How to Benefit From the VUCA World

Authors: Markus Peschl, Michal Matlon

At the heart of the traditional approach to strategy lies the assumption that by applying a set of powerful analytic tools, executives can predict the future of any business accurately enough to allow them to choose a clear strategic direction. In relatively stable businesses, that approach continues to work well. But it tends to break down when the environment is so uncertain that no amount of good analysis will allow them to predict the future.

Courtney, Kirkland, and Viguerie, 1997

In the previous blog post, we have looked at the definition of VUCA World and what it means for our organizations. We have explained how volatility, uncertainty, complexity, and ambiguousness characterize the economy today and what a wrong reaction to it can cause. This time around, we will take a look at the positive potential of the VUCA world and suggest how to benefit from it.

Questions for a VUCA audit

First, we need to create an assessment of our environment. Baran and Woznyj have developed a set of questions, making up a “VUCA audit”. These questions should be asked, discussed, and worked on by leaders and employees all across the organization regularly in various formats, such as team discussions, focus groups, informal conversations, or periodic surveys.

To get a sense of anticipated volatility, uncertainty, complexity, and ambiguity

• What might change quickly about the organization, industry, or market?
• Which changes in value systems, user/client preferences, or user behaviors can be observed?
• Which aspects of the organization or industry are unpredictable? Are we aware of it and how do we deal with this unpredictability?
• How is our work interconnected with or dependent upon other stakeholders?
• What are the networks we are engaged in? What are our roles and (causal) functions in these networks? In which ways do we depend on and/or can we influence the dynamics in these networks? 
• Where and how does our organization or industry lack clarity? Why? How could we change that?

To get a sense of your sensing and monitoring behaviors

• How might I stay in touch with trends in my organization, industry, or function?
• How often am I surprised by decisions or events, and why?
• Do I question and reflect on our organization’s strategy, premises, and purpose?
• What resources or relationships do I have or need to keep abreast of ongoing changes?
• How much time do I spend listening to others, inside and outside of my organization?

To get a sense of changes and trends inside the organization

• What do people talk about the most in meetings?
• What are the most disputed topics in our organization?
• What are the most important trends within our organization or workforce?
• What are the most common topics in informal conversations among coworkers?
• What are the key focal areas of our strategy documents and policies? Do they make sense to me and can I identify myself with them?
• What do the key leaders, both formal and informal, talk about the most?

To get a sense of changes and trends outside the organization

• What regulations or laws influence what we do and how likely are they to change? 
• What aspects of our clients or customers are changing concerning what we do and with what is changing in the market/environment?
• What are our competitors doing that we are not doing, and why?
• Which aspects of the industry could fundamentally influence our success?

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Creating a positive version of VUCA

To create organizations that can thrive in a VUCA world, we need to start looking at it as an opportunity and develop the necessary mindsets and skills to use it. Very often, whether as companies or a society, we are still in a mode of preparing ourselves for the world of yesterday, instead of appreciating the opportunities for a blooming future offered by a VUCA environment.

To do this, we need to turn VUCA on its head and reframe it in a positive light, so that:

• Volatility becomes Vision
• Uncertainty becomes Understanding
• Complexity becomes Clarity
• Ambiguity becomes Agility

The potential to foster a positive VUCA world – one based on Vision, Understanding, Clarity, and Agility rather than on the negative, reactive frame of the acronym, can best be reached through systems understanding that seeks to curate favorable conditions of living. So how could a positive version of the VUCA world look like? How could it guide us towards a thriving future?

Let vision take the place of volatility

Instead of trying to fight volatility and bring it under control, we should embrace the opportunities that are concealed in volatile dynamics. When change is a constant, the novelty lies in these unpredictable events. Identifying these elements of novelty and making sense of them leads to creating a vision as an image of the desired future.

If our vision is clear and coherent it can be communicated and shared. Laszlo suggests developing what he calls “protopian frames”. They are realistically optimistic scenarios based on the creation of desirable, feasible, and realizable images of the future, as well as solutions that lead to them. 

Such visions do not include precise goals but provide direction and orientation for an organization or society. There has to be some level of flexibility in goals to accommodate unforeseen changes. However, a clear vision equips an organization with a tool for navigating uncharted and rough terrain.

Answer uncertainty with understanding

One of the reasons why we fear uncertainty is that we lack knowledge and understanding of a certain situation or phenomenon. As a consequence, we cannot predict the future and the implications of our actions. Observing closely and listening carefully does not only bring about a more profound understanding of the current situation but also prepares us for the future.

We need to take extra time to listen more closely. We should look beyond what is directly accessible in our environment, user behaviors and values, our social systems, industry, and technology. Trying to make sense of what is happening around us on a deeper level and reflecting on our patterns of perception are all instruments leading to a deeper level of understanding. In most cases, this understanding will reduce the level of uncertainty and anxiety. It will bring forth alternative perspectives opening new ways of dealing with uncertain times.

React to Complexity With Clarity

Complexity is a fact of today’s world. We can neither close our eyes to it nor can we deny it. The way we can cope with complexity is clarity. When dealing with a complex situation, a leader doesn’t have to have a clear plan about how to do something, but they should be clear about the intent, the why, and the purpose.

As in most cases, a complex situation surpasses the cognitive capacities of a single person. It’s necessary to collaborate in teams for meeting the challenges of complexity. Therefore, a leader needs to be very clear in communicating and giving direction to enable efficient collaboration. If a team has a clear understanding of the intent or purpose, its members will be able to develop solutions to a complex situation.

Fight Ambiguity With Agility

If a situation is ambiguous, unclear, or can be interpreted in multiple ways, two capacities turn out to be central: agility and adaptability. Agility is a necessary individual and organizational capability for dealing with a VUCA world. It means the ability to sense, reflect, respond flexibly, make courageous decisions, and adapt to rapid change. Agility can be built on a foundation of smart experimentation, leading to the reduction of ambiguity. Two can be used to foster agility and deal with a VUCA environment:

• Get the beat and listen to the wisdom of the system. Listen and observe the system, before intervening. Try to understand the underlying patterns leading to the system’s behaviors and value its “inner intelligence”. This way, it’s possible to make use of the inner dynamics and forces that help the system to run itself sustainably.
• Communicate transparently. Provide frequent updates regarding strategy and its implications. Listen actively to team members and follow up on their ideas. Discuss why and how decisions are made and make plans visible.

Photo by Benjamin Davies on Unsplash