What is VUCA and why does it matter for leaders?

“It is not the strongest or the most intelligent who will survive but those who can best manage change.” – Charles Darwin

We love acronyms. We love shortening longwinded (and often already quite simplified) concepts into little bitesized letters – B2B, OMG, GP, LOL, NAV, OTT, PAT, PBT, ZOPA, YTC, WFH. These abbreviations are often trendy for a short while but soon lose their novelty. But one important acronym that’s experiencing a surge in usage of late is VUCA.

What is VUCA, you might ask? Well, it was coined by the U.S. military after the fall of the Soviet Union to describe what they perceived as a multipolar world of volatility, uncertainty, complexity, and ambiguity. Business and leadership analysts adopted VUCA in the 90s as a way of articulating the systemic and behavioural characteristics of organisational failure and the nature of the environment leaders and organisations would have to navigate effectively in order to flourish. Understanding how to cope with VUCA is pivotal to success.

Let’s go through the letters one at a time to decode what VUCA is really saying.

V = Volatility: the dynamics of change; the sudden, rapid, drastic and turbulent nature of change catalysts in the world.

U = Uncertainty: the unpredictability of outcomes and events, even those that result from familiar actions.

C = Complexity: the confounding multiplicity of forces, factors and issues that stem from the interdependencies of globally connected economies and societies.

A = Ambiguity: the confusing outcomes of ‘complexity’ and the blurriness of cause-and-effect, or rather, the potential for misinterpreting the reasons for, meanings behind, and outcomes of particular events.

What VUCA is, in essence, is a description of the globalised, fast-paced and continually changing world of today that doubles as a set of provisos leaders must consider when they plan, strategise, and act. This is not to say that VUCA is by any means ‘new’ – the world we live in, as Darwinian science stresses, has always been one of hardship and uncertainty, one we had to adapt and habituate to in order to thrive. But the reason VUCA is going through a renaissance is because the conditions of the 21st-century are turning the dial up on VUCA, so to speak.

In a far cry from the perceived binary choices between capitalism and communism, the U.S.A. and the Soviet Union in which VUCA’s etymology finds its roots, the world of today is one of copious choice and complex decision-making. Every decision and action is contingent on numerous variables, and these variables are contingent on numerous sub-variables, making causality hard to track and predictions nigh on impossible to make with any meaningful accuracy. As systems expand and diversify there is more opportunity for making previously unthinkable connections but, also, rather more pessimistically, the locus of control is fragmented, shattered into many smaller pieces. Similarly, technological advances and increasing connectivity, although they streamline business and at times might seem like a godsend, can occasionally manifest as a devil in disguise. As a result of all this, the world can seem daunting and unpredictable, moving faster than our reason allows us to travel.

The world has always been VUCA and looks as if it will continue to be. But why does this matter?

Well VUCA has the negative effect of inhibiting the way some organisations and leaders function. Being tasked with controlling and organising systems that present themselves as uncontrollable and subject to a complex mix of external variables and factors can feel overwhelming, psychologically threatening and, consequentially, stress-inducing. The Whitehall study, which researched the health of over 10,000 civil servants, found the biggest cause of stress at work is a combination of ‘high demands and low control’. Prolonged periods of stress can seriously affect not only performance but also physical and psychological wellbeing. The implications of living, leading, and working in a VUCA world are serious and affect us all, meaning we must find ways to work with VUCA, not against it. For this, we look to science.

Research shows us that some people cope well with stress because they have what psychologists call a tolerance of ambiguity or uncertainty. These people tend to view ambiguous situations as manageable and, in some cases, even attractive. This is partly because instead of thinking in binary terms (as with the pre-VUCA dichotomy of capitalism vs. communism), tolerant individuals have open and flexible cognitive styles that enable them to react and adapt to unpredictable circumstances, flourishing where more rigid thinkers might falter. They understand that an event is not detrimental in and of itself, but that the view they take on a situation is, meaning they adapt their perspective and think optimistically, viewing challenging circumstances as opportunities for development, learning, and growth.

On the flipside, individuals with a low tolerance of ambiguity experience an adverse or aversive reaction to ambiguous situations. Their threat circuits are activated and override when faced with uncertainty, leading to behaviours like stress, avoidance, delay, suppression, denial, sabotage, rumination and co-rumination (Furnham and Ribchester, 1995).

Developing a tolerance of ambiguity and changing one’s perspective and reaction to stress-inducing, uncertain circumstances reveals itself as a crucial trait that can differentiate mediocre leaders from successful leaders. An event that creates uncertainty is not in and of itself threatening but, if we construe it as such, we allow it to cause us threat. By changing our approach to and perspective of ambiguity, understanding that it is not what happens but the view we take on it that matters, we can better tolerate ambiguity. The question that presents itself next is how can we learn to do this?

The first step is to improve our emotional literacy. If we understand that our reaction to VUCA is driven by our moodstate and our emotions which, in turn, drive how they think, feel, and behave, we can begin to realise that we have a choice. We can start regulating our response to VUCA, understanding that feeling threatened is a natural, evolutionary reaction that, although necessary, can be regulated and overcome if we cultivate a cognitively flexible style of thinking. This awareness forms the foundation upon which resilience and tolerance of uncertainty can be developed and enhanced through neuroplastic and epigenetic processes over time (see blogs on Epigenetics and Neuroplasticity).

This is not an intangible process. Positive have developed evidence-based tools that can measure moodstate across organisations and track shifts, providing a quantifiable and actionable approach to change that can help businesses flourish. This insight can help businesses excel because it helps enable the flexible and adaptable mindset that comes to dictate whether we will survive and thrive amidst the VUCA world. In the words of H. G. Wells: ‘Adapt or perish, now as ever, is nature’s inexorable imperative.’