By Vidya Hattangadi  

VUCA is an acronym used to describe the state of business, political, societal and ecological world. VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. The world is experiencing a crazy spin of events because too many uncertainties have plagued it. Most organisations exist by adapting to complexities and by behaving flexible because they operate in multiple countries. We are seeing new trends in organisational structures seemingly evolving as fast as they can be identified.

Multinationals need to fight tough competition given by local players. Developing economies neither are behind the developed ones, nor show signs of competing with them. Emerging markets are different; they appear backward in some ways and advanced in others. For example, China’s telecommunications infrastructure is newer and better than that in most parts of the US. At the same time, approximately 300 million Chinese live on less than $1 a day, according to the World Bank. In India, the educated elite who command international wages flourish in a nation with high rates of illiteracy. In Russia, abundant venture capital coexists with murky property rights and intimidating bureaucratic barriers. These disparities aren’t likely to disappear soon, and they’re creating unique markets.

Local businesses have fragmented the business world and multinationals have a tough time fighting them. In most organisations, there is a dearth of experienced professionals. Strategies are developed in the boardrooms, which are implemented fitfully. Lack of proper guidance and strong leadership make organisations vulnerable from inside. Many organisations are taking time yet to learn and get stabilised. Both employers and employees are facing the brunt of the VUCA world.

Volatility: It is ever-increasing. Brexit is a good example of the VUCA world. Britain’s exit from the European Union took the world by surprise. A consequence of this political factor has affected economics, commerce, regulatory system and emotional perception of the people at large. Britain will be isolated from their major trading partners, i.e. the eurozone. That is surely not a healthy thing for global trade. The real shocks are yet to come.
After Brexit, political and security effects would be more important to the US. The potential economic gains and losses for the US in Brexit are small, apart from the TTIP (Transatlantic Trade and Investment Partnership) arrangement, which would result in substantial economic gains for the US. The US will miss the influence and global perspective that the UK brings to the EU decision-making process, particularly around foreign policy, security and defence. The TTIP is a planned agreement focused on lowering trade tariffs and removing costly regulations on business across the Atlantic. These barriers include labour rights, food safety rules and banking safeguards put into place following the recession.
Syria’s war shows no sign of stopping. Syria can be described as several interconnected wars. It’s not government-versus-rebels narrative it started out as in 2011. The US pressure on Turkey to deal with the ISIS will actually make Turkey more vulnerable to attacks from terrorist groups.

Brazil is unable to address its growing fiscal deficit. The war between North Korea and South Korea, and the political instability in many parts of world has increased volatility. The geographical, political, ecological, economical changes are too much of a burden on business organisations.

Uncertainty: It is linked to volatility. Making systematically-sound strategic decisions under uncertainty requires mature strategies in a framework for determining the level of uncertainty surrounding strategic decisions and for tailoring strategy to that uncertainty. Smart business organisations are reworking on their decision-making frameworks in which decisions can be executed. Management techniques were always based on assumptions about the future, and the use of planning is a major tool of management control. In today’s world, they are made for the present. Mergers, acquisitions and takeovers have reached a peak globally because firms are seeking to position and reposition themselves.

Complexities: Globalisation has pushed the boundaries of doing business, which has only created a wide gap between developed and underdeveloped markets, increasing the competition from new entrants. Globalisation has put pressure on businesses of all sizes to tap international customer base. From a technology point of view, businesses need to review all processes and see how their legacy and systems can cope with. The biggest fact today is that the start-ups are giving competition to established businesses in many sectors; bigger and established players are dumbfounded due to creativity and innovation from smaller firms. Organisations today need 24×7 innovative pool of employees, those who can just keep innovation pumping at all levels of business.

Ambiguity: Too much of information keeps pouring in from everywhere, creating more and more ambiguity. Customers have a lot of information and they are confused about what to buy, how to buy, from where to buy, at what price to buy. For any given product, there is substitution. Customer loyalty is out of business dictionary. Everything has become complex: marketing, sales, pricing, operations, R&D, a firm’s infrastructure, supply chains, buyer behaviour, big data systems, economic models, getting finances … everything is challenging. Due to random organisational structures, the authority and responsibility lines have becomes blurred, which creates a big leadership challenge. Due to blurring responsibilities of managers, internal complexities keep growing in organisations.

Employees get busy playing the blame game and politicising the work atmosphere. The same is with governments—blurring responsibilities gives way to non-transparency in systems. Globalisation has paved way for a growing number of multichannels at all levels, from governments to citizens, and each is stumbling with their own set of priorities and responsibilities. The conclusion: VUCA is equal to uncertainty.