In business, constant change has always been a given. But today, businesses face a landscape that is evolving faster with more unpredictability. Although there has been a shift toward renewed growth, the path to attain this growth isn’t as predictable or straightforward. In highly volatile markets, competition is more able to quickly move to exploit new and emerging business opportunities. At the same time, customer expectations are always on the rise as well as shifting. Simply put, businesses today must use HR to effectively operate in a highly volatile, uncertain, complex, and ambiguous world or a VUCA environment.
What Does VUCA Really Mean?
Aside from appearing as a highly trendy HR buzzword, VUCA stands for volatility, uncertainty, complexity, and ambiguity. The term was coined by the U.S. Army War College and is used to describe the dynamic nature of the world and the business environment. The following information provides an explanation of each of the four components of a VUCA business environment.
Volatility is used to explain the tremendous speed, magnitude, dynamics, and volume of change in the business environment. The challenges presented in a volatile environment are accented by unstable or unexpected situations with an unknown duration. However, the volatility of an individual situation isn’t difficult to understand because information is generally readily available about the scenario. The key to overcoming this volatility is to build in slack for the unexpected and dedicate resources specifically for the preparedness.
Uncertainty is used to explain the lack of predictability of the events and issues in a business environment. With uncertainty, change is a highly likely possibility, but not exactly a given. For example, you may have uncertainty surrounding a competitor’s product launch, which could muddy the future of the business and your market. The solution to overcoming uncertainty is to make a strong investment in the collection, interpreting, and sharing of information. This process works best in conjunction with structural changes, such as implementing information analysis networks that will reduce a significant level of the looming uncertainty.
Complexity is used to explain the conglomeration of compounding chaos and issues that surround an organization. Like most business scenarios, complex situations have several interconnected variables and parts. In most instances, there is information available allowing certain predictions to be made, but the nature and volume of this can be highly difficult to process.
Ambiguity is used to describe the haziness and confusion of the reality of the conditions, including the mixed feelings about the conditions. In other words, casual relationships are completely skewed. Simply put, there are no precedents, and you face the dreaded “unknown unknowns.” The solution is to gain understanding through experimentation, such as “cause and effect” analysis or to create a hypothesis and test them. The goal is to design your own experiments to the lessons and results can be learned on a broad level through your organization.
In a VUCA environment, each of the four distinct challenges requires four different types of responses. This notion makes it extremely difficult to understand and know how to approach an impending situation. At the same time, it makes it much easier to throw off the seemingly overwhelming work of strategy and planning with the notion that you can’t prepare for a VUCA world. While each VUCA challenge requires a different response, there is one underlying theme throughout the process: training and education.
Operating in a VUCA World
Fitness, speed, flexibility, and agility are words commonly used to describe an Olympic athlete instead of an organization and its leaders. However, the 21st century has ushered in a new way of business being moderated by the ever-growing digital revolution and the constantly expanding global market. This market is marked by volatility, uncertainty, complexity, and ambiguity or VUCA; and it isn’t poised to settle down or blow over any time soon. To accommodate the new market, a successful organization must exhibit the same traits as a world-class athlete. Continue reading to learn more about how HR support offers the solution to the problems experienced in a VUCA world.
Chaos Is the New Normal
The notion of operating in a chaotic environment isn’t new. However, the difficulty arises when organizations come to the realization the VUCA environment is here to stay. Based on the established 20th-century talent management model, the future was based on projects of predictability. As a result, firms made hiring, training, and development decisions based on their ability to prepare for the future. The majority of firms managed to prepare their organization and their employees for the one most-likely scenario. More advanced firms were able to not just prepare for the single-most-likely scenario, but they planned for two or three alternative situations. While this may have proved to be effective then, in a world of VUCA and continuous changes, it’s not practical.
Using this outdated talent management model in today’s VUCA environment would mean you would continually end up hiring, training, and developing people for scenarios that may never occur. Simply put, forecasting, planning and training will be rendered useless if the work environment you’re planning for fails to appear.
Managing Talent in a VUCA Environment
Although the challenges for each business will vary, it all comes down to one key factor: the talent. In order for your firm to last in a VUCA environment, it will have to embrace the capability of learning fast and adapting. The talent management or HR support function will have to assume the responsibility of transforming your people and management process, so they will be able to effectively function during the turbulence. While all areas of HR support and talent management will have to become adaptive and agile, four areas that will require the most change are: leadership development, innovation, talent acquisition, and analytics.
Leadership Development
Leadership development must adapt to meet the new requirements of a VUCA world. Leaders must be recruited or transformed with “adaptive” skill sets in a relatively short period of time. These leaders must be fast decision makers, able to learn quickly, as well as innovators. In addition, they must be able to optimize these same skills within their team. To help support this renaissance-type of function, development will be imperative. Leadership courses should target the skills needed for driving innovation, leading change, networking across boundaries, and making rapid decisions. Virtual learning solutions will allow leaders to solve corporate problems and contribute directly to the business results.
Talent Acquisition
The goal of talent acquisition in a VUCA environment is to quickly identify new hires that are adaptive and able to learn quickly to meet the rapid pace of the environment. Recruiting will need to be prioritized, so that bringing in game changers and innovators into key position will be a top priority. New hires will also be expected to be tech-savvy because new and innovative technologies must be implemented to assist firms in adapting. The market for these type of new hires are characterized as highly competitive, which means recruiters must also be better trained. In VUCA environments, business opportunities often appear very quickly. As a result, all hiring and promotion must be accelerated to fulfill the new and sudden needs.
Innovation
Instead of focusing on increasing productivity, firms like Google and Apple have embraced the VUCA environment and set goals to be innovative and first. To help foster innovation, on-the-job training, coaching, mentoring, and job assignments have a renewed place in VUCA environments. In addition, HR must focus on training programs that help develop adaptability, collaboration, openness to change, agility, and higher-order critical thinking skills. At the same time, talent management and HR support will need to deliver these training programs through more current mediums such as social media and e-learning training modules to keep up with the rapid pace of change.
Analytics
In a fast-moving VUCA environment, it’s vital to get development right the first time. To help meet this new demand, HR support must be based on a more scientific, metric-driven, and data-based approach. Predictive analytics are essential in increasing the speed at which decisions are made and reducing the time involved in planning stages in a VUCA world.
Although envisioning HR support in this scary and frustrating VUCA environment, many firms have taken the opportunity to become champions of change, such as Facebook, Apple, and Google. All of these firms have maximized talent, increased revenue per employee within a VUCA environment. Through a steady stream of education, these firms have implemented effective HR support to engage their employees.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.