VUCA 2.0 in the current COVID-19 outbreak

by: Tzehao LEONG

 

The current COVID-19 virus has certainly been the embodiment of a VUCA (Volatility, Uncertainty, Complexity, Ambiguity), catching not only companies but also entire countries off guard with how fast it has spread beyond China’s borders. With no cure or end in sight currently, it has forced the hand of many companies to take drastic measures, such as working from home to reduce risk of viral spread, or taking no pay leave or pay cuts to combat unforeseen losses and in preparation for a possible recession in the days ahead.

So what exactly is VUCA? And how do we navigate this current VUCA situation?

First introduced as a concept by the American War College to describe the global multilateral situation after the Cold War, it draws upon the leadership theories of Warren Bennis and Burt Nanus, and has over the years, been increasingly used in business management and strategic leadership.

 

VOLATILITY is a situation with unstable changes, and unexpected challenges that could last for an unknown duration. However knowledge is readily available and it might not be hard to understand.

Eg. Mask prices going up and supplies going down during the COVID-19 situation where demand sharply increases plus hoarding by people, coupled with factories in China being crippled by the situation.

UNCERTAINTY is a situation where there is a lack of predictability, even though the basic cause and effect might be known.

Eg. Currently no one can be sure if or when the viral spread has reached its peak, or when things will normalize.

COMPLEXITY is a situation with countless interlinked variables and factors, with some or all of the information available or predicted, but the sheer scale of it makes it challenging to process.

Eg. The COVID-19 situation has spread beyond most, it not all borders, and with different healthcare policies, speed of responses, availability of expertise and resources to tackle the virus amongst the different countries, it has proven difficult to execute a coordinated response to stem the spread.

AMBIGUITY is a situation where cause and effect is not so clear, there is no prior experience to fall back on, and the management faces an unclear reality or future filled with countless unknowns.

Eg. To date, researchers are still unclear of the exact source of the COVID-19 virus, how it spreads, and what the most effective way to stem the spread is. Even a timeline to create a working vaccine is unclear.

 

However, does this mean that companies are left defenseless against this VUCA situation? There are still measures that can be taken, that might not totally solve the challenges, but could at least prepare companies and mitigate the potential negative impact of the COVID-19 situation.

Which brings us to the VUCA antidote (Vision, Understanding, Courage, Adaptability), or VUCA 2.0, as coined by Bill George, a senior fellow at Harvard Business School.

VISION is the ability to see through the fog and have a vision ahead for your organization. Things you could do during this period are to take the chance to stop, evaluate, and strategize for when the dust settles. For example doing R&D to have a new product ready to launch when suitable, or up skilling employees. This situation will definitely settle eventually, and if organizations have planned for what to do when the time comes, they will be anticipating and ready to move ahead of others who have not.

What is your vision?

UNDERSTANDING is where leaders first have to truly understand their organization’s strengths and potential blind spots, in order to pick the best strategies that play to their advantages. In this stage, information gathering is crucial, not only within the organization but also outside, from as wide a spectrum as possible, ranging from employees, to clients, and even about the industry and economy. This is especially evident during this period, seeing how increasingly interconnected the globalised economy has become, with no one emerging unscathed from the COVID-19 virus spread. This crucial understanding and wide spread information gathering will allow your organization to better understand the challenges the virus pose, and with that be better able to develop strategies to counter them.

Do you know what you don’t know?

COURAGE is the audacity during difficult times to make decisions based on calculated risks that could go against all common practice and beliefs. Sometimes, organizations have to consider going against traditionally successful techniques and take risks, because in the rapidly changing world of today, being second to take action could be the difference between survival and failure. While many organizations are taking measures now to cut costs amidst losses from the COVID-19 situation, and in anticipation of a potential recession, some organizations have actually chosen to invest in infrastructure, moving their production facilities to lower cost countries in preparation for when things get back to normal. Not only do they take advantage of the depressed prices now, but also in the future as their costs of operations will be lower.

Risk more than others think is safe. Dream more than others think is practical. (Howard Schultz)

ADAPTABILITY is essentially the need for organizations to be flexible to change and fit today’s ever changing world. While mid and long term plans are necessary, strategies do have to be flexible enough to rapidly adapt to external circumstances, without affecting or changing the organization’s overarching vision and mission. The COVID-19 virus is the perfect example of this, the rapid global spread of the virus catching everyone completely off guard.  Once seemingly thought to have been contained within China, it has soon spread to all 4 corners of the globe with no end or cure currently in sight. Organizations will then require multiple contingency plans not just to survive through this challenging period, but also how to make up for lost revenue and continue growth when the situation improves.

Adaptability is about the powerful difference between adapting to cope and adapting to win. (Max McKeown)

 

With the current situation as it is, organizations cannot afford to stay still and hope for the best, especially without a clear timeline available. Organizations will have to hold fast to their mission, vision and values, while employing the strategies from VUCA 2.0, to not only pull through these challenging times, but also to prepare them with strategies and resources on hand, ready to move ahead of the competition when the dust settles and things normalize.

 

 

For more information on VUCA, its antidote, and how your organization can learn how to employ them, please contact us at: info@FOCUSAdventure.com