Thriving in the VUCA Environment (Brad Cousins Commentary)

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The acronym VUCA — volatility, uncertainty, complexity and ambiguity — was developed in the 1980s by the U.S. War College. In recent years it has emerged as a research stream surrounding digital disruption and design thinking, in part contributed by myself in a 2018 article in The Academy of Strategic Management Journal. With the emergence of COVID-19, the concept of VUCA has returned to the battlefield as a strategy against an invisible enemy that is destroying the economy and radically changing lives around the globe.

Volatility refers to large-scale change having no predictable pattern. In stable environments, organizations rely on experience, routines and existing business networks to acquire and democratize information necessary to make strategic decisions.

This is an Opinion

In volatile situations, these organizational structures lose their agility as leaders and managers become paralyzed by anxiety and grasp for quantitative statistical information as to the magnitude of the impact. Volatility has manifested itself through the COVID-19 crisis as a sudden, large-scale shock to the economy, with its full impact yet to be realized.

In a volatile situation, it is important to remember that quantitative analytic data is historical and will change as actions are undertaken to break trends. Quantitative data is like driving down the road looking in the rear-view mirror. It can give you a statistical prediction of the future, but it’s up to you to grab the wheel and set direction. Volatility is best overcome by exercising fear-setting, the act of visualizing the worst case of the future and living in that fear to develop strategic countermeasures.

Uncertainty is the lack of knowledge surrounding the frequency, duration and significance of change. In uncertain environments, cause and effect are known, but timing and impact are not. Uncertainty is resolved by investing in collecting, interpreting and sharing knowledge from outside existing networks.

At the onset of COVID-19, uncertainty was extremely high and manifested itself into a rule of thirds: one-third of the people were convinced of an apocalypse; one-third didn’t even know the issue existed; and one-third believed it was a hysterical overreaction. Until a consensus view of the issue can be reached, a rhetoric-based information battle ensues and polarized views become more entrenched.

Uncertainty is best navigated through social problem-solving often referred to as sensemaking. Sensemaking is the cognitive process where groups of people use their collective, divergent, qualitative insights and converge on a consensus meaning.

Complexity has been referred to as “the threshold of chaos” by management guru Peter Drucker. In complex environments, normally simple patterns are combined in a multitude of interconnections resulting in unreliable communication of information, lack of accountability and slow decision-making.

The COVID-19 environment feels like chaos seen in an apocalyptic sci-fi movie, where convoluted health, government and economic networks lack the coordinated messaging on which business leaders can base sound decisions. To simplify complex situations, organizations must create boundary spanning structures and knowledge-based strategies to gather outside information and communicate it quickly into the organization.

Ambiguity typically surrounds new situations and identifies a lack of understanding of cause and effect or a precedent on which to base predictions. Newness is the challenge of ambiguous situations with little quantitative and historical data on which to predict trends and no way to establish validity or value of information collected.

Early in the pandemic, leaders struggled to compare the coronavirus to other known infectious diseases such as the flu. It is human nature to rationalize the unknown cause and effect through the lens of what we do know, especially when the perspective of subject matter experts is hard to comprehend. A growth mindset based on a willingness to learn diverse information is necessary to overcome ambiguity and expand on belief structures.

As the battle continues, it is imperative that organizations move from surviving to a strategy of thriving.

Brad Cousins is the CEO of Brad Cousins & Co., CEO of Ingage Human Capital Strategies and a Vistage Chair in Little Rock.