4 Volatility, uncertainty, complexity and ambiguity
In our overview of the environment so far we have emphasised a number of features of turbulence and uncertainty. Most notably, we earlier referred to the acronym of VUCA. In their Harvard Business Review article, ‘What VUCA really means for you’, Bennett and Lemoine (2014) suggest that this level of complexity is often used to excuse the hard work of planning. However, the authors contend that one can prepare for a VUCA world. They reason that the four elements have different attributes and appropriate preparations can be made as follows:
Volatile contexts throw up unexpected happenings and challenges. Crises and disasters can result in broken supply lines and loss of staff. Recommended responses include disaster planning, and building in slack. These mean extra expense, so the strategy has to match potential reward to the level of cost and risk incurred.
In these contexts there is a shortage of experience and knowledge. As an example, a disruptive innovator may threaten established markets with a new product which displaces existing products or services (e.g. when desktop computers replaced mainframes, and, more recently, smartphones – which have largely replaced other mobile and fixed-line phones). The recommended approach is to invest in intelligence.
A complex situation has many component elements which are interconnected. Some partial information is available but because of the volume or nature of it, this can be hard to interpret. As an example, a multinational firm has to cope with extensive variations in regulatory environments, cultures and tariffs. The recommended response is to build resources and capabilities to match the level of complexity.
In these situations meanings and causal relationships are unclear. As an example, moving into new emergent markets presents unknown challenges. The recommended response is to experiment and pilot.
Activity 6: Preparing for a VUCA world
Jot down in the space below your thoughts about how employers might respond to the environmental challenges represented as volatility, uncertainty, complexity and ambiguity.
Now answer the following question:
How would you use the VUCA model to advise a grocery retailer seeking to grow in its own domestic market while also planning for expansion into international markets? In particular what are the HR implications? We have reproduced the VUCA diagram below from ‘What VUCA really means for you’ (Bennett and Lemoine, 2014) to help you create a VUCA diagram for the grocery retailer. Click on ‘View’ below the diagram to access a blank version and add your notes, using the Characteristics, Example and Approach structure that you see here.
How did your answers compare with the initial notes you made?