Executive Summary: Getting straight to the VUCA point

This is a short story about innovation and opportunity, one born from the need to push the boundaries.  In addition to looking at how to deal with “VUCA”, we will touch on the approaches which have allowed SpaceX the upstart to beat Boeing an established powerhouse.  It is then down to you to consider the implications for you and your business, are you equipped to deal with VUCA?

VUCA stands for volatility, uncertainty, complexity, and ambiguity. It describes the situation of constant, unpredictable change that is now the norm in certain industries and areas of the business world.

VUCA demands that you avoid traditional, outdated approaches to management and leadership, and day-to-day working. These are usually too sluggish and limited to be effective in a turbulent environment.

Newer, more agile, and pragmatic processes are the key to managing in the VUCA world. The solution, make vision, understanding, clarity, and agility your guiding principles to counteract the threats of VUCA, and to turn them to your advantage.

 Managing Uncertainty with Strategy & Vision

So where, when and why did this frankly awful acronym arise?

Post 9/11 Donald Rumsfeld famously said,

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

This was a distillation of a complex matter and cleverly highlights the need to have strategies to deal with the risks associated with the unknown.

Around this time the US Army War College was amongst the first organisations to use the VUCA acronym.  Today the relevance is greater than ever as both military and business planners are worried about radically different, and unfamiliar environments in both the arenas of international conflict and business.

• Volatile – change is rapid and unpredictable in its nature and extent.
• Uncertain – the present is unclear and the future is uncertain.
• Complex – many different, interconnected factors come into play, with the potential to cause chaos and confusion.
• Ambiguous – there is a lack of clarity or awareness about situations.

In 2009, Bob Johansen adapted VUCA for the business world in his book, Leaders Make the Future.  He used it to reflect the turbulent and unpredictable forces of change that could affect organisations, and he argued that you need new skills, approaches and behaviours to manage in the face of the four VUCA threats.

In 2024, 15 years later, we now appreciate that in learning how to deal with these perceived threats, we have discovered new ways of moving more quickly, with greater agility and the end result is an ever-faster pace of innovation.

Let’s take the niche and nerdy challenge of building more efficient rocket engines and heavy lift systems to get people and equipment into space.

For the best part of 50 years innovation stalled.  Humanity made it to the moon, job done!  For decades we have seen very little advancement in core technologies such as rocket propulsion.  Yet, all of a sudden, we are seeing step changes equating to an order of magnitude better performance, what’s going on?  Is it better computers, more resources, or something else completely?

Insights can be gained from comparing the performance of SpaceX vs Boeing, both of which were awarded contracts by NASA to transport equipment and people to the International Space Station (ISS). Despite the fact that Boeing had far greater resources, much larger and arguably more expert teams, and twice the NASA funding award of that given to SpaceX, they failed.  In fact, they failed so badly NASA had no choice but to extend their contract with SpaceX in order that the ISS could receive its required supply missions.  So, what was SpaceX doing that Boeing wasn’t?  Spoiler alert, ironically as this is extremely complex, so I wont go into too much detail… rather I will give you a few key aspects of the big picture and from that you will hopefully appreciate is the point and consider how your organisation is doing when responding to its VUCA challenges.

Why VUCA matters… the big perceived negative

Before we jump to solutions, let’s take a moment to explore the dark side of volatility, uncertainty, complexity, and ambiguity as they become more and more prevalent in the business world.

• People become destabilised and anxious.
• Motivation is sapped, career moves are thwarted.
• Business incurs the cost of constant retraining and reshaping.
• Indecision paralysis is often combined with an increased chance of making bad decisions.
• Short term reactive management jeopardises long-term projects, developments and innovations.

It’s all overwhelming for both the organisation and individuals.

How to succeed working with VUCA

While VUCA might seem inescapable in certain industries, you can manage yourself, your team and your organisation to mitigate its effects. Better still you can actually use it to your advantage.

The key to managing in this environment is to break VUCA down into its component parts, and to identify volatile, uncertain, complex, or ambiguous situations. Each type of situation has its own causes and resolutions, so you should aim to deal with one at a time.

In his book, Johansen proposes a framework that you can use to respond to VUCA threats, called VUCA Prime. He suggests that you should do the following:

Solution 1: Counter Volatility with Vision

1. Accept and embrace change as a constant, unpredictable feature of your working environment. Don’t resist it.
2. Create a strong, compelling statement of team objectives and values, and develop a clear, shared vision of the future. Make sure that you set your team members flexible goals that you can amend when necessary. This allows them to navigate unsettled, unfamiliar situations, and react quickly to changes.

Solution 2: Meet Uncertainty with Understanding

1. Pause to listen and look around. This can help you understand and develop new ways of thinking and acting in response to VUCA’s elements.
2. Make investing in, analysing and interpreting business and competitive intelligence a priority, so that you don’t fall behind. Stay up to date with industry news, and listen carefully to your customers to find out what they want.

• Review and evaluate your performance. Consider what you did well, what came as a surprise, and what you could do differently next time.

1. Simulate and experiment with situations, so that you can explore how they might play out, and how you might react to them in the future. Aim to anticipate possible future threats and devise likely responses. Gaming, scenario planning, crisis planning, and role playing are useful tools for generating foresight and preparing your responses.

Solution 3: React to Complexity with Clarity

1. Communicate clearly with your people. In complex situations, clearly expressed communications help them to understand your team’s or organisation’s direction.
2. Develop teams and promote collaboration. VUCA situations are often too complicated for one person to handle. So, build teams that can work effectively in a fast-paced, unpredictable environment.

Solution 4: Fight Ambiguity with Agility

1. Promote flexibility, adaptability and agility. Plan ahead, but build in contingency time and be prepared to alter your plans as events unfold.
2. Hire, develop and promote people who thrive in VUCA environments. These people are likely collaborative, comfortable with ambiguity and change, and have complex thinking skills.
3. Encourage your people to think and work outside of their usual functional areas, to increase their knowledge and experience. Job rotation and cross training can be excellent ways to improve team agility.
4. Lead your team members but don’t dictate to or control them. Develop a collaborative environment, and work hard to build consensus. Encourage debate, dissent and participation from everyone.
5. Embrace an “ideas culture.” Kevin Roberts, of advertising agency Saatchi and Saatchi, coined this alternative VUCA definition: “Vibrant, unreal, crazy, and astounding.” This describes the kind of energetic culture that can give teams and organisations a creative, agile edge in uncertain times.
6. Reward team members who demonstrate vision, understanding, clarity, and agility. Let your people see what kind of behaviour you value by highlighting innovations and calculated risk-taking moves.

When it comes to SpaceX vs Boeing, we have two organisations tackling the same ambitious challenge presented to them by NASA in two very different ways.  Both organisations existing in the same volatile, uncertain and complex world, both having to deal with the same ambiguities.

So how did they respond?  It’s not difficult to imagine the many long drawn-out committee meetings at Boeing, too many people wading through impossibly complex waterfall plans, with too many assumptions, set against too many unknowable details.  The result, too many risky planning assumptions, missed deadlines and failure.  Conversely, SpaceX has a clear vision, a razor-sharp design ethos and most of all the teamwork and agile processes that allow for rapid prototyping and development.  Their “fail fast” mentality is enabling them to take managed risks, learn at an accelerated rate and make innovation real.  While Boeing may spend years between complex tests, SpaceX has a rolling programme of very specific tests for parts of the complex problem.  With every step forward the volatility, uncertainty, complexity and ambiguity fade away.

Where does this get us? Something as complex as landing a re-usable rocket on a drone ship at sea has become a regular occurrence, some times as often as three landings a week.  Meanwhile their very different thinking has resulted in their cost of  mass to orbit being an order of magnitude less than their competitors. One could even say, if something is uncertain it’s a great opportunity as we don’t know for sure that it can’t be done… now that’s something to consider.

Ref: ‘Leaders Make The Future: Ten New Leadership Skills for an Uncertain World’, by Bob Johansen.