VUCA is a concept that originated with students at the U.S. Army War College to describe the volatility, uncertainty, complexity, and ambiguity of the world after the Cold War. And now, the concept is gaining new relevance to characterise the current macro-economic environment and the leadership required to navigate it successfully.
Unpredictable events happening outside an organization can be negative or positive, but either present greater VUCA, which makes it more difficult for leaders (or asset managers) to make decisions. An example of positive complexity is a product going viral and becoming an internet sensation. An example of negative complexity is how the hopelessness of a Tunisian fruit vendor led to Brexit.
On December 17, 2010, Mohamed Bouazizi, a young fruit vendor in Tunisia, was cited for not having a permit to sell produce. The police attempted to extort the equivalent of seven dollars from him, which was more than he could hope to make in a single day. In despair, with no other way to protest, he doused himself with gasoline in front of the municipality building and struck a match, igniting himself—and the frustration of Arab youth. People around him took pictures and videos of this incident, and the news rapidly went viral on social media. His plight resonated with a massive number of people, inciting huge demonstrations and riots. Twenty-eight days after Mohamed’s self-immolation, Tunisian president Zine El Abidine Ben Ali fled to Saudi Arabia, stepping down after 23 years in power; and so began the Arab Spring. When the Syrian people rose up against Bashar al-Assad, instead of stepping down, like many of his counterparts in other Arab countries, he led his country into civil war, producing millions of refugees. These refugees poured into Europe and Britain, seeking safety and opportunity. The growing public discontent about these refugees, compounded by other complicated factors such as financial disparity among the nations in the European Union and resulting burdens on bigger, healthier countries such as the United Kingdom, led to the Brexit referendum.
In the past few months, trillions of euro's of wealth vanished in equity markets around the world in what is called the biggest sell-off in years. Never could the British voting public, or perhaps anyone in the world, have imagined that such an outcome began when a fruit vendor set himself on fire in Tunisia six years earlier.
This chain of events shows how complex the world is today. Unpredictability is itself a hallmark characteristic of complexity. The good news is that negative complexity can, in fact, be harnessed to create positive complexity, because the underlying principles that govern both are the same. The sad news is that very few organizations are prepared to operate in this higher level of complexity.
Here are some things any organization can do now to start the transition:
- Move from hierarchy to self-organization. Push decisions down to the edge of the organization, where information is the freshest and most salient: the cash register, the production line, the call center, and sales reps.
- Move from protecting information to democratization of information. To empower employees to make decisions, make communication frictionless. Conduct weekly all-hands meetings. Sure, some might have to stay up late or get up early for global companies, but the gain of getting the information straight from the horse’s mouth is well worth it.
- Speed up interactions. Accelerate the speed of interaction as much as possible. In the VUCA age, speed matters more than perfection. Set the expectation for everyone to answer emails within a couple of hours for quick ones and by the end of the day for long ones.
- Use simple rules to make quick decisions, rather than perfect analyses.