Introduction into volatility, uncertainty, complexity and ambiguity in projects and programs and using it to your advantage
It is often said that today’s business environment is become increasingly fast changing and complex, and also that we need to adapt our way of doing business to this phenomenon. But what does this really mean? How can we become aware of any complexity and change that effects us?
Change is not new
In essence fast change and complexity is nothing new. The rise of the annual cycle of trading fairs in the Champagne region in Medieval France and the Flemish cities, for example, led to some profound changes in the way goods were traded and even to a change in the type of goods people would produce. After many decades of stable trading routes and practices, stability gave way to years of change. People had to continuously rethink what they produced, and how and where they traded it. Some farmers, craftsmen, traders and cities were better at adapting to this change than others. Consequently some new players rose to the top, other could consolidate their position, and some lost and faded into obscurity.
A different mode of change
What is different in the current economic environment, compared to medieval France and Flanders is the scale of information about the changes and also the speed of change. For consumers it is very easy to switch from one company to another. It is also very easy for people to compare products, services and prices and to rethink and change their buying behavior. For companies it is relatively easy to change from a local supplier to a supplier from another continent. Mass media and social media can make or break a brand or product in a matter of days. New technologies can radically change the way a consumer buys a product or even the way a consumer defines a product. And all these and other factors need to be taken into account, which leads to the problem of making sense of information overload. This is where VUCA enters the picture.
What is VUCA?
VUCA is an acronym coined by the US Army War College to deal with volatility, uncertainty, complexity and ambiguity in conditions and situations after the cold war. Since then it has slowly entered the world of business and government. It is particularly useful in dealing with questions of strategy, strategy implementation and strategic leadership. To put it differently, when an organization has to deal with matters that involve unknown aspects, fast changing environments, ambiguous signals or complexity, VUCA can help them navigate this complexity to accomplish their goals. VUCA helps to understand the playing field and how to deal with it. The VUCA-elements clarify boundaries, context and content of the business environment. It unravels the dynamics at work within the organization. It sets the stage for planning, managing and leading.
VUCA consists of four elements:
- Volatility: The nature and speed of change forces and change catalysts, the nature and dynamics of change;
- Uncertainty: Lack of predictability, high risk of surprise, unknown factors at play;
- Complexity: Cause-and effect are not knowable beforehand, numerous interacting forces at play, high risk of mixing up and confusing issues in the business environment;
- Ambiguity: Obscurity of the meaning of issues, haziness of reality, potential for misreads, confusion of cause and effect;
Satish, Usha and Siegfried Streufert in their 2006 paper “Strategic Management Simulations to Prepare for VUCAD Terrorism” for the Journal of Homeland Security added a fifth element. They added ‘D’ for delayed feedback and information flow.
Coping with constant change using VUCA
During the 70s, 80s and 90s there was also change going on, but somewhere in the 90s the pace of change seemed to pick up volatility, uncertainty, complexity and ambiguity. Compared to the current economic, geopolitical and social changes, the 70s, 80s and up to the mid 90s now seem fairly stable and transparent.
The constant change is really about the question of knowledge and of cause-and-effect. Do we have all the knowledge about the circumstances in question? Are all the cause-and-effect-loops knowable and known to us? There are situations in which certain cause-and-effect-loops might be at work, but if we can only know them in retrospect, then we must adapt our approach accordingly. And if the interplay of disrupting developments gets too big, then we are faced with a constant lack of knowledge. Extensive planning will be useless and we must adopt a more agile approach. We must seek to understand the turbulence at work in order to know how to cope with it. VUCA is in essence all about disruption of stability, predictability, clarity be it through absence or obscurity of cause-and-effect-loops or through absence or obscurity of knowledge about the current situation or development.
In future articles I will expand on the nature and use of VUCA. I will go into the relationship between VUCA and Agile. I also will describe it’s use in strategy formulation and in strategy implementation. And I will elaborate on the various ways it can be used in projects and programs.