The term VUCA was first used in 1987 but was introduced in 1991 by the U.S. Army at the time of the end of the cold war which resulted in more volatile, uncertain, complex, and ambiguous situations in the world. The VUCA concept represents a changing environment where previously laid standard rules and laws don’t work.
It requires individual and diverse approaches depending on the nature of the problem and the prevailing situations. Businesses need to understand that they operate in the VUCA world and need to be agile & adaptable to situations. E.g Patanjali modified its products according to changing market, focusing on chocolates, biscuits for the kids, ayurvedic beauty products for the ladies while Baidyanath failed to understand this market.
VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity
Volatility: It means increasing turbulence and change in circumstances. Businesses need to learn to embrace the change and act accordingly by understanding other opportunities present in the market. E.g. PVR Cinemas understood the volatility in a single screen theatre market and adopted the concept of a multiplex cinema.
Uncertainty: It means uncertainty in the future. Companies like Ola and Uber have created an uncertain challenge for the auto industry. Thus, the auto industry needs to reduce the impact by understanding these challenges by making a relevant strategy. Businesses need to be ready for an uncertain and unpredictable future.
Complexity: Today the businesses are more interconnected than ever. Diverse culture, working environment, globalization makes the organization’s complex. Businesses need to bring in a simplified and clear approach to reduce complexity.
Ambiguity: Businesses need to work in groups with different people and this means having different interpretations of the same problem. This brings in ambiguity and confusion. Similarly, entering into a new, unknown, and unexplored market could be vague and thus businesses need to widen their imagination, analyze the situation more prudently and reduce ambiguity.
This VUCA can be controlled using other VUCA
Vision: A good leadership with a vision
Understanding: Understanding, analyzing markets using data, and exploiting new facts and ideas.
Clarity: Simplify things and approach problems from a holistic perspective.
Agility: Adapting quickly to changing business environments.
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