Discover the Concept of VUCA
Doesn’t it seem like the world is evolving faster than ever? In a visionary speech at Davos in 2018, Canadian Prime Minister Justin Trudeau said, “The pace of change has never been this fast, yet it will never be this slow again.” This observation is truer now than it has ever been.
Let’s look at each element in more detail:
Volatility
Technology has brought rapid change to the business environment, and the pandemic has accelerated the speed of digitization and change. For example, Research by McKinsey has demonstrated that COVID-19 fundamentally changed the pace of business and the adoption of digital.
Uncertainty
Uncertainty feels as though it’s never far away right now. Highly unpredictable environments are combined with fast-changing markets to create new challenges for businesses and teams. For example, an analysis by strategy consultants Innosight shows that the average lifespan of the largest companies in the world was around 30-35 years in the 1970s. However, that is now forecast to reduce to 15-20 years in this decade.
Complexity
Technology generates many new opportunities for engaging customers, driving efficiencies in business operations, creating new business models, and enabling better decision-making. With these new possibilities, teams must navigate the increasing complexity generated by fragmentation in how customers interact with companies and changing customer behavior. This brings new urgency to transformation and the need to be more resilient to change. A survey of 2,500 enterprise decision makers worldwide by cloud communications platform Twilio found that 97% of respondents believed the pandemic sped up their company’s digital transformation.
Ambiguity
Knowing the best course of action in the face of growing volatility, uncertainty, and complexity, knowing can be hard. These factors mean the solutions and answers are not always obvious. As a result, businesses and teams must test and learn more so they can learn fast and find the best way forward.
Take a moment to consider how the VUCA world affected your work. Then, write your answer in the corresponding section of the log book (if you haven't yet, download it here).
Understand the Changing Context in Which Teams Operate Today
What is the impact of the VUCA world on the workplace?
The diagram below captures the impact of VUCA on workplaces. High volatility means that teams need to respond quickly to changes in contexts. Greater uncertainty, complexity, and ambiguity requires teams to experiment more and to be far more adaptive.
Imagine that you work at YourDailyPress, a large print-based magazine publisher in business since the 80s. What has changed for them in the last decade?
Here are three fundamental changes:
Changing customer contexts: Digital technology has dramatically increased how consumers can access content and given the reader more power. In the case of YourDailyPress, readers may find and access relevant content via mobile apps, social media, or a search engine.
Changing competitive contexts: More content is available than ever, and there are more ways to consume it, including reader apps, websites, and even social apps such as TikTok. Newcomers to the market have created new business models enabling competitors to grow swiftly.
Changing company contexts: The pandemic has meant that, like most businesses, the publisher has had to adapt to new ways of working such as hybrid in-person and remote working. Declining circulation and advertising revenues have generated a need to create new profit sources.
Sounds challenging, right? Such changes are happening across most of the work industries. In response to these ever-changing dynamics, organizations and teams must be far more responsive to change and more flexible in their strategy and execution.
Understand How Disruption Affects Markets
In Ernest Hemingway’s 1926 novel The Sun Also Rises, the character Mike Campbell is asked about his money troubles:
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
Why so?
Technology S-curves are an excellent illustration of this process. Google’s Director of Engineering, Ray Kurzweil, has described how new technologies typically begin with a slow adoption, followed by high growth and rapid development before the growth plateaus into maturity. As new technologies arrive, they create overlapping S-curves, shown in the diagram below:
The dilemma zone in the middle is the time when businesses and teams must adapt to the new world created by disruptive technology. However, there are two significant challenges involved with making this shift. Let’s return to YourDailyPress and see how disruption affects their business.
When they are at the top of their existing S-curve, the publisher has reached the full potential within the current technology (printing), so there is little reason to innovate. Yet this is precisely when they should explore new technologies and innovations to avoid disruption.
Moving from one technology S-curve (printing) to the next (digital) requires the publisher to break open existing assumptions around business models and ways of working and relearn new ways of thinking to capitalize on the possibilities of the new technology.
Your Turn!
How do you think YourDailyPress could have adapted to the digital world to avoid disruption?
✅ Solution: here are my suggestions.
Let’s Recap!
That was a lot of theory! But it’s important to understand why more adaptive approaches have become crucial to so many businesses. Here’s a summary of what you learned:
An increasingly VUCA world means that teams must respond quickly to change and use test-and-learn approaches to develop emergent, adaptive strategies.
Rapidly changing customer behaviors and expectations are combined with shifts in markets and evolving ways of working to create a perfect storm that frames the need for greater agility.
Nice work! Now let’s see what Agile is (that’s why you’re here, isn’t it?) and how it addresses the challenges discussed in this chapter. In the next chapter, you’ll learn the high-level aspects of Agile and discover the Agile Manifesto.
