VUCA: Definition, Overview & Impact on Organizations

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  • 0:04 VUCA & Buffalo Wings
  • 0:57 What Is VUCA?
  • 1:54 Volatility and Uncertainty
  • 2:26 Complexity & Ambiguity
  • 2:57 VUCA's Impact
  • 4:52 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Volatility, uncertainty, complexity and ambiguity are all realities of doing business in the 21st century. In this lesson, you'll learn more about these situations, known collectively as VUCA, and how they impact business decisions.

VUCA and Buffalo Wings

In early 2012, Buffalo Wild Wings found itself in a pickle. Best known for its chicken wings, the company faced a dilemma as the price and size of the wings it purchased started to surpass the menu price customers were paying. The restaurant chain was faced with a choice to combat this volatility: raise prices, decrease serving sizes or move away from wings and focus on other menu items.

Ultimately, the company opted to adapt and change the wording of its wing servings on the menu, moving from a 6- or 12-piece order to menu items labeled as ''snack,'' ''small,'' ''medium'' or ''large.'' The change guaranteed a certain amount of chicken in weight, without naming the number of wings specifically. By all accounts, the change in wording had very little impact on customer perception or satisfaction.

This Buffalo Wild Wings story is just one example of what it's like to do business in a VUCA world.

What Is VUCA?

VUCA is an acronym, first popularized by the U.S. military in the 1990s, that represents the difficult or challenging situations businesses face in a 21st-century marketplace. VUCA represents:

  • Volatility
  • Uncertainty
  • Complexity
  • Ambiguity

It's no big surprise that as the business world changes and becomes less predictable, doing business becomes more complicated and uncertain. Buffalo Wild Wings learned the hard way that through its experience with rising costs and fewer wings, which was impacting its bottom line. It had to adapt quickly to keep from losing money, while still satisfying the needs of its customers.

The concept of VUCA, in fact, is changing the way that organizations make decisions, manage risks, foster change and solve problems. We'll get into that in a bit, but let's discuss the elements of VUCA first.

The VUCA framework puts names to the different types of challenges business may face. These include the following:

Volatility and Uncertainty

Like Buffalo Wild Wings can attest, volatility is being confronted with something unexpected or a rapid or significant change. The restaurant saw this in the rising price of chicken wings and had to adjust to stay afloat.

Uncertainty involves the unknown or facing a situation that is unpredictable. A business may not be able to predict or forecast what's caused the change and may be unsure how to proceed as a result. Uncertainty can also pop up in the form of business or market surprises, and may be a result of circumstances a business cannot control.

Complexity and Ambiguity

The concept of complexity in business involves the many working pieces and parts that make navigating change more difficult. It can manifest in confusion, lack of information or even too much information, such as myriad avenues of advertising for various companies vying for consumer attention. Because of the wide range of possibilities, things become more complicated.

Ambiguity exists in the world of the unknown. Circumstances may be unclear, information may be vague and signals may get crossed due to mixed messages.

VUCA's Impact

Volatility, uncertainty, complexity and ambiguity all play roles in how leaders and business make decisions, problem solve, handle risks and innovate for change. How?

To begin, they provide a framework in which businesses plan and make decisions. If a business is confronted by an issue of volatility, such as rising prices, that challenge creates boundaries for the company that they must operate within to make decisions and, hopefully, innovate for change.

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