What is VUCA?

Wendy Sage-Hayward, MA, FEA
Published: Nov 30, 2020

VUCA is a term based on leadership theories from Warren Bennis and Burt Nanus which has gained popularity recently given the current conditions of the planet and humankind. VUCA stands for the following:

  • Volatility – The speed of change in an industry, market or the world in general. The greater the volatility in the world, the more rapidly things change.
  • Uncertainty – The extent to which we are impaired or challenged in confidently predicting the future. The more uncertain the world is, the harder it is to forecast.
  • Complexity – The number of factors that we need to take into account, their nature and the relationships between them. The more complex the world is, the more challenging it is to analyze.
  • Ambiguity – The lack of clarity about how to interpret something when information is incomplete. The more ambiguous the world is, the harder it is to interpret.

In practice, the four terms are highly interrelated. For example, the more complex and volatile an industry is, the harder to predict and therefore more uncertain it will be. An important question is how does leadership prepare for and respond to a VUCA state? In a recent article, family enterprise expert, Thomasina Williams, suggests that family businesses are uniquely positioned to lead effectively in a VUCA environment. Williams utilizes the term itself to define the resiliency and natural strength family businesses offer during turbulent times:

  • Values – Family values are often the foundation of how family businesses operate and so during times of crisis, these values offer an important guide for how to treat key stakeholders.
  • Unity – Loyalty from employees in family businesses is high because the ‘family culture’ of belonging and being cared for is felt by all. There is no better time to emphasize the feeling of belonging than during times of volatility.
  • Composure – Family business is one of the most complex forms of organization in the world, as they are steeped in the unique experience of integrating intensely personal family relationships with business dealings. Navigating this complexity from their outset provides a distinctive clarity of purpose, which is an unyielding perspective on what really matters during crises: people.
  • Adaptability – Family businesses often carry lower debt, have simpler infrastructure and hold a longer-term view which positions them to be adept at handling ever evolving circumstances.
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