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Know Why the future of business is VUCA?

VUCA

After the Pandemic, the world economy underwent serious changes, making change inevitable. There has been no stability in anything. Business leaders of our generation have worked in and been through uncertain times. Over the past decades, the concept of executive decision-making has suffered from global upheavals, shocks, and transformations, including digitization, technology transformation, geopolitics shifts, business model development, and shifting consensus on globalization and trade.

The COVID-19 pandemic is altering our society’s calculation of uncertainty, as no COVID-19 crisis has occurred in recent memory. Business changes are being discussed and talked about. Recently the Finance Minister of India Nirmala Sitharaman told FICCI leads 2022 that the future of business is VUCA.

According to Nirmala Sitharaman, if the future of finance is VUCA, then it will be even more so. Let’s try to understand what she meant. She meant that the future of any business is unpredictable after the changing times and the business need to adapt to the desired change for survival.

VUCA is an acronym for Volatility, uncertainty, complexity, and ambiguity.

A firm’s characteristics should be able to adapt to the fluctuating needs of the environment since every demand is based on a need. The business model must be capable of deploying quality functions and analysing risks using FMEA (Failure mode Effect Analysis). As consumer expectations change, the company must evaluate its business plan and respond by offering a feasible option. A method that mitigates risk with reliable countermeasures is needed to create alternative sources of action.

Even though it is challenging for anyone of us to pinpoint a specific area of finance and predict how it will play out, we must all make plans, think within the limits before us, and be prepared to fend off any black swan events that might arise. In light of this, there is a sense of urgency when it comes to discussing the future, especially the future of finance since we need to prepare ourselves for something that will be more unpredictable and volatile and influenced by outside factors.

India is facing unprecedented challenges. Covid Pandemic has not ended yet and we are facing localised threats and disasters with regional or national implications. The conflict between Russia and Ukraine is having a significant effect on the world’s supply chain, obstructing the movement of commodities, driving up costs and product shortages, and resulting in severe food shortages globally.

According to the definition of VUCA, the world is currently experiencing a Black Swan event due to the Coronavirus causing chaos and changing business models.

VUCA stands for Volatility, uncertainty, complexity, and ambiguity.

Volatility: Volatility refers to the dynamics and character of change as well as the causes and catalysts that drive that change and its type and speed.

Uncertainty: Uncertainty is a Lack of predictability, the potential for surprise, awareness and comprehension of problems and events are all examples of uncertainty. Businesses should be able to adopt the uncertainty and prepare the mix to counter it

Complexity: In terms of an organisation, complexity refers to the multiplicity of forces, the confounding of problems, and the chaos and confusion that surround it. Darwin believed in the survival of fittest theory and the organisations would indeed survive that are capable of adjusting to the given environment

Ambiguity: Ambiguity is the blurriness of reality, the possibility of misinterpretations, and conflicting interpretations of conditions. The business needs to use a diligent, proactive approach to decision-making if the business model has to succeed.

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