What is VUCA environment and how it affects the strategic management of companies?

The times are constantly changing, and in the 21st century, things seem to be changing even faster. Businesses face moments of total fear of the unknown and part of starting a new company means having to take some risks and/or a potential leap of faith. Regardless, there is a terminology for the hardships and difficulties companies, employees, and even leaders face nowadays. It is called VUCA and it stands for volatility, uncertainty, complexity, and ambiguity. These are general aspects, but they could prove to be daunting, especially in a fast paced, constantly evolving business environment.

How can VUCA environment affect a company?

 

Things like inflation and new market ventures are completely unexpected for a company and could come entirely out of left field. For example, some companies like Dollar Tree have to raise their prices in order to accommodate for the ongoing inflation of prices. This situation describes volatility perfectly, and it is up to a competent leader to adapt and evolve beyond the hardships. In a similar vein, such changes, as aforementioned, could come out of nowhere and blindside every aspect of the business. That uncertainty is a major part of VUCA as well.

 

Navigating things like that kind of change could prove difficult, but not entirely impossible. Making these tough decisions is what many would consider to be complexity. The intricacies of having to adapt to an ever-changing world, or let go of an employee who just isn't putting enough in anymore. While oftentimes seeming cruel, these are the moments in the life of a business that determine the future of it as a whole. It is called complexity for a reason! Similarly to uncertainty, there is also ambiguity. Where uncertainty is fueled by total mysteries of unknown hardships one may face, ambiguity is total ignorance and blindness in relation to the aspect of the business world someone is a part of.

 

Ways to combat VUCA environment

While it may seem dire, there are many ways to combat VUCA within the business environment. Many of the aspects of VUCA require a form of blindness and risk taking, but a competent leader could manage to accomplish this. Management goes by the wayside many times in a business when VUCA is encountered and could throw off even the most prepared of leaders and employees as well. VUCA, however, is nothing more than a general list of terms that people may encounter during the lifespan of a company or business venture. It can be strategically avoided and overcome with the right response and abilities to maintain a level head even in the most tiring of circumstances.

In order to properly combat VUCA, one first has to acknowledge its existence.  Many companies go out of their way to prove that they have no issues or complications and that they are immune to many of these hardships, but that is simply not the case. Everyone is susceptible to these issues. The key to overcoming them, however, is to simply break down each of the components of VUCA and how they apply to the current situation and company, and take it from there as to how to deal with the situations. For example, one must combat volatility with a bigger picture, uncertainty with information, complexity with clarity, and finally ambiguity with knowledge. These all may seem arbitrary, but placing them in front of you and allowing the possibilities to run through and evaluate the best course of action for them, may be the most instrumental aspect of any business and its potential growth.

We recommend that you continue updating yourself on the latest trends and acquire the right knowledge. If you want to know more about VUCA environment, we invite you to take a look at our Master's Degree in Marketing Management.