Consumer Behavior Lecture #1 : VUCA
What is a VUCA world?
- created post Cold-War period to explain emerging new world dynamics - Operating in complex environments due to rise of globalization and info technology - Traditional structure is not equipped to handle VUCA (rapid change) - Must give up traditional structure in order to handle complexity!! Strategy needs to evolve to work with VUCA, increase agility, capacity in order to adapt
What are 5 steps we can take in VUCA moments?
1. Anticipate the issues that shape conditions 2. Understand the consequences of issues & actions 3. Appreciate the interdependence of variables 4. Prepare for alternative realities & challenges 5. Interpret & address relevant opportunities
Ambiguity (characteristics, example, approach)
Causal relationships are completely unclear. No precedents exist; you face "unknown unknowns" (EX) you decide to move into immature/emerging markets or launch products outside your core competencies. [Approach]: experiment; generate hypotheses & test them, learn lessons that can be broadly applied
Some examples of VUCA situations
Coronavirus, unemployment, poverty & social inequality, financial/political corruption, crime & violence
Uncertainty (characteristics, example, approach)
Despite a lack of other info, the event's basic cause/effect are known. Change is possible but not given. (EX) a competitors' pending product launch muddies the future of the business & the market [Approach]: invest in information (collect, interpret, share it); works best w/ structural changes like adding info analysis networks to reduce ongoing uncertainty
Losers & Winners (think about how different industries adapted to Covid)
Potential Losers: tourism/leisure, aviation & maritime, automotives, construction/real estate, manufacturing, financial services, education oil & gas Potential Winners: agriculture, e-commerce, ICT, personal & healthcare, food processing & retail, medical supply & services
Complexity (characteristics, example, approach)
Situation has many interconnected variables, some info is available or can be predicted, but volume can be overwhelming to process. (EX) you're doing business in many countries, all with unique regulatory environments, tariffs, & cultural values. [Approach]: restructure, bring on/develop specialists, build up resources adequate to address the complexity
Volatility (characteristics, example, approach)
The challenge = unexpected/unstable with unknown duration, but not necessarily hard to understand as knowledge about it is often available (EX): prices fluctuate after natural disasters takes a supplier off-line. [Approach]: build in slack & devote resources to preparation! (stockpile inventory/overbuy talent)
What does VUCA stand for?
Volatility Uncertainty Complexity Ambiguity
