What is the VUCA world?

Product Owner blog
Product Owner blog

Today, we live in the so-called “VUCA” world, which is an acronym for Volatility, Uncertainty, Complexity, and Ambiguity.

Bob Johansen, of the Institute for the Future, mentioned VUCA in the business world in his book „Leaders Make the Future“. He used it to explain the turbulent and unpredictable changes that are impacting organizations, and he stressed new skills, approaches, and behaviors are necessary to manage the four VUCA threats.

Volatile means a high level of instability and high dynamics of change. It involves a lot of unpredictable situations and resists our need for control. It is often perceived as negative, but it can also bring sudden positive changes. To overcome Volatility, create a clear vision of the future and then set your team members flexible goals that can be amended if necessary.

Uncertainty means a situation in which we do not have enough information to predict the result and do not know what impact our activity will cause. Then, we cannot properly plan the achievement of goals, because we do not know what will happen next, such as during the Covid-19 pandemic. In this case, it is important to listen, analyze and evaluate performance to understand the situation. The aim is to anticipate possible future threats and generate foresight to prepare your responses.

Complexity means a large number of parts that interact with each other, such as e.g. social groups or markets. In such systems, prediction and control are difficult, because a change in one variable can affect others unpredictably and create a completely unexpected response. Competitive advantage in complex systems requires the ability to sense, shape, and exploit new opportunities. Simply, continuous improvement is no longer enough. The best way is to react to complexity with clarity – communicate clearly with people and promote team collaboration.

Ambiguous means a lack of clarity on how to interpret the situation, because the information is incomplete or even contradictory. Because it is open to more than one interpretation, there is no obvious meaning. Context plays a key role and if the perspective changes, new information necessary for decision-making can be revealed. This can also be a source of innovation but requires a high level of creativity and observation skills to identify new ways of interpretation. If you want to counter Ambiguity to promote flexibility and adaptability – plan, but be prepared to adapt your plans.

Organizations, and people in general, are afraid of a “VUCA” environment because they feel they are losing control. If we can’t predict the future, if we don’t understand the situation or if we don’t know how it will affect us, we feel insecure.

Although the VUCA world seems difficult to escape, it is possible to manage your team and mitigate the risks and negative effects. Learn more about different management styles required, and adapted to the complex environment.