The Impact of VUCA on Organizational Change

Organizational change defines the transition of organizational process from the current state to the desired state (van den Heuvel, Demerouti and Bakker 2014). The aim of the organizational change is to improve the organizational process towards getting better business success. The market conditions of organizations are changing at rapid pace. Such changing market condition is actually referred to as VUCA, which stands for volatile, uncertain, complex and ambiguous market situation. This discussion will highlight the way in which uncertainty, volatility and chaos drive organizational change. Apart from that, the discussion will also incorporate some models and theories of organizational change and innovation for better understanding of organizational change.

The world is changing at an increasingly rapid pace. Such changes are not only radical, but also these are transformative. Transformative changes transform every aspect of human lives as well as the boundaries between and within the markets. VUCA world has high level of impact on the organizations and such changing world ultimately drives the organizations towards changes. According to Kuusela, Keil and Maula (2017), VUCA world leads to new challenges for organizations with highly volatile and uncertain market. More specifically, with the globalization nature, the organizations are facing highly volatile and uncertain market. With the frequent changes in the market situation, no organization is capable of sticking to only one fixed strategy. They must have to change business model for coping up with the market changes. On the other hand, Cullen et al. (2014) opined that organizations often do not understand the complexity level of the market or organizational situation can hamper the business process. In complex market situation, organizations cannot always foresee elements behind the market change. Hence, these organizations should incorporate change management plan and innovation model towards coping up with VUCA market changes.

In case of volatile market condition, the situation of the market is highly unstable and it may be form an unpredictable period of time. Both external and internal markets can be volatile in nature, which can have high level of influence on the business process organizations. According to Lockett et al. (2014), fluctuation in the share price is a great example of organizational change in the face of volatile market condition. Moreover, organizations are forced to change fluctuate its share price with the changes of demand and sell of share holders. The speed and rate of change in business organizations and markets demands have accelerated the market demands. On the other hand, Hornstein, (2015) opined that in contemporary market condition, the demand and preferences of the customers seem to be extremely volatile in nature. Customer demands and preferences are always changing with changing life style. In such situation, organizations must have to change their product and service features for coping up with the change in customer demands and preferences. Innovative and customized features in the changed products and services make the customers more loyal to the organizations. Otherwise, the organizations can lose the loyalty of the customers. Hence, it can be said that volatile market condition drives organizational change and innovation.

Volatile Market Conditions and Organizational Change

While considering the example of Coca Cola Company, it can be said that volatile market condition has led to its major organizational change. The organization had to add and change some of its products as per the demands of the customers for sugar free cola. Hence, it can be said that Coca Cola Company has perfectly aligned its product quality and innovation with the changing demands of the customers for getting long term success (Oreg et al. 2018). On the other hand, while taking the example of Nokia, the organization had become failed to cope up with the changing demand of the customers for android operating system. It had not changed its operating system and remained stick with its old windows operating system. Ultimately, the customers started to shift to other organization for fulfilling their changing needs, which ultimately causes disruption of the business of Nokia (Cordery et al. 2015).

In case of uncertain market condition, uncertainty is all around the business organizations. In such difficult time, it is extremely necessary to be clear on present for accurately predicting the future outcome. However, uncertainty is always associated with lack of predictability of the issues and events, which can ruin the success of business. According to Cameron and McNaughtan (2014), sudden launch of similar or even superior products and offerings by the competitors can be an uncertainty for the organizations. New and innovative products offered by the competitors often seem to be a threat for a particular organization. In such situation, the organization should change their business model through launching their unique products and service for beating the competitive of the competitors. On the other hand, Nohe and Michaelis (2016) opined that political forces have also direct bearing on the functioning of business organization. Political forces like the ideologies of the parties, Government decision, tax policy and political stability seem to be quite uncertain for organizations. Changes in political frame force organizations to change their business model for coping up with the changes political frame. Organizations always have to be adaptive with the changing government decisions and policies for their long term sustainability. Hence, it can be said that uncertain

While considering the example of Tesco Plc, it can be seen that the organization always changes their product quality and discount policy as per the changes of their competitors companies. In this way, the organization has become capable of beating its competitors in Australian markets (Sharif and Scandura 2014). On the hand, Volkswagen did not change their carbon emission rate of the cars as per the carbon emission standard set by government for which Government had banned those cars leading to organizational failure (Axelrod and Axelrod 2017). From these two examples, it is evident that uncertainty leads definitely leads to organizational change.

Examples of Organizational Change

While considering the model of organizational change, Lewin’s three step model of organizational change can be highlighted. As per this model, organizations must break down their existing status quo before building up new ways of operating. Each and every organizational members are not willing accept the organizational change. However, in order to cope up with the uncertainty, volatility and chaos of market condition, organization must have to change their own business model. According to By, Oswick and Burnes (2014), organizations need to unfreeze the exact needs for the changes for organizations and convey it to the important organizational members for encouraging them towards organizational change. In this way, the organizational members become willing to accept the organizational change. In the next step, the organizational members resolve the uncertainty about the organizational change and actively participate to implement the change for beating the market volatility and uncertainty. The organizational leaders must be highly supportive to their subordinates to help them in contributing in organizational change success. Appelbaum et al. (2015) opined that refreezing stage is related to stabilization of organizational change for long term organizational success. Every organizational member must have the sense of stability and confidence to beat the market volatility through organizational change.

Complexity is the confounding of issues and chaos associated with the changes in the market. Some information about the nature complexity is obtainable, while some other can be predicted. Logical enquiry and reasoning can be extremely necessary for solving the complex nature of market condition. Shah, Irani and Sharif (2017) pointed out that business organizations cannot always foresee the factors, which can hamper their success level. Hence, organizations should always be adaptive in all situations for making changes in the business model as per the complexity of the market condition. As per Vakola (2014), in the globalized business environment, international business organizations have to face unique tax and regulatory environment in different international countries. Hence, different regulatory market and business conditions of international countries drive the organizations to change their business model for getting success in those countries. On the other hand, Smollan (2015) opined that globalized organizations must have to be adaptive as per the different cultural expectation of the international countries. For example, Dominos has perfectly localized and adapted their pizza variance as per the cultural expectation of global customers. Hence, it can be said that complex and chaos nature of market condition definitely drive organizational change.

Complex market environment leads to good deal of ambiguity, which make it difficult to understand the meaning of event and its impact. According to Axelrod and Axelrod (2017), the consequence of ambiguous business condition can be highly unpredictable, which can never guarantee the determined success of any business situation. Hence, organizations should always be adaptive in nature for making changes in the business model in the negative consequences of the ambiguous market condition. Vakola (2014) pointed out that organizations often launch products and services, which are out of their core competencies. Organization launches such products and services without having any experience in those products and service. Hence, it can lead to organizational ambiguity depending on the acceptance rate products and services by the customers in the market. Hence, such organizations should always keep an alternative plan, which can support them in case of failure of business in ambiguous market situation. For example, the ambiguous market situation led to failure of Coca Cola Life. However, they immediate changed their business plan by banning the product and making alternate business plan. Hence, it is evident that ambiguity drives to agile business condition for organizations.

Uncertain Market Conditions and Organizational Change

While considering the kotter’s 8 step organizational change model, it can be said that this model is perfect for establishing changes in the organization as per volatile and uncertain market condition. As per this model, the organizational leaders must have to create a sense of urgency regarding the organizational change among the organizational change. The leaders must lead the organizational members properly for convincing them towards the change. The vision of the change must be clear enough to foster organizational change towards beating the volatile and uncertain market condition (Cameron and McNaughtan 2014). Furthermore, the change agent must communicate the vision of the organizational change equally with all organizational members. It will engage all the organizational members with the required organizational change.

In the next step, the organizational change should remove obstacles for smooth implementation of the organizational change. Instead of setting one long term goal, the change leaders should focus on short term winning strategy towards long term organizational change. Such short term win will motivate the organizational members towards successful organizational change. After all these, organizational leaders can establish successful changes for making their organizations adaptable in the volatile, uncertain and complex market condition. The ideas for continuous improvement should also be associated with the organizational change (Nohe and Michaelis 2016). However, in the next step, the change leaders should anchor the organizational change with the overall organizational culture for long term sustainability of the organization. The model of business innovation adds innovative and unique business ideas in the business models through fostering proper organizational change. Moreover, the changes for organizational innovation help organizations towards gaining high level of competitive advantage over the rivals.

Conclusion

While concluding the discussion of the question, it can be said that volatile, uncertain and chaotic market conditions create huge challenges on the business operation. No organization can cope up with the volatile and uncertain market conditions with just one fixed organizational strategy. Moreover, organizations need to change their business process in every step as per the volatile and uncertain market condition. The changing demands of the customers are highly volatile in nature, which drive the organizations towards changing their business strategies and products and services. On the other hand, sudden launch of similar or superior products and service by the competitors can be high uncertain for the organizations. Hence, the organizations should bring organizational innovation through proper organizational changes towards getting high level of organizational success. Apart from that, organizations face tough complexities in their globalization, while they are influenced by different regulatory environment in international markets. Hence, the organizations should adopt localization strategy for fostering success in international market. Moreover, it can be said that volatile, uncertain and chaos drive organizational change.

Reference List

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