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What is VUCA? And why do these four letters help businesses handle complexity better?

Digital transformation is shaking the world. The four terms that VUCA stands for can help you lead the way amid the chaos. Read how:

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We live in a world full of ambiguity and uncertainty. Has that not always been the case? No: digital transformation is new and its disruptive powers are immense. This state of affairs has recently been called VUCA. Read on to discover how to make good decisions for the future in the VUCA world.

It seems that every area of life is becoming digital. Experts talk about disruption. The effects are evident in the workplace, in society and in social life. Change, uncertainty and conflict are everywhere. Digital ideas are destroying and eradicating once-successful products and markets from the industrial age. Businesses are under a lot of pressure to respond to these changes. Four letters describe this state of affairs: VUCA

VUCA defined: four dimensions of the present

The acronym VUCA is derived from these four terms:

  • Volatility: The world has become fleeting – there are anomalies, peaks and crises in the positive and negative sense.
    Question: What is that doing to us?
  • Uncertainty: Many things today are unknown and unsure.
    Question: What can we still rely on?
  • Complexity: Problems are often complex and not easy to solve. There are many interdependencies.
    Question: How can we change that?
  • Ambiguity: There are contradictions and equivocalities which we have to endure.
    Question: How can we remain able to act and pursue our aims despite our ambiguous surroundings?


Three well-known examples of disruptive business models belonging to digital companies are:
  1. In retail: online marketplace Amazon has assaulted the world of retail, and department stores like Karstadt and Hertie have gone bankrupt and vanished from the market.
  2. Mobility: ridesharing service Uber is forcing European taxi drivers out of the market and aims to take business away from delivery companies, ambulance services and couriers.
  3. Tourism: AirBnB is overrunning the hotel industry, paying no tax to local authorities and hurting the residential property market in attractive cities.

VUCA – from management training to the front line

The term VUCA first appeared in a management book in the middle of the 80s. The acronym describes an increasingly confusing environment. But it only gained widespread attraction when it was used by the American War College in its curriculum following the fall of the Wall in 1989.

This event and all the changes that followed instantly threw the military doctrine of the Cold War into question. After thirty years of constancy, the US armed forces needed a new strategy for a changed reality: what should we do now, and how? VUCA became the basis for leadership training courses that helped people remain capable of acting at every level.

Challenges of leadership amid digital transformation

The four terms volatility, uncertainty, complexity and ambiguity describe the nature of the VUCA environment in which we and our workforce have to act now and in the future. The topic on everyone’s lips is change in businesses. We need change management. Digital transformation is accelerating change and innovation cycles are becoming shorter. This is causing volatility.

Nobody can predict what anything is going to be like, or which start-up will destroy the which multinational next. Cause and effect can no longer be identified in the VUCA environment. We are making more misjudgements because we cannot resolve ambiguous signals. All this we have to endure.

Complexity is more than just complicated

Digital transformation has a new quality. We can no longer respond to the challenges of the present using the strategies of the past. There were complicated challenges back then, but we were able to surmount them by analysing them and concentrating on the essentials. Today’s complex processes cannot be reduced in that way without them breaking apart.

Agile organisations: a way to the future

Changing corporate culture is right at the top of the to-do list for businesses in the VUCA world. We have to respond more quickly to requirements, develop things more creatively and serve our customers better. To achieve this we will have to revise some of the belief systems that still persist in many organisations.

For instance: the belief that the boss knows everything. Today, everyone has to learn how to learn from each other and with each other. We need new leadership skills. Conventional departmental thinking makes us slow and prevents teams from feeling responsible together for the customer and their project.

'To lead people reliably through the VUCA age, managers need VUCA skills so that they can manage instabilities competently'

Melanie Vogel, VUCA expert

VUCA management as an answer to the VUCA world

Harvard Business School proposes the establishment of VUCA management as a leadership programme in these uncertain times. This will require authentic leaders with skills that business schools cannot teach, writes Bob Georges, the author of these four counterstrategies:

  • Vision: Define corporate values clearly as a response to volatility, hold to them, and include everyone.
  • Understanding: Understanding, listening and finding out as much as possible – from customers, staff and partners – helps to counteract uncertainty. In sales and in production. This means acquiring a 360° view of the business.
  • Courage: In complex worlds, you can think as long as you like about what is right and what is wrong, but the result will remain uncertain. Courage is required to make decisions quickly. Decisions feel risky, but they offer the opportunity to succeed in something new.
  • Adaptability: Long-term strategies risk being overtaken before they reach their destinations. Adaptability is enormously important in times of contradictory dynamics. Not just surviving challenging times but growing stronger is one of the capabilities that determine success in a VUCA world.

What does successful leadership in the VUCA world mean?

  • Being present – with all your workforce everywhere in the company
  • Listening well – being open to different, new and critical input
  • Learning yourself – building up a learning organisation
  • Being courageous – committing to initiating and managing change
  • Investing – helping your workforce become agile (tool set, skill set, mind set)
  • Giving everyone a clear understanding of the meaning of what they do
  • Visibly celebrating the small successes of transformation
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