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Wherever we look around us, we find claims and concerns that the world is increasingly getting out of control. Whether it is the business press, the media more generally, or our personal conversations, we are witnessing an increased feeling of uncertainty, turbulence, and change. This feeling has recently culminated in the notion of ‘VUCA’, the idea that the world has become unprecedentedly volatile, uncertain, complex and ambiguous (see here for a brief explanation). While a full assessment of whether this idea is correct is out of the scope this article, it is useful to briefly review it and not take it just for granted.
On the one hand, it seems obvious. Through digitalization, big data, artificial intelligence, robotization, (de)globalization, terrorism, financial crises, climate change and global shifts in power, we feel an increased volatility, uncertainty, complexity, and ambiguity in the world around us. On the other hand, though, such feelings are as old as mankind and we can question whether our situation today is more VUCA than during the Black Death, World Wars I and II or when we discovered that the earth was neither flat nor the center of the universe.
It is informative in this respect to compare current claims and concerns to older ones. If we compare, for example, Peter Hinssen’s “New Normal“ from 2010 to Manuel Castells’ “Rise Of The Network Society“ from 1996, the observed effects of digitalization on our world – increased complexity, dynamism, connectedness, and so on – are strikingly similar, with nearly 25 years in between.
We can also look at some of the early issues of strategic management’s oldest scientific journal, Long Range Planning. There we find papers with titles such as “Strategic Management: A New Managerial Concept For An Era Of Rapid Change” (1971), “Defence Planning: The Uncertainty Factor” (1971), and “Planning In A State Of Turbulence” (1977). This is more than forty years ago and as these titles suggest, VUCA was experienced then as well.
The fact that VUCA claims are of all ages doesn’t automatically imply that they are false or irrelevant. It is quite likely that the speed of change in many industries is much faster now than ten or twenty years ago. Enabled by (digital) technology and driven by changing customer needs, this increased volatility is real for many organizations. And yes, due to greater variety in supply and demand, increased (online) connectedness between people and between organizations, and increased globalization, the complexity of doing business has probably increased too.
However, due to technological enhancements, we have also become much more capable of dealing with this increased volatility and complexity. Computing power and speed, the omnipresence of information, the development of complex algorithms, artificial intelligence and the digital connectedness of the world, enable us to make dramatically more complex analyses and respond dramatically faster than even a decade ago. Thus, even though volatility and complexity probably have increased, our increased ability to deal with them does not directly mean that this has made doing business also more difficult.
While volatility and complexity can be established and measured quite objectively, uncertainty and ambiguity are more of a perceptual nature. In various definitions, the latter two are even proposed to be a result of the former two: the more volatile and complex a situation, the more uncertain and ambiguous we perceive it. This means that whether we experience the world is more uncertain and ambiguous, depends to a large extent on our ability to deal with its volatility and complexity.
The fact that uncertainty and ambiguity are largely in the eye of the beholder, points us at another interesting question about VUCA: who is it that experiences the world as more VUCA? My experiences in executive MBA teaching and consulting is that this perception is quite age-dependent and something particularly found at managers above fifty. This is supported by psychological research that shows, for example, that the older we get, the quicker time seems to pass by and the harder we find it to cope with the changes around us.
Another important question is whether the four elements of VUCA reflect on-going, fluctuating, gradual developments or whether we now witness a dramatic increase in all four of them. In other words, are the changes we feel just more of the same, or a break with the past? The latter is often suggested. This is understandable. It is more dramatic and makes for better headlines. But the first seems much more likely: that VUCA represents four continuously varying factors that increase and decrease over time, dependent on which part of the world and which industry you are in.
If we leave alone the question whether or not the world as a whole has become more VUCA than ever before, we can observe that most industries, at some point in time, do have VUCA characteristics. However, most industries are not VUCA all the time, and very often also not to an extreme degree. Rather, they typically go through disruptive phases alternating with more stable periods where even the disruptive periods are often spread over a couple of years. Furthermore, companies may have a diverse portfolio of products and services, some of which in markets that are VUCA and some in markets that are relatively stable, predictable, simple and clear.
From this quick review of the VUCA idea, we can thus take that the world might indeed be VUCA. But at the same time, this was also the case ten, twenty, or even fifty years ago. Furthermore, many aspects of business might not be so sensitive to the VUCA-ness of the world and companies often have portfolios of products in markets with different degrees of VUCA. Finally, the same technological advancements that cause VUCA, also help us to deal with it better than ever before.
So, is the world more VUCA than ever before? It just depends on how, where and when you look and who is looking.
January 4, 2019 at 07:31AM
Forbes – Entrepreneurs