VUCA — A Holistic Explanation

Standing for volatility, uncertainty, complexity and ambiguity, the acronym VUCA was once used by US Army War College to describe the unstable world after the end of the Cold War. Then shortly after Agile Manifesto was published at the dawn of the 21st century, VUCA began to be fervently embraced in strategic management discussions and became a practical code for awareness and readiness in a wide range of organizations.

To have a better understanding of the term, we need a holistic view that’s beyond business boundary and anatomize VUCA in an all-encompassing world taking into account the changes in all spheres of life, such as technological advancement, political turmoil, global warming, generational divergence, and more. These global shifts are interconnected in a dynamic manner, and together, they are reshaping our world into a crazy one featured by four prominent elements — volatility, uncertainty, complexity, and ambiguity.

· Complexity refers to the multiple interconnected factors of our environment, all of which must be taken into consideration in decision makings. The more factors there are, the more testing it is to fully analyze the environment and come to rational conclusions. For example, global warming is an extremely complex issue to tackle, since it requires high level of global collaboration from all societies. The sheer number of societies, organizations, and people involved, the variable levels of commitment they can make, as well as the various degrees of conflict of interest at stake are all part of the interdependent factors that contribute to the complexity of the problem. So are humanitarian crises in areas like Latin America and Middle East, each one caused by different factors and demanding local, national and international levels of collaboration to find the best solution.

· Volatility refers to the high rate of changes in the current dynamic world. The more volatile the environment is, the quicker the reactions to the changes need to be in order to adapt. The most typical example is technological advancement leading to rapid shifts in all industries that are reflected in fluctuations in demand and turbulences in markets. Nowadays, we’re all accustomed to seeing hundreds and thousands of retail stores forced to close by online shopping, with most of the victims being previously renowned companies and brands, like Gap, Forever 21, Kmart, and Sears, etc. — a perfect demonstration of disruption brought by technologies.

· Ambiguity refers to a lack of clarity about how to interpret the unknown situation due to incomplete, inaccurate, or even contradicting information. The more ambiguous the situation is, the harder to understand it. Brexit is a result of ambiguity — only slightly more than half of the British people participated in the 2016 referendum voted for leaving EU, probably not based on a holistic view of EU at large, nor a clear understanding of the possible outcomes of this grave decision. The UK is dealing with something that’s never happened and its future is obscured by blurred visions.

· Uncertainty refers to people’s inability to understand what’s going on due to lack of knowledge of decision ramifications. Although the basic cause and effect of the situation are known, it’s still a highly taxing task to predict the future with the absence of other critical information. The US-China trade war and ISIS threat are both so full of uncertainties that the outcomes are near impossible to anticipate. Who will become the next leaders of the two countries and what political stance will they adopt? With all the US troops withdrawn from Syrian Democratic Forces in Dec. 2018, will the Global Coalition to Defeat ISIS continue to make enough commitment in fulfilling its original purpose?

Rather than standing alone, these four elements almost always overlap and reinforce each other with great enthusiasm to render the present more obfuscated and the future more unforeseeable. For instance, global warming is as ambiguous as complex due to the contradicting arguments about its causes and consequences. Facing uncertainties of environmental conditions, younger generations are more driven than the elderly to take proactive measures for a better future, which triggered the generational warfare that not only shows no sign of abating but also gets intensified by bleak financial prospects caused by political and economic volatilities, for which baby boomers are again to blame — as believed by the youngsters … The analysis can go on and on, which will eventually link the entire set of global events into one astronomical situation that exudes complexity, volatility, ambiguity, and uncertainty all at once, as illustrated in the fuzzy clouds below that portray today’s relentlessly shifting world, be it about business or general life:

Related article:

The Moral of Agile You Need to Know

My book:

Agile Leadership Explained: We Can All Be Agile Leaders and Change the World Together!

Sources:

Sun, M. (2020). Agile Leadership Explained: We Can All Be Agile Leaders and Change the World Together! Amazon. https://www.amazon.com/Agile-Leadership-Explained-Leaders-Together-ebook/dp/B084GB85G2/ref=sr_1_1?crid=245ICODFZCEDD&keywords=agile+leadership+explained&qid=1653488880&s=digital-text&sprefix=agile+leadership+explained%2Cdigital-text%2C86&sr=1-1

Wikipedia. (Sep. 2022). Volatility, uncertainty, complexity and ambiguity. https://en.wikipedia.org/wiki/Volatility,_uncertainty,_complexity_and_ambiguity

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Maggie Sun

MBA, certified agile coach and experienced strategy analyst, specializing in business agility, agile leadership, Beyond Budgeting, and general management.