By: Kellie McDermott
Organizations operate very differently than they once did. Making the understanding and assessment of your project’s external business environment even more important to project success. Project managers and project teams need to operate with an appropriate level of awareness of what is happening outside of the project in order to be able to handle potential impacts.
To understand the business environment better, project managers and project teams can use prompts. These frameworks can be used to guide the understanding of external factors that may impact the project. Common prompts include: PESTLE (political, economic, social, technical, legal, environmental); TECOP (technical, environmental, commercial, operational, political); and VUCA (volatility, uncertainty, complexity, ambiguity). This article will concentrate on how you can use VUCA to develop resiliency, navigate change, and bring your project to a successful end despite uncertainty.
What is VUCA?
VUCA stands for volatility, uncertainty, complexity, and ambiguity. It describes how rapidly business, technology, and other advancements are changing and growing making our future state unpredictable and the nature and pace of those changes.
Volatility
Volatility refers to an environment undergoing change and disruption. In a volatile environment, change is unpredictable and often occurs suddenly. The extent and timespan of change is hard to anticipate. This complicates your organization’s ability to keep up with trends and anticipate future needs.
The COVID-19 pandemic is a great example of volatility. Within a short period of time, many organizations had to switch from fully in-person to fully remote while maintaining operations and without knowing when the situation would ease or what further changes awaited.
Uncertainty
Uncertainty refers to the lack of predictability during times of change. Planning becomes more difficult when conditions cannot be fully understood. Failure to deal with uncertainty can create organizational “Analysis Paralysis” as decision-makers second guess themselves.
Marketplace disruptions are a good example of uncertainty. When a competitor releases a new product or service, organizations might struggle to understand whether the new entrant is a real threat in the near- or long-term or if it is just a fad. This uncertainty could cause organizations to delay its response.
Complexity
Complexity refers to many dependent factors, each of which could be in different stages of change or importance. You must ensure you and your organization understand the complex environment you are operating in to plan and operate in a coherent and focused manner.
Inflation is a great example of complexity. Inflation can have multiple complex causes that differ based on your industry or products. Responding to inflation is more difficult when assessing a mass of interconnected factors that may or may not affect your project or organization.
Ambiguity
Ambiguity refers to a lack of clarity about what is happening. Ambiguity is common when organizations try to assess market conditions and what their competitors will do next. Also, not all relevant knowledge is readily available or accessible to project managers, and they might be unaware of crucial information or other factors that affect the project or business environment.
Why VUCA?
Understanding the principles of VUCA helps you as a project manager and your organization realize what you know and can control, and, maybe more importantly, what is not within your control. When you and your project team understand a VUCA environment, you can focus on crafting strong responses rather than getting caught up in confusion and uncertainty.
Organizations can also use the VUCA framework for scenario planning to identify areas of concern or improvement, then brainstorming ways to prevent, mitigate, or adapt to those scenarios.
Resilient and agile organizations adapt to change and maintain strong performance even when nothing seems certain. These traits can definitely be learned. As you and your organization look to increase resiliency and adaptability, consider the following ways VUCA can help increase your skills.
Assess Organizational Risks of Volatility
To build resiliency against volatility, have you and your project team need to create a robust risk management plan to navigate unexpected and changing circumstances. Four questions that should be asked when developing your risk management plan include:
What is causing volatility?
- How can it be solved?
- Who will be affected?
- Why are we addressing this?
For example, supply chain disruptions affected many organizations in 2021 and still today. These organizations struggled to obtain raw materials, parts, and other crucial resources to complete their projects. If a project team is looking to build resilience against such volatility, a variety of subject matter experts should be brought together to share their valuable perspectives. Some might emphasize the complex numbers and facts, such as the amount of stock on hand and the extra costs of seeking alternative suppliers. Some may help create a coherent plan that assigns clear responsibilities to each involved role and department. Some may consider how this volatility affects your suppliers, customers, and employees. And some may think out-of-the-box and suggest new solutions to the supply chain issues.
Create Contingency Plans for Uncertainty
One of the challenges of uncertainty is that many people become afraid to act if clear solutions are not available and every option carries at least some level of risk with it. Project teams that have clear project visions, transparent plans, and clarity on processes tend to build resilience against uncertainty easier. These teams collaborate to proactively create solutions to all possible scenarios. These contingency plans (think back to your risk management) help project teams react with a purpose to unforeseen events.
Break Down Complexity
Complexity is not just about changing a mindset. The key to making complexity more manageable is to break down complex problems into smaller, achievable tasks. Work with your project team to identify the core components of complexity within the project environment, analyze them, and break them into smaller, more manageable parts. Then, with these smaller components in hand, form a plan for each component, including setting a timeline and assigning tasks to individuals or teams. The team should communicate, collaborate, and monitor the plan to ensure processes stay organized, progress is measured, and stakeholders know what is happening. As the team works on the various components of the plan, you might discover synergies you otherwise would have missed.
Create Decision Frameworks to Overcome Ambiguity
Your team can build resilience against ambiguity by creating frameworks, processes, or structures that help people make decisions in the face of unknowns. Some questions you and your project team could ask include:
- What does the data say about our current state? How will we measure success?
- What is the plan of action? What processes and guidelines should we use?
- Does everyone have a clear role? Who is affected by this plan?
- Why are we doing this? Have we explored all the feasible options?
Ambiguity can create more freedom to explore and experiment. Ensure that experimentation is followed by measurement, analysis, and reflection.
Upskill Project Team Members
Operating in a VUCA environment requires different skills and abilities. For example, if the organization is adding artificial intelligence and machine learning to its processes, that can cause significant volatility and uncertainty for staff worried about their futures. Leadership can prevent ambiguity by being clear and forthright about what these technologies mean for the organization.
Let Solarity Help
The world changes quickly, and organizations with the capacity for agility will gain an advantage. “You don’t have to be a CEO to redefine leadership,” says Herrmann Chair Chief Thought Leader, Ann-Herrmann Nehdi. “You just need to understand how you can better flex your thinking. Look at the competencies that are most challenging for you today and start working on developing those before you get caught off guard.”
How you, your project team, and your organization use VUCA will be unique, but in reality, we all must get comfortable with volatile, uncertain, complex, and ambiguous situations. Help your team embrace this new reality through building resilience and agility. We offer a variety of courses to help you and your team build resilience and agility. Keep in mind that we can customize any of our courses to meet your unique needs.
Check out our offerings:
Reference
Herrmann International. “VUCA World: Building Resilience.” 2023.