In this paper, the origin and basic assumptions of the VUCA paradigm are first explained. Then the current megatrends are named as drivers for VUCA and digitization in particular is examined in more detail. Then I dedicate myself to the consequences of VUCA for the individual, for society and politics.
What the VUCA dimensions mean for companies, organizations and the HR department is discussed in the following chapters. After deriving recommendations for action for the above areas, the thesis ends with a short discussion and a look into the future.
Table of content
Table of content
List of figures
1. Introduction
2. Origin and basic assumptions of the VUCA paradigm
3. Overarching megatrend digitalization
4. Impact of the VUCA world
4.1 Consequences of VUCA for companies and organizations
4.2 Importance of VUCA for the HR department
5. Derivation of recommendations for action
5.1 Recommendations for companies and organizations
5.2 Recommendations for human resources
6. Conclusion
Appendix:
Bibliography
Internet sources:
List of figures
Figure 1: Relationships VUCA
Figure 2: Elements of an organisation
Figure 3: Fields of action for the HR department
1. Introduction
Fundamental reforms, renewals and reorientations of cultures and societies are not a new phenomenon, because changes have occurred since time immemorial (cf. Amann & Alkenbrecher, 2015, p. 18). The Greek philosopher Heraclitus of Ephesus has already established before our era that the only constant in our universe is change (cf. Appelo, 2011, p. 317).
According to Drucker, there is a profound change in the history of the Western world every few hundred years. Within decades, a society with new basic values, social, economic and political structures emerges (cf. Drucker, 1992, p. 3). Looking backwards at the industrial stages of development underscore Drucker's statement, but the speed of change has increased rapidly in recent decades.
Around 1800, the first industrial revolution (Industry 1.0) marked the transition from agrarian to industrial society, made possible by the invention of the mechanical loom and the steam engine.
The starting signal for the second industrial revolution (Industry 2.0) is the introduction of electricity at the end of the 19th century. The work in the production halls will be further automated. New manufacturing techniques such as assembly line work result in mass production. But office workplaces are also undergoing further development. Telephone and telegram simplify communication and speed up the work process.
With the invention of the first functional computer in 1941, the third industrial revolution (Industry 3.0) begins. The use of IT and robots leads to greater automation of production. The personal computer for office and household establishes a new branch of industry (cf. Frick, 2018, above).
We are currently in the fourth industrial revolution (Industry 4.0). It is characterized by the networking of man, machine and product in real time. In this phase, the focus is on increasing digitization (cf. Welpe, Brosi & Schwarzmüller, 2018, p. 10).
In today's living environment, the speed of change, the complexity and the ambiguity of statements can be felt intensively both in the workplace and in the private environment (cf. Lenz, 2017, p. 38). The speed of the current change has no historical model (cf. Eder, 2017, p. 15), this is one of the reasons why a prediction of the future is almost impossible (cf. Graf, Gramß & Edelkraut, 2017, p. 15). The associated challenges in the post-modern world are summarized in the acronym VUCA (Volatility, Uncertainty, Complexity, Ambiguity) (cf. Lenz, 2017, p. 39).
In the present term paper, the origin and basic assumptions of the VUCA paradigm are first explained. Afterwards, the current megatrends will be mentioned as drivers for VUCA and digitization in particular will be examined in more detail. Then I dedicate myself to the consequences of VUCA for the individual, society and politics. What the VUCA dimensions mean for companies, organizations and the HR department is discussed in the following chapters. After deriving recommendations for action for the above-mentioned areas, the term paper ends with a short discussion and a look into the future.
2. Origin and basic assumptions of the VUCA paradigm
The origin of VUCA lies in the military sector. The acronym was introduced in the late 1990s by the US Army War College (cf. Amann & Alkenbrecher, 2015, p. 27) to describe the turbulent scenarios of modern wars and conflicts. Especially in the Iraq wars and in the fight against the Taliban in Afghanistan, the American armed forces have noticed that the military conflicts have changed (cf. Graf, Gramß & Edelkraut, 2017, p. 217). Despite existing command structures and high-tech equipment, it has not been possible to take effective action against decentralized, agile network structures of the enemy. It was time to develop a new understanding of how to deal with rapid changes (volatility), the increase in uncertainty (uncertainty), complexity (complexity) and ambiguous information (ambiguity). The command structure of the army and its training have been converted to the VUCA requirements mentioned above, i.e. rigid, centrally controlled organizational structures have been replaced by decentralized, self-responsible networks and autonomous teams (cf. Lenz, 2017, p. 39). With small combat units of a maximum of nine people, so-called squads, the basis for an agile organization has been created. There has been a shift from symmetrical to asymmetric warfare, the foundations of which are also of interest to the corporate world (cf. Burg, 2017). In his book Corps Business ,2001, Freedman lists a total of thirty military principles that he believes are transferable to management. These include the already mentioned focus on small teams and a flexible organization. Hierarchies are in place, but decisions can be made in an emergency without prior involvement of management (cf. Freedman, 2001, p. 207) or the realization that there are no one hundred percent correct solutions and contrary opinions are helpful. In addition, he is of the opinion that only through constant training across all hierarchical levels and departments, an organization can be successful (cf. Freedman, 2001, p. 208).
In particular, the financial crisis in 2008 was an important catalyst for the adoption of the VUCA concept into the corporate world. In the face of a situation comparable to a military trouble spot, existing business and organizational models became obsolete. At the latest since the beginning of the digital transformation from 2011, the VUCA dimensions have already become reality for many employees and managers (cf. Welpe, Brosi & Schwarzmüller, 2018, p. 25).
Characteristic of current and future working environments are the four central basic assumptions of the VUCA paradigm, which are explained below.
Volatility actually comes from the statistical and financial sector (cf. Mack, O. et al., 2016, p. 6) and refers to the increasing speed, scope and dynamics of change. Their extent and range of fluctuations are also increasing, e.B. fluctuations on the stock exchange (cf. Graf, Gramß & Edelkraut, 2017, p. 16) or price fluctuations after a natural disaster (cf. Bennett & Lemoine, 2014, p. 2).
Uncertainty describes a decreasing degree of predictability of topics and events, new things arise from nothing. Consequences of actions can hardly be predicted, causal relationships become more unclear (cf. Graf, Gramß & Edelkraut, 2017, p. 16), e.B. the future market development can hardly be predicted by the product launch of a competitor (cf. Bennett & Lemoine, 2014, p. 2). Kail (2010) cites the events of 9/11 as a tragic example of uncertainty. Those responsible saw this as a repetition of the attacks of 1993 in the parking garage of the World Trade Center and reacted according to the evacuation plan drawn up at the time, thereby losing valuable time to rescue. In other words, a previously developed successful solution does not necessarily have to be correct in a similar case (cf. Kail, 2010, p. 3).
Complexity refers to the increasing number of links, dependencies and possibilities for action that make a topic inscrutable (cf. Drath, 2016, p. 283). Linear relationships no longer exist (cf. Mack, O. et al., 2016, p. 6) instead contradictory interests and dilemmas are increasing (cf. Graf, Gramß & Edelkraut, 2018, p. 16), e.B. due to global sales markets in which each country has different regulations and cultural values (cf. Bennett & Lemoine, 2014, p. 2).
Ambiguity describes an ambiguous factual situation, the world becomes blurred (cf. Graf, Gramß & Edelkraut, 2018, p. 16). Framework conditions and prerequisites can be interpreted in several ways, even two contradictory statements can both be correct (cf. Lenz, 2017, p. 39), e.B. the decision to invest in immature or emerging markets or to dare a product launch outside the core business (cf. Bennett & Lemoine, 2014, p. 2).
However, the four dimensions described should by no means be seen separately from each other. Rather, they are in a reciprocal relationship to each other, and in some cases they overlap. According to Mack (2016), the dimension complexity has a key function because it creates the elements volatility and uncertainty. The subsequent decision-making process is characterized by ambiguity (cf. Mack, O. et al., 2016, p.7).
Figure 1: Relationships VUCA
Abbildung in dieser Leseprobe nicht enthalten
Source: Based on Mack, O. et al., Links between VUCA, 2016, p.7
In summary, vuca is a natural phenomenon that people and companies have to deal with due to the described framework conditions of our world today (cf. Mack, O. et al., 2016, p. 11). Which drivers are superordinately responsible and what effects arise from this is discussed in the following chapters.
3. Overarching megatrend digitalization
The current megatrends: Digitalization, globalization, connectivity, new work, and a new culture of knowledge (cf. Zukunftsinstitut, 2018) can be identified as overarching drivers of VUCA (cf. Graf, Gramß & Edelkraut, 2017, p. 18). According to the definition of the Zukunftsinstitut, a trend is a change movement or a process of change (cf. Zukunftsinstitut, 2018).
The most discussed trend in the literature is digitization. This is due, on the one hand, to its speed, scope and impact on existing systems, and on the other hand, to the fact that it affects all areas of human interaction, the business world, politics and society. Digitalization means, for example, that billions of people have unlimited possibilities through the use of their smartphones, because they are equipped with unprecedented computing power (cf. Eder, 2017, p. 15). Content is recorded, photos are taken, comments are inserted, events are liked, etc. and thus an increasing amount of data is generated, which can be evaluated with the help of algorithms and whose ownership represents a real competitive advantage for companies. Social networks span the world, connect people, establish business relationships and provide information about applicants. However, they also pass on information from social bots and can use echo chambers to repeat the same content, so that the impression of an opinion majority is suggested. The keyword Industry 4.0 mentioned at the beginning includes intelligent factories with machines, logistics units and products that communicate with each other, cooperate and thus become a self-controlled system. Through the so-called Internet of Things, the heating in intelligent houses can be operated digitally or checked via smartphone whether there are burglars in the house. Without claiming to be exhaustive, the above-mentioned developments fall within the scope of the overarching VUCA trend of digitization. These developments affect not only companies in the information and communication sector, but all companies. From agriculture to healthcare to the food industry, there is no area that does not have to deal with digitization and its VUCA effects (cf. Welpe, Brosi & Schwarzmüller, 2018, pp. 9-10). Against this background, the following chapter is dedicated to the consequences of VUCA.
4. Impact of the VUCA world
The effects of the VUCA world are not only visible in the corporate world, but also in the private sector, society and politics.
Around eighty-six percent of Germans believe that their lives are faster than they were ten years ago (cf. Papasabbas, 2017, p. 113). Many people find it difficult to adapt to the speed with which our living environment is changing (cf. Vogel, 2016, p. 24). Multi-options and the constant intensification of competition require a high level of presence, attention and flexibility from each individual. There is no certainty about what has been achieved once in a lifetime, the compulsion to constantly prove one's performance anew prevails (cf. Vogel, 2016, p. 24). On a social and political level, when VUCA is mentioned, there is often something threatening. There is a diffuse fear about the dismemberment of our society. On the one hand, a Generation Global is growing up that no longer feels part of a nation state, a party or a religion, but thinks cosmopolitan (cf. Papasabbas, 2017, p. 45), on the other hand, nationalist populism is growing (cf. Dettling, 2017, p. 91), for example the refugee crisis. Concerns about ever-increasing inequality in our society (cf. Brynjolfsson & McAfee, 2016, p. 210) are also growing. Digitalization as a VUCA driver gives rise to fears that dealing with the new technologies could develop as a monopoly on power and, in addition to the gap between rich and poor, a new wealth gap between digital alphabets and illiterates will arise (cf. Eder, 2017, p. 16). The widespread fear that increasing automation will make people superfluous in the coming world of work is refuted by Horx (2017) in his robot report. Especially in countries with a high degree of automation, such as Japan and Germany, there is lower unemployment. He names numerous professions that have only emerged in recent decades, such as Internet scouts or bloggers (cf. Horx, 2017, pp. 26-29). The fact that not only new professions are emerging in the VUCA world, but also the forms of organization and work are changing, becomes clear in the next chapter.
4.1 Consequences of VUCA for companies and organizations
The megatrends already mentioned force companies to decide and react even more focused, faster and more flexibly. Due to the strong competition and the fast pace of the economic world (volatility), companies are exposed to an ever stronger pressure to innovate. On the one hand, the traditional brand Levis has to face the new yoga pants trend (cf. Higgins, 2015, above) and, on the other hand, it has to carry out its established jeans pants business with already proven structures and processes as usual (cf. Grannemann & Rotzinger, 2017, p. 26). The uncertainty about the development of the markets makes strategic planning increasingly difficult and there are no proven recipes from the past that can be used (complexity). For example, Volkswagen did not present the usual five-year plan in the context of the diesel affair, but "drove on sight" (see Handelsblatt, 2015). Due to his increasing individuality (ambiguity), the way he deals with the customer also changes (cf. Vogel, 2017, o. S.). Whether muesli, shoes or laptops, everything should be tailored to personal wishes (cf. Heckel, 2016, o. S.). Thus, all areas of the company from research and development to marketing and sales experience the effects of the VUCA world. A detailed examination of the individual departments in the company would go beyond the scope of this term paper. That's why I dedicate myself below to the VUCA impact on companies as an organization. Organizations are social entities that jointly pursue a defined goal through certain structures, processes, roles, rules of the game and values. When organizations change, their components always change, i.e. the people and culture, the structure and roles as well as the rules and processes (cf. Schroeder-Hohenwarth, 2017, pp. 215-216).
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