What is the Meaning of VUCA World? - theLivingCore

Looking back at 2020, there is no doubt that we live in a VUCA world. The acronym first coined in the army is now widely applied to business ... WhatistheMeaningofVUCAWorld?theLivingCore1.February20216.July2021Authors:MarkusPeschl&MichalMatlonPicture:DrewDauLookingbackat2020,thereisnodoubtthatweliveinaVUCAworld.Theacronymfirstcoinedinthearmyisnowwidelyappliedtobusinessandsociety.Itdescribesaworldwhichisvolatile,uncertain,complexandambiguous.Butwhatdothosetermsmean?Andhowdotheyaffectourorganizations?Volatile:HighlevelsofinstabilityandchangeVolatilitydescribesthespeedofchangeinacertainsituation.Forexample,stockmarketsarevolatile,withcompaniessometimeslosingeven30%oftheirvalueinamatterofdays.Samegoesforweather.Whensomethingisvolatile,it’sunstableandoftenunpredictable.Thesituationdoesn’thavetobecomplicatedortoodifficulttounderstand.Butthehigherthevolatility,thelowerisourabilitytopredictwhatcomesnext.Thismeansalotofrisk.Becauseofthat,volatilesituationsandenvironmentsareoftenseenasnegative.Theydefyourneedforcontrol.However,inthelongterm,volatilitybringsunexpectedopportunitiesforinnovation.Itbreaksupexistingpatternsandroutines,openingupthespacefornovelty.Uncertain:LackofknowledgeabouttheimpactofouractionsUncertaintyreferstoevents,inwhichwedon’thaveenoughinformationtopredicttheiroutcome.Sucheventsdon’thavetobevolatile.It’sjustthatwecan’tbecertainaboutwhatouractionswillcause.Inuncertainenvironments,wecan’tmakeproperplanstoachieveourgoals.Wedon’tunderstandwhat’shappeningandwhatwillhappennext. DuringtheCOVID-19pandemic,thegovernmentswereconstantlystrugglingtodecidewhatmeasurestoimplement.Becauseevenwiththehelpofadvancedcomputermodeling,itwasextremelydifficulttosay,whichofthemwillbeeffectiveandhowtheywillimpacttheeconomyandsocietyasawhole. Whatcanhelpustoorientourselvesduringuncertainsituationsisrecognizingtheirmultipleflavorsandunderstandinghowtodealwiththem:1.Aclearenoughfuture:insignificantuncertaintyInthesesituations,wecanalmostneglecttheambiguity.Wehaveenoughdatatosaywhatstepsweneedtotaketoachieveadesiredresult.Wecanusestandardtoolssuchasmarketresearchandbusinessplanningtodevelopastrategy.2.Alternativefutures:uncertaintyaboutwhichknownpaththefuturewilltakeHerewecandescribemultiplealternativesofwhatcouldhappen,butit’snoteasytotellwhichofthemwilltakeplace.Inbusinessinnovation,wecananalyzethegapsbetweendemandandexistingsolutionstofillthemup.Thechallengeistofillthisgapasquicklyandinexpensivelyaspossible.Thiscanbeseenasasearchandoptimizationprocesswhichputsourresourcestobetteruse.3.Discoveryinpossiblefutures:uncertaintyaboutunknown,butexistingpathsWeareconfrontedwitharangeofpossiblefutures,butwecan’texactlytellwhattheyare.Theoutcomesofouractionsareunpredictable.Insteadofsearchingforthebestexistingsolutions,wehavetofirstdiscoverthem.Demandalreadyexists,butsupplydoesn’t.Ortheotherwayaround–wealreadyhavethetechnology,butnodemandforit.Formanagersandemployees,thismeansbecomingopenandalert.Unexpectedsolutionsmightappearandtheyhavetobeexploredbytrialanderror.Thisusuallyleadstoanadaptationprocessknownasincrementalinnovation.4.Trueopennessandambiguityofthefuture:uncertaintyaboutfuturethatisnotonlyunknown,butalsounknowableDuringthehighestlevelsofuncertainty,neithertheproblem,northesolutionsareyetknown,andtheyareconstantlychanging.Fromadesignperspective,thisisknownasawickedproblem.Tomakeuseofsuchasituation,wehavetobringtheproblemandsolutionsintobeingthroughaco-creationprocess.Here,wecan’trelyonpreviousexperienceorbestpractices. Whethercreatingatransportationpolicyordigitizingyourorganization’sprojectmanagement,it’salmostimpossibletoimaginehowtheworldwilllookinthefuture.Wehavetoactivelyshapethefuturethroughradicalinnovationbygraspingwhatemergesandmakingitreal.Thesesituationsaretherealchallengeoftoday’sworld.Complex:AlargenumberofinteractionsleadstooverloadofinformationComplexsystemsconsistofalargenumberofpartsthatarehighlyinterconnectedandinteractingwitheachother.Thinkofahumanbrain,consistingofbillionsofneurons.Theseinteractionsleadtonon-linearandemergentbehaviors.Inmostcases,thecausesforthesebehaviorscan’tbefoundintheindividualpartsofthesystemandthereisnocentralentityplanningorcontrollingthem.Rather,controlisdistributedoverthesubsystemsandtheoverallsystem’sbehavioremergesintheprocess.Thesesystemsarecomplexandit’sveryhardtopredictorcontrolthem,evenifweunderstandtheirindividualparts.Wecan’tusereductionistthinkingtodescribethem.Livingandsocialsystems,suchasorganizationsandmarketsarecomplex.Changingasinglevariablecanimpactalltheothersunexpectedlyandcreatenewfeedbackloops.Confusionispartofthegame.Andactuallybeingfrightenedispartofthegame,too.Youhavetofigureouthowtoengagewiththatconfusion,engagewiththatfear,andflipthatintoanopportunity.BobJohansenWhenwepushcomplexsystemstoohard,theycanbreakdown.Wecanseethiswhenstockmarketscrash,climateundergoesirreversiblechangeorwhenlivingorganismsdie.Anychangeswithinthemcanbedisruptive,fastandunexpected.Butthiscanhaveapositiveside(forbusiness).Complexsystemscanbeasourceofinnovation.That’swhyit’simportanttoinvestintounderstandinganddesigningsuchsystemsthoughtfully.Whenacompanystrivestobefuture-orientedandinnovative,itneedstoproactivelyshapeitsnewniches(futuremarkets,newoffers).ItneedstobecomeanEnablingSpace,whichrequiresawholedifferentsetofprocesses,mindsets,skillsandspaces.Competitiveadvantageincomplexmarketsrequiresacapacitytosense,shapeandseizenewopportunities.Simplecontinuousimprovementofexistingcapabilitiesisnotenoughanymore.Ambiguous:LackofclarityabouthowtointerpretasituationAmbiguityisaboutinterpretingasituationthatisvague,obscure,incomplete,fuzzy,orevencontradictory.Duetobeingopentomorethanoneinterpretation,thereisalackofclarityinthesenseofnothavingoneobviousmeaning.Contextplaysacrucialroleinambiguity.Beingawareofourperspectiveandchangingitmightclarifywhat’shappening.Changingthecontextmightexposenewinformationnecessaryforreachinganinformeddecision. Similarlyascomplexity,ambiguitycanbeseenasasourceofnovelty:offeringmorethanoneinterpretation,wecanalwaysfindanunexpectedelementofnoveltyintheblurrinessofasituation.However,ittakesahighlevelofawareness,creativity,aswellascapabilitiesofobservationandreflectiontoidentifythesenovelwaysofinterpretingasituation.Whyit’simportanttoconsidertheVUCAworldWecanoftenseepeopleandorganizationsbeingafraidoftheVUCAenvironment.Itmakesusfeellikelosingcontrol.Ifwecan’tpredictthefuture,understandasituation,ordon’tknowhowtoinfluenceit,wefeelpowerless.Thisreactionisnatural.Ourbrainsdevelopedas“predictionmachines”,whichworkedwellinthepast–arelativelystableenvironment. ThecurrentVUCAworld,however,istheveryoppositeofstableandpredictable.Soitcausesconfusionandfear.Itcanleadtofeelingsofinsecurity,lossofmotivation,declineofcreativityanderosionoftrust.Incompanies,itparalyzesdecisionmaking,leadstoshort-termthinkingandengaginginactivitiesforthesakeofbeingactive.TheorganizationitselfturnsintoaVUCAenvironment.BeingconfrontedwithVUCAdynamicsrequirespersistentsensing,assessing,reflecting,sense-makingandmonitoringoftheexternalandinternalenvironment.Inourthinking,wecan’tlimitourselvestocompetitors,ourownindustry,usersorgovernmentregulations.Wehavetoobservechangesinvaluesystems,socialandpoliticalcontexts,ortechnologicaldevelopments. Acompanyhastodevelop“senseorgans”andcapacitiesofbeinghighlyawareandsensitivetosuchchangesthatgofarbeyondclassicfieldsofcorporateanalyticprocesses.Thisisundoubtedlyadifficulttask.However,companieswhichmanagetodevelopthesecapabilitieswillhaveastrongadvantageinthefieldofbeingfuture-readyandradicallyinnovative.TheywillbeabletoharnessthepotentialsoftheVUCAworld.SubscribetoournewsletterGetspecialinsightsonthelatestdevelopmentsfromus.Leavethisfieldemptyifyou’rehuman:RelatedArticles11.April2017Whyasystemsthinkingperspectiveoncognitionmattersforinnovationandknowledgecreation30.September2016DesigningEvents8.April2019Labor-Impuls-Forum:Worksmarter–notharder