Managing VUCA with VUCA

Chapter 1

Introduction

VUCA is a concept that originated with students at the U.S. Army War College to describe the volatility, uncertainty, complexity, and ambiguity of the world after the Cold War. And now, the concept is gaining new relevance in characterizing the current environment and the leadership required to navigate it successfully. Rhenald Kasali in The Great Shifting (2018) wrote that one of the VUCA causes is disruptive innovation because of technological breakthroughs. Disruptive innovation is described as any situation in which an industry is shaken up and previously successful incumbents stumble. This Paper will explain how should we face the VUCA's dangerous challenge and turn it to be an opportunity.

Chapter 2

VUCA

According to (Horney, Pasmore, & O'Shea, 2010) the Term VUCA, coined by The USA Army War College, describes the dynamic nature of our world today and has caught on in a variety of organizational settings to describe a business environment characterized by:

· Volatility-The nature, speed, volume, magnitude, and dynamics of change

·  Uncertainty -The lack of predictability of issues and events

· Complexity-The confounding of issues and the chaos that surrounds any organization

· Ambiguity-The haziness of reality and the mixed meaning of conditions

The term VUCA was first stated in the following statement below:

“…a world order where the threats are both diffuse and uncertain, where conflict is inherent yet unpredictable, and where our capability to defend and promote our national interests may be restricted by material and personnel resource constraints. In short, an environment marked by volatility, uncertainty, complexity, and ambiguity (VUCA) (Magee, 1998).”

Today's business environment characterized by VUCA is due to changes made by humans themselves as the process of learning and thinking drives technological advances that then disrupt all aspects of human life from technological development. This technological breakthrough then encourages disruption in all aspects of life. This is usually called disruptive innovation. Disruptive innovation is described as any situation in which an industry is shaken up and previously successful incumbents stumble (Christensen, Raynor, & McDonald, 2015). Disruption itself is defined as an interruption to the regular flow or sequence of something (Christensen, Raynor, & McDonald, 2015). According to (Kasali, 2017), "The word disruption is becoming popular because it moves in line with the emergence and development of information technology applications and transforms ordinary forms of entrepreneurship into start-ups. The word shifts from the term that was coined after the world war, namely destruction introduced by Schumpeter."

We can identify some of the major changes that drive disruption as follow:

1. Technology: Technological advances in particular are driven by the advancement of several basic industries that drive technological advances in several fields.

- Advances in microchip technology and the internet are driving the development of Artificial Intelligence technology. Currently, technological advances have entered the third wave, namely the Internet of Things. (Kasali, 2017). With the support of the internet and artificial intelligence emerged smart devices, smart home, smart city, and smart shopping.

-Advances in information and communication technology have also given birth to changes to the digital world (digital media, digital economy driven by the increasingly strong e-commerce platform).

2. New Generation -millennials: Growing up along with technological advances was born a millennial generation that is very technologically literate and revolutionized cultural change in various fields.

3. Disruptive Leader. In line with the symptoms of a disruptive society, a disruptive leader emerges who with full awareness creates change and progress in new ways (Kasali, 2017). We can take some examples of young corporate leaders in Indonesia who have been born start-ups in Indonesia that are now unicorn start-ups (start-up companies with a valuation of their company value above 1 million US Dollars) such as Gojek-Nadiem Makarim, Traveloka-Ferry Unardi, Bukalapak-Muhammad Zaki, Tokopedia- William Tanuwijaya) and these companies have disrupted economic and social activities in Indonesia with their respective platforms developed. 

Chapter 3

Managing the VUCA World

The consistent and permanent change in the business environment characterized by VUCA is the driver of the shifting related caused by a disruption in all fields. The inability to deal with changes will erode the competitive advantage owned by anyone even though they are the market leader in the industries. When we are no longer relevant to the situation then the choice is to be eliminated. This applies to everything, individuals, institutions, or businesses. All can be eliminated because they are unable to compete in a fast-changing era.

Below are some examples of products or businesses that fall victim to VUCA because they are no longer relevant and end up being disrupted by change.  They have been disrupted by the changes that have taken place.

This case can happen to us as individuals. Individually we can be easily replaced by others or even replaced with artificial intelligence technology if we do not do self-disruption to then keep ourselves competitive and relevant. 

VUCA conditions are unavoidable and become an integral part of the industry or the environment (especially related to business or economic activities). Instead of thinking of it as a threat the company should anticipate it as a rarity of mitigation and get the opportunities and use it to our advantage.

In managing VUCA conditions, a framework is developed as a precautionary measure. This model is known as VUCA Prime. VUCA Prime is a behavioral leadership model, first introduced in 2007 by Robert Johansen (a distinguished fellow at the Institute for the Future), to counteract each of the four elements of VUCA with a specific positive response (Bartolomeo, 2019)

According to VUCA Prime the organization should do the following:

 1. Counter Volatility with Vision. Frequent and rapid changes that can cause anxiety, worry, and intimidation can be minimized if the organization has a clear goal or vision. All members of the organization understand the future to be achieved and the future it should be achieved. Everyone in the organization can respond to any change without fear and threat but strives to embrace that change while exploring the opportunities that arise from those changes.

 2.  Anticipate Uncertainty with Understanding. Uncertainty about current and future conditions that might make organizations hesitant in making decisions and making strategies can only be overcome by trying to eliminate that obscurity into something brightly lit. For example, the Company can analyze the business and competitive environment with competitive intelligence and market studies to find out the state of the market and potential competition, or strive to better engage with customers so that they can understand customer needs better. Companies are also required to always be updated with industry developments (by following news about the industry or joining a particular industry association)

3. Response Complexity with Clarity. Complexity has the potential to cause misunderstandings, miscoordination, invite conflict, and potentially reduce speed and flexibility at work or in making decisions. Clarity can be built by building clear communication within the organization, building team solidity, and encouraging collaborative efforts within the team. 

4. Anticipate Ambiguity with Agility, when the future contains multiple alternatives, be ready to adapt the approach to match the desired outcome. Organizational agility is simply achieved by adopting the practice of collaborating, delivering, reflecting, and improving against agreed metrics (Bartolomeo, 2019).

Kompas Media Group is an example of a company that I think is able to answer VUCA conditions with strategic measures. The strength of Their vision and agility in anticipating change make Kompas Group still exist. If in the ordinary calculations the presence of digital technology and the media revolution of course people think Kompas will quickly die. People no longer read a lot of printed daily, books are also getting digital.  But Compass with the power of his vision and the ability to read changes and flexibility Compass is able to survive. Kompas does not only depend on its core business, namely print media. Kompas Group in addition to having digital media, television also plays in the tourism industry (Santika Group) and plays in the manufacturing industry.

In the transportation industry. Disruption of the taxi operator industry occurs when online transportation develops with the support of digital technology advancements. With the birth of Gojek, Grab eroded Bluebird's success as a market leader in the taxi operator business. Vuca's condition did reduce the strength of the Bluebird. BlueBird has been slow to respond to changes. But then quickly improve and take a chance in a disrupted industry. Instead of competing head-to-head with the online transportation king, Bluebird leverages the power of Gojek's digital networks and applications to cement its position as a reliable and quality transportation partner. The two then collaborated. The birth of the Go Bird application in the Gojek application.

Bluebird understands very well that online transportation is inevitable. With the advancement of digital technology and unstoppable AI, digital-based transportation services are increasingly gaining relevance and answering the needs of the market. The choice to embrace change and get opportunities is the right step to take. Bluebird understands its vision, knows its market potential going forward, understands the nature of its business, and is agile in responding to conditions.

Chapter 4.

Conclusion

Change is an inevitability. VUC which identifies an environmental trait is a framework intended to make organizations or individuals more precise in responding to change. By solving some VUCA variables with VUCA Prime, you can find some anticipatory steps. To be a winner in every changing condition is to remain relevant to the changing environment. Change or die.

 

References

Bartolomeo, M. d. (2019, November 07). Axelos. Retrieved from https://www.axelos.com: https://www.axelos.com/resource-hub/blog/vuca-prime-the-answer-to-a-vuca-dynamic

Christensen, C. M., Raynor, M. E., & McDonald, R. (2015). What is Disruptive Innovation? Harvard Business Review December, 44-53.

Horney, N., Pasmore, B., & O'Shea, T. (2010). Leadership Agility: A Business Imperative for a Vuca World. People & Strategy Vol 33 issue 4, 32-38.

Kasali, R. (2017). Disruption edition 6. Jakarta: Gramedia Pustaka Utama.

Lawrence, K. (2013). Developing Leaders in a VUCA Environment. Retrieved from www.execdev.unc.edu: www.execdev.unc.edu

Magee, R. R. (1998). Strategic Leadership Primer. Carlisle Barracks. US Army War College.