Nathan Bennett and G. James Lemoine (“What VUCA Really Means for You” [Harvard Business Review, January 2014 edition]) superficially introduced the four horsemen of apocalyptic decision making (Volatility, Uncertainty, Complexity and Ambiguity [VUCA]). This post dives deeper into volatility, and future ones will address the others. While two or more are often at play, for my analyses only the one under discussion will be. The objective is to increase our comfort level in dealing with these four.
Frequent and extreme changes characterize volatility. If the other three are not in the picture that means our event is not overly complex, ambiguous or uncertain. Using Bennett’s and Lemoine’s example of prices fluctuating after a natural disaster, that means prices might fluctuate wildly over the short run, but we reasonably should be able to predict their long term. That means ensuring we’re in position to “ride out the storm.” Once that’s assured, short-term opportunities might avail themselves.
Other examples include:
- Suppliers dumping product onto the market, issuing recalls or severely reducing production
- Employers laying off or massively hiring talent we typically need
- New competitors making a splash without sustainability
- Legislative changes drastically altering the “rules of play”
Again, assuming the other three are not present, the long term should be reasonably simple, clear and certain. Our allies will be history and experience in finding related patterns, and statistical and data analysis in determining long-term trends. Once done, we’ll need to re-verify that current policies, processes and procedures will get us there.
Managerially, we’ll need to avert the natural reaction of responding immediately to every change or new information. Once we’ve determined the best long-term destination for riding out the storm, and once we’ve assured ourselves our infrastructure can carry us there, it’s a matter of securing the resources to do that.