Facing VUCA times: a great challenge for companies

  • INSIGHTS  |
  • 14/05/2021  |
  • 453 Views  |
Facing VUCA times: a great challenge for companies

We are currently living through VUCA times, with VUCA being an acronym that stands Volatile, Uncertain, Complex, and Ambiguous times.  During the last few years, “VUCA” became popular as a new notion to cover the different dimensions of an ‘uncontrollable’ environment – but now more than ever this acronym is perfect to describe the pandemic time we currently live in, highly characterized by COVID-19 and its consequences on economy and society worldwide.

• Volatility: volatility refers to a situation in which change is rapid and unpredictable in its nature and extent. The more volatile the world is, the more and faster things change. COVID has both stopped some emerging trends (such as the Experiential trend) and accelerated others (Digitization).
• Uncertainty: uncertain environments are those in which the present is unclear and where major “disruptive” changes occur frequently. Uncertainty does not allow predictions of any type, also not on a statistical basis. Currently, the speed of countries reopening in Europe is a major question mark.
• Complexity: complexity refers to the co-presence of many different factors that are interconnected and variable. The more factors, the greater their variety and the more they are interconnected, the more complex an environment is. With the growth of Big Techs, for in the USA and China in particular, our European world has opened massively to new business models.
• Ambiguity: ambiguity refers to a lack of clarity or awareness about situations. An environment or a situation is ambiguous, for example, when information is incomplete, contradicting or too inaccurate to draw clear conclusions. The potential impact of COVID variants is creating high ambiguity, challenging economic growth forecasts.

So, even if the VUCA concept was applied also to describe the world before the Covid-19 outspread, the pandemic brought and enforced some already existing problems of our society, making the four VUCA elements to become stronger and more pervasive. Now, at this particular stage of the pandemic, despite the recent signs of potential recovery we are seeing thanks to vaccines, there are still a great number of risks that make our environment “foggy” and difficult to control, such as the co-existence of different COVID variants (like the English or Indian ones), the presence of different COVID cycles according to countries, with impact on the timing of lock-down measures.

As an example that may help visualize and explain the current situation, a mapping tool developed by the World Economic Forum in partnership with Georgetown University makes understand the causal relationships that are present in different sectors and fields, as well as their effects during COVID-19. The result is an interactive graphic that collects data about the pandemic and at the same time maps and shows the impact of the COVID-19 spread across the multiple layers of the ecosystem we live in. 

At the same time, there is a growing need for both companies and individuals to have a minimum of visibility on the future to move forward and to be able to plan and launch new projects, also helping the economy to recover from the actual recession.

But how can companies deal with the current situation and give a dimension of visibility of the business in this VUCA context?

Below are some ideas and suggestions that could answer to this challenging question:

“Setting the North Star”: the priority for leaders and managers should be defining a True North, a purpose, or a goal to achieve. Creating a strong statement of objectives, setting fundamental values, and developing a clear, shared vision of the company in the coming years will be key in order to succeed and never be affected by quick or unpredictable changes. With this purpose, for example, at RGI Group we created some strategic projects that will define the future of our company leveraging on some pillars like our people, state-of-the-art technology, partnerships, innovation.
Working on scenario: early economic pick-up and recovery will be differentiated by countries, and will require to work on a scenario basis, for key decisions as well as budget matters.
Problem resolutions: “fixing what could be fixed” whatever the scenario. Finding and communicating simple mid-term actions can change the perception of the environment and give visibility. As an example, even just defining the way the company will operate in the future in terms of workplace, guaranteeing a hybrid work model with a mix of days in the office and days working remotely could help give more assurance to the company.
Decision making: choosing which decisions to take immediately, to prioritize in order to be a first mover and which ones to push back once visibility is higher; for instance the process of digitization of our economies is something that is certain and will not be affected or stopped, so it should be tackled immediately. On the other hand, embarking on longer term trends around the experiential society should be initiated only once the COVID-19 crisis will recess, so that we could finally explore and enter new markets, in line with an effective rebound of those activities.
Creating value at ecosystem level:  Fueling energy into the business and its extended stakeholders, with a focus on the whole ecosystem wellbeing.
Human Resources: taking a decisive step to strengthen the business by investing in people and people management, developing as a primary goal a focus on skilling and trainings, as well as encouraging talent acquisition and employment growth.

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