide discussion material, offer room for interpretation and are a topic for many blog posts. Sometimes they create a kind of wave; a buzzword becomes a megabuzzword. “Agility” is such a megabuzzword. But it’s not just “mega” because it’s discussed and written about particularly frequently, it’s “mega” because it has a concrete impact on companies and the people in them. Organisations want to “agilely transform” themselves. Employees are allowed to develop an “agile mindset”. Suddenly processes in companies are questioned, hierarchies (in some places) demonized, new career paths outlined. Personal responsibility and self-fulfilment move more into focus every day.
Of course, there are also buzzwords that are often discussed and described, but have less impact. “Disruption” is one such word. Organisations are asked to think disruptively, to question their business model and to develop new, unprecedented world innovations. It is demanded to behave like Uber or Spotify. The permanent change, adaptation and reorientation is proclaimed. I have described my opinion in two articles:
I find the difference in the evaluation of individual buzzwords and the resulting aspects interesting. “We now have a newsroom with a Kanban board” a friend told me recently. “Almost everybody does that now.” Aha. “How’s it going with the board?” – “Not so good yet, postponing the projects isn’t going well yet.” Oh. If you don’t follow trends, you can get the impression that you’re not up to date. “That’s just a buzzword” I heard recently at an event and several participants nodded in agreement. I keep the buzzword I judged to myself, but it also seems to have the opposite effect: If you follow a trend, you’re falling for it. Bad luck. Not thinking. Loser.
From my point of view, VUCA is neither a megabuzword nor a nonstarter. There is volatility, uncertainty, complexity and ambiguity. In our business life, on a social and political level. And now? What does this mean for you, your profession and your tasks? I would like to take a look at the individual aspects of VUCA.
The V in VUCA: Volatility
Volatility is a term used to describe the extent of fluctuations within short periods of time. The business environment does not change continuously but by leaps and bounds, customers and suppliers change their behaviour patterns, new business models emerge overnight and existing ones are replaced”. The definition comes from our Smartpedia section respectively our VUCA page.
Of course this sounds comprehensible in itself. People and organisations are changing, markets are changing, and so are laws. Everything is in flux. But is that really the case? Stocks can behave volatilely, but often as a result of market psychology, rumours and algorithms. But companies? Customers and entire markets? How often do you change your fixed network provider? The electricity supplier, the water supplier, various insurance companies? Maybe you’ve had a contract in a gym for a long time, even though you don’t go? Yes, there are customers who are volatile and change their providers regularly. The majority of people do not. Not privately, not professionally. If there is a rumour in Germany that the legislator wants to bring about changes, it is almost immediately pointed out by associations that clear regulations are important for the business world, because only in this way can companies adapt their strategies. In other words, there are instances that ensure that the rules of our business world do not become too volatile.
But there are always new vendors with new solutions on the market! Car sharing with Drive Now, electric scooters from Lime, streaming from Netflix. Yes, markets are changing. Netflix was founded in 1997, but “only” started offering video-on-demand in 2007. Electric scooters were already allowed in San Francisco in 2012, in Germany they have been allowed since June 15, 2019. What is volatile or sudden about it?
The U in VUCA: Uncertainty
The U in VUCA is my personal favorite. It stands for uncertainty and indicates a state of lack of knowledge and obscurity. Companies do not know what will happen next. Forecasts become more difficult. Really? Isn’t practically everything uncertain? Isn’t that simply called “life”? And hasn’t that always been the case for companies?
I wasn’t there when the first fax machine was sold. Or the first telephone. How do you actually sell the first of a kind when two machines are needed for use? Should you develop a machine if you don’t know how to sell the first of its kind? For me this is “uncertainty”. Every innovation is an answer to uncertainty. It may not always be the right answer, but uncertainty is definitely nothing new. Uncertainty has always existed.
Of course, our markets are becoming more transparent, the number of potential competitors and innovations may increase; the challenge itself is not new. It has to be met with vision and method, in small steps like pretotyping or prototyping, and by observing customers and markets. It’s good if this means that corporations no longer need ten years to develop cars, but can now do so in three, four or five years. Do companies invest in development even though the product can be sold in three years at the earliest? Uncertainty doesn’t seem to be a big problem to me.
The C in VUCA: Complexity
Now it’s getting complex. Or complicated. Peter Addor, Swiss mathematician and systems thinker, already pointed out in an article in 2017 that volatility, uncertainty and ambiguity are effects of complexity. In other words, complexity is the cause of the three other concepts.¹ Complexity does not fit into the VUCA lettering.
We define complexity at VUCA as follows: “Complexity means that the effects of actions cannot be calculated in advance, nor can causes be traced back afterwards. The systems in which companies operate are too complex with their numerous parameters. Companies therefore try not to prematurely deduce causalities between cause and effect”.
The world may indeed be complex, but it is likely to be complicated. In my experience, people like to use the term “complex” when they mean “a lot”. “The task is so complex” does not mean that actions cannot be defined and effects cannot be understood, but that the amount of activities (felt or real) is too high. In this context, Mark Lambertz, digitisation expert and systems engineer, speaks of internal complexity, which should not be confused with real-life complexity.² In addition, he says that in practice it should be enough to clarify the “how” and “what”, as well as the “why”, “who”, “when” and “with what” in order to complete a task. And what happens if, as Peter Addor says, the side-effects of complexity also include uniqueness and originality? Then at the latest it’s time to take a look at ambiguity.
The A in VUCA: Ambiguity
Ambiguity is a great word. I had to look it up in the dictionary. Ambiguity stands for duplicity or twofoldness. Translated into the world of companies, developments and projects, this probably means that linear and causal explanations do not always work, that blueprints cannot be transferred, that best practices do not help. Somehow it sounds like complexity, doesn’t it? Peter Addor has already said that one is the result of the other. But have blueprints really ever worked for all companies in all situations in all markets? For example, does the best product always prevail on the market? No, definitely not. Are there products that were on the market too early and could not be sold, but a decade later became a global success? Sure. So what is so new and great about the word ambiguity – besides the fact that it is now part of the active vocabulary? From my point of view: nothing.
Competences in VUCA
I suppose you’ve already understood what I’m getting at. Yes, we live in a VUCA world. The world has always been VUCA. Long before this acronym existed. Still, I’m not quite finished yet. I would like to go into some of the competences that are often demanded in the context of VUCA. Tanmay Vora, an author who likes to write about “Leadership, Learning and Change”, listed twelve of these competences in 2015:³
- Develop an Adaptive Mindset.
Develop an adaptive approach, open up to new ideas and break new ground.
- Have a Vision.
Develop a vision that simultaneously serves as a force and orientation for decisions and actions.
- Embrace Abundance Mindset.
Think strategically and with foresight, without losing sight of current reality.
- Weave Ecosystems for Human Engagement.
Create an ecosystem for human engagement in which trust is possible and values are lived.
- Anticipate and Create Change.
Use your foresight, recognise challenges early on and drive change before you are driven by them.
As a leader, you can only be successful if your personal vision and values overlap with the vision and values of the company.
For the remaining competencies, I will refrain from further explanations.
- Be an Agile Learner.
- Network and Collaborate.
- Relentlessly Focus on Customer.
- Develop People.
- Design for the Future.
- Constantly Clarify and Communicate.
I don’t know how you feel when you read such lists and statements. I find it very difficult to read this. Not only have I heard or read these kinds of demands countless times, the competencies are so general that they could easily appear with other buzzwords: The competencies in New Work, in Work 4.0, in Remote Work, in Digitisation – always fits, right? It is almost like a horoscope of replaceable concepts.
Head of Marketing, t2informatik GmbH
Michael Schenkel is a graduate business economist and is passionate about marketing. He has a certificate for excellent hiking characteristics, Odenwaldtour in classes 6a/6b and since 1984 the Seahorse. He likes to blog about requirements engineering, project management, stakeholders and marketing. And he will certainly be delighted if you meet him in the real world for a cup of coffee and a piece of cake or for a virtual get-together.