VUCA turns 34…

Suddenly the world is full of surprises. Switch on the news, and it’s another unprecedented change story. Disruption seems to be everywhere, and the acronym VUCA (used to describe conditions of volatility, uncertainty, complexity and ambiguity) regularly features in business meetings and management speak.

Admittedly, I was a little surprised to learn that the term VUCA was first used in 1987, long before our world got shaken up by the pandemic, climate change concerns, fake news and social media. Can you remember what the world was like in 1987? I don’t think I’d met anyone who owned a mobile phone, and I hadn’t yet heard of this thing called the internet.

But 34 years ago, we started to become aware that increasing levels of VUCA would require us to respond to our world in new ways. Since then, globalisation and tech advances have drastically changed the interconnectedness and pace of our lives and businesses. 

And while we might be fatigued by hearing about yet another unprecedented event, our VUCA world does bring about some exciting new challenges and opportunities.

A VUCA world demands from us a different approach to strategic leadership and a greater contribution from individuals at all levels of the organisation.

A shift from efficiency to adaptivity

In the context of our industrial age past, our organisations used to gain their competitive advantage by leveraging scale. A focus on efficiency and rigorous, reductionist optimisation and standardisation allowed our organisations to deliver high-quality goods and services at low cost. And it’s an advantage we could rely on, provided the world didn’t change very fast.

In the context of a VUCA world, however, we require responsive organisations. Our ability to react fast to changes in the environment is critical for organisations to maintain a competitive edge. Today, strategy needs to evolve from resisting complexity to working with it.

Leaders can no longer rely on knowledge that they have acquired in the past. A VUCA world forces responses beyond our current know-how. Leadership development, therefore, needs to focus on developing the capacity for adaptive leadership. It’s about giving leaders an opportunity to practice their responses to unexpected events in a risk-free space and learn from mistakes in a simulated version of reality. Leaders need a chance to test their assumptions against a variety of possible futures.

When we have the skillsets that allow us to understand how systems behave and how our choices influence them, we are less likely to be caught off-guard. We become more skilled at recognising opportunities and threats, faster at responding to them, and more confident in our ability to make good decisions.

Here are some questions to ponder:

• What kind of future events are likely to impact your business over the next couple of years?  

• What kind of scenarios would be useful to test in a simulated world?

• How much time do your leaders spend practising decision-making in a risk-free space?