Skip to main content

Figure 4 shows the VUCA diagram from Bennett and Lemoine (2014). It is shown in the form of a two by two grid, with a vertical axis and a horizontal axis which do not show values but have arrows at the end of the axes to suggest that values go up, in the case of vertical, or to the right, in the case of the horizontal axis. The vertical axis is labelled ‘How much do you know about the situation’, suggesting higher or lower knowledge, with the horizontal axis being labelled ‘How well can you predict the results of your actions?’ suggesting higher or lower predictability. The four VUCA concepts – Volatility, Uncertainty, Complexity and Ambiguity each have one square of the two by two grid, each with a list of characteristics, examples and approaches. At top left of the grid (higher knowledge, lower predictability) is ‘Complexity’. Characteristics are listed: ‘The situation has many interconnected parts and variables. Some information is available or can be predicted, but the volume or nature of it can be overwhelming to process.’ Example is listed: ‘You are doing business in many countries, all with unique regulatory environments, tariffs, and cultural values.’ Approach is listed: ‘Restructure, bring on or develop specialists, and build up resources adequate to address the complexity.’ At the bottom left of the grid (lower knowledge, lower predictability) is ‘Ambiguity’. Characteristics are listed: ‘Causal relationships are completely unclear. No precedents exist; you face “unknown unknowns”.’ Example is listed: ‘You decide to move into immature or emerging markets or to launch products outside your core competencies.’ Approach is listed: ‘Experiment. Understanding cause and effect requires generating hypotheses and testing them. Design your experiments so that lessons learned can be broadly applied.’ At the top right of the grid (higher knowledge, higher predictability) is ‘Volatility’. Characteristics are listed: ‘The challenge is unexpected or unstable and may be of unknown duration, but it’s not necessarily hard to understand; knowledge about it is often available.’ Example is listed: ‘Prices fluctuate after a natural disaster takes a supplier off-line.’ Approach is listed: ‘Build in slack and devote resources to preparedness – for instance, stockpile inventory or overbuy talent. These steps are typically expensive, your investment should match the risk.’ At the bottom right of the grid (lower knowledge, higher predictability) is ‘Uncertainty’. Characteristics are listed: ‘Despite the lack of other information, the event’s basic cause and effect are known. Change is possible but not a given.’ Example is listed: ‘A competitor’s pending product launch muddies the future of the business and the market.’ Approach is listed: ‘Invest in information – collect, interpret and share it. This works best in conjunction with structural changes, such as adding information analysis networks, that can reduce ongoing uncertainty.’

 4 Volatility, uncertainty, complexity and ambiguity