The term VUCA – an acronym for Volatility, Uncertainty, Complexity and Ambiguity was first used in Military in the 90s. Here’s how Wikipedia defines VUCA.
More recently this has become a reality of business environment. There is a general agreement that business environment is characterized by VUCA a.k.a. Business VUCA.
Its becoming increasingly difficult to plan for long time spans. Plans and forecasts go wrong catching managers off their guard. Does it mean that we should stop planning for the long term? Isn’t there any value for long term vision?
There is value for both long term vision and short term response. Managers need to sync up and update their vision to account for changes in the environment. The frequency of updating forecasts and plans needs to increase to keep up with VUCA. Error in forecasts and plans result in waste in 2 ways –
1) Resources and materials that go unutilized if actual demand is below forecast
2) Loss of opportunity, delays and dissatisfaction if demand exceeds forecast.
Organizations need to receive and process information to update their plans more frequently. Anytime anywhere access to managers and decision-makers using mobile phones will help but on the other hand they will be inundated with information and signals from ever changing environment.
We not only need quicker but more distributed decision-making. Organizations need to have decentralized and flatter structures to facilitate faster response to change. Organizations having empowered, agile, cross-functional teams are quicker to respond to change than siloed hierarchies. Decentralized structures seem to be achieving this better than flatter hierarchies.
All this means we need to have more frequent and smaller messages, events , alerts and decisions. But would it be enough if our commitments still remain long term? How can decentralized decision-making help if execution still remains centralized?
Quicker and more frequent decisions can be executed only if we make short term commitments and reduce the size of individual transactions. We should empower decentralized decision-makers to enter into these smaller transactions.
Mobile technology and consumerization of enterprise IT is going to help us reduce the size of transactions that can be handled by decision-makers using technologies like Google Wallet or Square.
Embracing enterprise mobility and handing smartphones to all employees is not going to make your organization responsive to VUCA. You will need to restructure your organization to be more decentralized, empower individuals to facilitate decentralized decision-making and reduce the size and commitment time-span of transactions.