Many people say we are now live in a ‘VUCA world’, meaning that the economy, politics, markets, industries, are more Volatile, Uncertain, Complex and Ambiguous than ever before. But what does this mean, and what are the implications for leadership? There have been massive shifts in technology led change in recent years, which many experts say has led to this ‘VUCA world.’ If you were to search for “VUCA” on Google there would be 3,320,000 search results. In 2015, an article reported that there were over 396,000 google search results for ‘VUCA’. So in five years there has been a 10x increase in the number of articles, blogs, books, about VUCA.
Over the years there have been a number of technology led innovations that have disrupted established players, for example:
- Netflix video streaming vs Blockbuster video DVDs
- ‘Clicks’ vs ‘Bricks’, led by Amazon vs high street shopping
- Electric cars, such as Tesla, Nissan Leaf
- Airbnb vs traditional hotels
- Uber vs local taxi firms, or taxi’s hailed in the street
- On-line holiday firms, such as Expedia vs the demise of Thomas Cook founded in 1841.
- And of course Google, Alexa, Siri, social media etc.
It is claimed that the acronym VUCA was first used in the 1980s. The U.S. Army War College is credited with introducing VUCA to describe the more Volatile, Uncertain, Complex and Ambiguous multilateral world resulting from the end of the Cold War. Over the years, the term VUCA has transferred to the business world, becoming embedded, with executives using VUCA as a new buzz word.
The acronym ‘VUCA’ may seem to have four synonyms, one the same as the other. But they are in fact distinct, with precise definitions:
- Volatility: relatively unstable change; information is available and the situation is understandable, but change is frequent and sometimes unpredictable.
- Uncertainty: lack of knowledge as to whether an event will have meaningful ramifications; cause and effect are understood, but it is unknown if an event will create significant change.
- Complexity: Many interconnected parts forming an elaborate network of information and procedures; often multiform and convoluted. But not necessarily involving change.
- Ambiguity: A lack of knowledge as to ‘the basic rules of the game’; cause and effect are not understood and there is no precedent for making predictions as to what to expect.
(From What a difference a word makes: Understanding threats to performance in a VUCA world, Nathan Bennett and G. James Lemoine, Organisational Performance, Business Horizons (2014) 57, 311 – 317).
In addition to VUCA, some commentators have said that we’re in the ‘fourth industrial revolution.’ But, hold on a moment, if this is the fourth, then we’ve already had three industrial revolutions (#1. steam mechanisation, #2. electrical mass production, #3. electronic and IT, and now #4. cyber systems and artificial intelligence). So haven’t we had chance to get used to this change? Based on this on-going change in which one industrial revolution leads to another, and as we’ve had 30 years to get used to the notion of VUCA, why are we increasingly unsettled, so much so that this produces 3 million Google search results for VUCA?
Technology has clearly fuelled and accelerated the VUCA world. Since the internet and World Wide Web was invented in the 1980s by Sir Tim Berners-Lee, there has been a momentous shift in the development of new technology. With the increasingly fast pace of technological development, it’s difficult to know what’s’ coming next. Previously change came at a manageable pace, there was an ‘evolution’ and gradual ‘emergence’. Now it seems that there is revolution after revolution, disruption followed by disruption. It is as if we don’t have time to adjust to the new normal; as soon as we adapt to technological change, things have moved on again and the new normal that was version 2.0 is now version 3.0!
A recent article in Forbes proposed that more Volatility and Complexity causes greater Uncertainty and Ambiguity. So maybe if we can deal with Volatility and Complexity, we will experience less Uncertainty and Ambiguity. Luckily the technology that has forged this rapid pace of change, can also be used to help us understand it. The increased computing power and algorithmic analysis can be used to help us manage Complexity, providing us with the ability to understand and respond.
But Uncertainty and Ambiguity seem to be more difficult to resolve. These relate to how we respond to the accelerating change, and our struggle to make sense of the world. Uncertainty and Ambiguity also calls into question the role of a ‘leader’ within organisations and for this a paradigm shift is needed. The old image of a leader is of a person who followers look up to for guidance and direction, leading from the front, based on their expertise and experience; “the leader has seen this before, and so will show us the way!”
However, this is further and further from the truth. The heroic leader, with all the answers, telling their followers what to do, is like lemmings jumping off a cliff. There is now the need for leaders to ask questions and listen. By asking questions and listening to the answers, leaders will be able to piece together an understanding of Uncertainty and Ambiguity. This requires a leadership mind set which starts from the position of humility and willingness to engage; “As a leader, I don’t know the answer, I’m no longer an expert. So I will talk to a wide variety of people, and by listening to their different ‘expert’ perspectives, I will understand.”
But will leaders be able to evolve to meet the changing demands of the 2020s? Or is the role of heroic leader, who is the expert, such an ingrained stereotype, that only a few of the most self-aware and open minded will be successful in making the change?
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