Digital transformation is making its way into most companies and industries. In times of change one often reads about the so-called VUCA world. VUCA stands for volatility, uncertainty, complexity and ambiguity. It quickly becomes obvious that every company is facing these challenges. But in order to prepare for the world of tomorrow, it is necessary to reduce the fear of these words and recognize the opportunities behind the VUCA world.
We are experiencing rapid developments in the areas of production, technology, communication and mobility. Start-ups and creative companies are fundamentally changing the market, breaking new ground and reinventing traditional business models. In this environment, volatility, uncertainty, complexity and ambiguity have become almost normal. Some sources even go so far as to call “VUCA” the digital normality.
Overview of VUCA
You always hear a lot about the VUCA world. Whether in workshops, lectures or whitepapers. But what exactly is behind the market-changing building blocks of the VUCA world?
Volatility is essentially the nature and dynamics of change and its speed of change. Whether technological, social or economic – innovation cycles are becoming ever shorter. What used to take years, such as the replacement of radio by television, can now happen in just a few months. Groundbreaking innovation is the goal of many entrepreneurs today and so, especially in times of digitalization, the market can look completely different in a year than it does today.
Even if this sounds threatening at first, this change also holds opportunities. With a certain flexibility and creativity, companies today can revolutionize their entire business model. What used to be viewed critically by society is now normality and gives companies absolute freedom to try out new things and also (albeit on a small scale) to fail.
But it is natural that such an agile market creates uncertainty among management and employees. Companies must therefore change their own culture and promote openness to the new. It must be communicated that life includes making mistakes and failing with new technologies. The fear of punishment must be removed if one fails in the search for something new. The future is something unknown, but this unknown holds opportunities for economic and personal growth.
In the digital age, everything is determined by data and networks. However, this connectivity of digital enterprises also means that the complexity of the business is raised to a whole new level. This openness to complex business models and thought patterns must be built and fostered in the minds of management and department heads.
Complexity is diverse and dynamic. This is how the ideation and the entire management of the future must become. Companies must see this new, more complex world as an opportunity and become creatively active in it. Otherwise complexity quickly becomes a complication.
Ambiguity can be seen as a kind of business risk. At a time when all companies are expected to be disrupted, the outcome of an investment is no longer clear. Whereas in the past it was possible to assess exactly what a project or investment could mean in the medium and long term in one’s own business environment, it is no longer so clear and simple in the dynamic market environment. But this ambiguity can be exploited. It can promote creativity and encourage employees to think innovatively. This creates an open culture of innovation that companies like Google and SAP already exemplify.
What does the VUCA world mean to your company?
In a world that is accelerated by change and in many parts uncertain, leaders must come to terms with the new reality. They can no longer predict the future for the next ten years. Strategies and processes must therefore remain flexible and dynamic so that the company can hold its own in the market in the long term.
Rather, the goal of a good, modern manager must be to seek continuous innovation and at the same time see the VUCA world as an opportunity for their company and their employees. Together with their employees, they must initiate and drive change.
Walk the path through digital transformation together with your employees. Communicate openly and listen to each individual’s concerns and problems. From this attentive listening, great ideas can be born.