Following up on the previous article about complexity and VUCA (link), this article focuses on handling volatility, uncertainty, complexity and ambiguity in projects and programs. While change is nothing new, the current rate of volatility, uncertainty, complexity and ambiguity in society and in business is something that needs to taken into account in order to keep your organization able to fulfill its goals.
About the business environment
The business environment is an interplay of internal and external factors and actors influencing an organization’s situations and conditions. It involves partners, suppliers, competitors, owners, but also government, laws, technological developments, social and economic trends, and the market. All these aspects contribute to the turbulence we know as VUCA.
You have to have a clear and accurate view of the business environment to develop an awareness of your situation. Both overestimation and underestimation of VUCA can be a problem. Creating situational awareness of your business environment is a task of the entire organization. Project execitives and managers however should make it an ongoing project task to keep their awareness up to speed. Changes in the environment can have a big impact on the success of the project. And this needs to be managed.
Understanding the elements of VUCA
Each of the VUCA-elements provides a deeper insight in the VUCA of the business environment and thus helps to improve the behavior of groups and individuals in the organization. It is pivotal in repairing systemic failures, behavioral failures and ultimately it is pivotal in a continuous strategic realignment of the organization in order to stay highly competitive.
The VUCA elements:
- Volatility: The nature and dynamics of change and the nature and speed of change forces and change catalysts. The lack of stability and predictability. The rate of change.
- Uncertainty: The lack of predictability, the prospects for surprise, and the sense of awareness and understanding of issues and events. Uncertainty is a lack of clarity to interpret a situation and to draw conclusions about challenges and opportunities from it.
- Complexity: The multiplex of forces, the confounding of issues, no cause-andeffect chain and confusion that surround an organization. The interconnectedness of factors and actors disrupts clear cut cause-and-effect patterns. To put it differently, complexity is an interplay of connected parts and variables that leads to different outputs for the same inputs.
- Ambiguity: The haziness of reality, the potential for misreads, and the mixed meanings of conditions; cause-and-effect confusion. Relationships of cause and effect are completely unclear and the meaning of a situation can not definitively be resolved through linear processes. Ambiguity and uncertainty should not be confused. While uncertainty lacks clarity, ambiguity has specific and distinct (albeit varying) permittable interpretations. Evaluations by different people will lead to different and equally correct interpretations and answers.
In their book “FOCUSED, FAST & FLEXIBLE: Creating Agility Advantage in a VUCA World”, Nick Horney and Tom O’Shea present a way to rate the VUCA-disruption in your organization. They came up with a scale from one to five:
- Level 1 – Calm waters
- Level 2 – Mostly calm, with occasional choppiness
- Level 3 – Occasional calmness with moderate choppiness normal
- Level 4 – Rapid, choppy turbulence normal; occasionally extreme
- Level 5 – Extreme, rapid and unpredictable; dangerous, chaotic
This rating should be done for each of the four elements. Both the past period and the next period should be rated. By doing this regularly a deeper understanding of VUCA is developed and the skill in rating will improve. Discrepancies between the predictive rating and the rating of the same period in hindsight can provide deeper insight into how periods are interpreted and predicted.
Agile & VUCA
Managing disruption and turbulence in your organization requires specific skills and methods. VUCA can not be managed by conventional tools such as extensive planning and bulky project plans. When confronted with volatility, uncertainty, complexity and ambiguity in your business enviroment, managers of projects and strategic programs need to embrace shorter feedback loops. They will also have to allow for failure, which is necessary to generate knowledge and insight, and create learning processes based on multidisciplinary collaboration, transparence, a strategic focus and healthy group dynamics. In short, both the leaders and team members, and the projects and strategic programs need to be agile. Agile methods and principles have the spirit that is best suited to deal with VUCA on a practical level.
In their book Nick Horney and Tom O’Shea also present a way a team’s (or organization’s) agile readiness. They came up with a scale from one to five:
- Level 1 – Not ready – very fragile here
- Level 2 – Have recognized factors but not ready
- Level 3 – Somewhat ready
- Level 4 – Mostly ready
- Level 5 – Team fully ready, willing and able to face these factors
This rating should also be done for each of the four elements, and for the same reasons and benefits. It can be part of the continuous learning proces.