What does VUCA mean?

What does VUCA mean?
Published December 22, 2014

You might have heard the term VUCA quite a lot recently – but what exactly does it mean for you and your business?

Nigel Povah, chairman, chief executive and founder of a&dc, can help us get under the skin of this term – which stands for Volatility, Uncertainty, Complexity and Ambiguity.

Volatility

In the context of a VUCA world, this word means the world is changing at a very high and rapid rate.

According to Mr Povah, this has been known for many years and the idea that the world is changing rapidly is not new. However, he believes the world has not recognised the importance of this significantly.

Mr Povah put forward one graphic illustration of just how quickly the world is changing, presenting the scenario of a person undertaking a three-year university course.

“By the time they are graduating, many of the things they were taught in their first year won’t be true or relevant,” he said.

“This is quite scary. Some of that stuff has been superseded because of the pace of change. No longer is it long periods of time before these changes kick in. They’re happening far, far quicker than ever before.”

If you think about this in terms of the operating environment for businesses, then it is clear that they can’t afford to rest on their laurels. It’s equally clear that for these firms to thrive, they need to be led by people capable of both identifying and responding effectively to change.

“But when you look at the other three words in the VUCA definition, they add to the confusion, you could say,” Mr Povah stated.

Uncertainty

The world is full of uncertainty, which means there is a lack of clarity about both the present and the future.

As a result, business leaders can’t always understand why something has happened while predicting with any certainty what is yet to come can be even more difficult.

“This uncertainty makes the world a very difficult place to operate in effectively,” Mr Povah commented.

The challenge for anyone who is heading up a business, therefore, is to both recognise this state of affairs and respond to it effectively.

Complexity

If a problem arises, business leaders don’t always find it easy to go back to why it occurred and identify its root cause.

However, this causes a big problem for their firms. After all, if they don’t understand what gave rise to a particular problem, then it becomes even more challenging to be able to predict what’s going to happen in the future.

Mr Povah believes that being able to recognise the fact that numerous and complex circumstances contribute to various situations is an essential attribute for a leader.

“Many of the problems that occur in the world now can be explained by saying it wasn’t one event that caused this problem to occur,” he remarked.

“It was three or four different events that when combined together gave rise to this problem.”

Ambiguity

The final word of the VUCA acronym means that the likely outcomes of various scenarios and situations are not entirely clear.

So even if something does happen, it’s hard to ascertain what exactly the consequences of that event might be and what it really means.

“All of this bundled together just makes the world a very chaotic and confusing place,” Mr Povah said.

And this is the environment in which business leaders need to be equipped to deal with every day of their working lives.

    Read more in Leadership & Management Development (LIVED)