The first of the abbreviations was the VUCA
model. Like many other concepts, it originated in the American military environment in the 1980s. The acronym described ways of seeing and responding in conditions of volatility, uncertainty, complexity, and ambiguity, provoked by the dissolution of the "Eastern bloc" and anticipation of the "Cold War" ending.
Economists Warren Bennis and Burt Nanus brought this term into the business sphere, describing it in their book "Leaders
." In the early 2000s, market leaders such as Coca-Cola, Apple, and Hewlett Packard began using the VUCA model for their strategies.
So, how do these four letters translate?V — Volatility.
The term describes the constant changes in society and business - shifting trends, regular crises, "bubble" economies, fluctuating currency rates, and so forth.U — Uncertainty.
Predicting the future has become incredibly difficult. Changes in the environment, threats of armed conflicts, pandemics - these situations are impossible to forecast and can shatter any long-term plans in an instant.C — Complexity.
To construct reasonably accurate plans and forecasts, an increasing number of factors must be considered. This makes it challenging to identify which specific factors significantly impact the outcome. The complexity of the necessary computations has led to the emergence of innovations like BIG DATA, AI (Artificial Intelligence), and ML (Machine Learning).A — Ambiguity.
Signals received by society and business are often ambiguous. This stems from polarized opinions and in the business environment leads to confusion about how to act in the market.Here are several implications of VUCA for companies:
• Employees are under stress, burn out faster, and lose motivation;
• Workers can't and don't want to establish long-term career plans;
• Both rank-and-file employees and managers frequently make incorrect decisions;
• Companies have stopped making long-term plans; while strategies used to span 3-5 years, now the planning horizon has shrunk to 1-2 years;
• In uncertain situations, the decision-making process is fraught with substantial difficulties;
• Excessive amounts of time and human resources are spent battling and overcoming unplanned events.