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Great Leaders' Antidote to the VUCA World

leadership Mar 19, 2020

The English acronym VUCA is nowadays often used in connection with the ever faster digitization and disruption in the business world. Behind this are the four nouns volatility, uncertainty, complexity and ambiguity. These are intended to describe the challenges in today's business.

What does VUCA mean?

  • The first letter "V" stands for volatility.

What do we mean by volatility in this context? Volatility means that sudden, unforeseen things happen, for example natural disasters or economic crises. Although events happen unexpectedly, the causes and reasons for them are easy to understand and comprehend in retrospect. Good examples of this are the global financial and real estate crisis of 2008, and more recently, the Coronavirus-induced crisis now. Although the crisis is unexpected for most people, it is always explainable afterwards.

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  • The "U" in VUCA stands for uncertainty.

In uncertain situations, it is impossible to draw on past precedents or make forecasts for the future. We simply don't have the information we need to make a reliable judgement. For example, disruptive business models can quickly undermine traditional industries. Start-ups in particular attack entire industries with their products and services; nobody suspects anything, all of a sudden the new market participants are there and change the world overnight.

 

  • "C" stands for complexity.

Nowadays we have to deal with a multitude of decision factors that also depend on each other. People often overwhelm us with the wealth of information available. We then find it difficult to make informed decisions. We see this clearly, for example, with today's school leavers. In my time this was relatively clear for most people, school, Bundeswehr or civilian service and then study or training. Among other things, because there are so many possibilities today, 18-year-olds need a gap year first - and many become depressed because they don't know what to do with their lives.

 

  • "A" stands for ambiguity

By this we mean situations in which we have contradictory information. In times of "alternative facts" and "fake news" there is only very rarely clear information; we are dealing with a multitude of news sources that sell us their view of things as truth.

 

How can we meet VUCA?

How do we create an environment that involves all active generations of employees? How do we manage to give employees orientation and support in a constantly changing and increasingly complex world? We are allowed to face the challenges of the VUCA world. We are allowed to develop special qualities on the side of our employees, but above all on the side of our managers.

 

  • Volatility (Vision)

In order not only to survive in a volatile world, but to dominate the market, we must learn to think ahead and anticipate change. This requires more than a single view of the world - employees must be able to network effectively and work together. We should think and act in a future-oriented way. We are allowed to develop sustainable visions and communicate them clearly in order to make our employees curious about the future of the company. We should cultivate a climate that encourages our employees to spontaneously make their own decisions when the situation demands it.

 

  • Uncertainty (Understanding)

In uncertain times people need support and are allowed to understand what is happening around them. We need to create collaborative environments; environments where strong, reliable teams provide security and support decision-making, even in situations where there is no guarantee of success. Continuous learning is important because our employees increasingly need to understand complex interrelationships. Only in this way can you remain able to act. 

 

  • Complexity (Clarity)

Today's world has become very complex. As digitalization progresses, more and more data is available. In 2020, every person in the world will produce an average of 1.7 MB of data every second. We can take advantage of this data and make more decisions based on it. We may also create clear corporate structures for our employees and define competences, responsibilities and powers transparently.

Especially in our complex world, we as managers can communicate effectively, verbalize our decision-making processes and define the scope for action in order to give our employees the necessary clarity.

 

  • Ambiguity (Agility)

In an ambiguous environment, we should be able to stand the fact that things are not clear. As leaders we need resilience, tolerance of ambiguity but above all courage to engage in experiments. We can teach our employees start-up skills such as agility and a "fail-fast" mentality. With so-called MVP (Minimum Viable Products), for example, we have to test things out and see whether a given assumption proves to be true in practice. Perfectionism and the fear of mistakes are important obstacles to the development of a company.


Bottom Line

VUCA presents companies with major challenges, but it also offers leaders a significant opportunity to exert significantly more influence on organization development and create added value.  

Who, if not leaders of every management level, should accompany the corporate change and release the necessary energy for it?

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