Home » Why business acumen is more important than ever in a VUCA world

Why business acumen is more important than ever in a VUCA world

“In the VUCA world, immersive learning, experiential learning, is the pedagogy of choice, because it’s not just a fixed body of knowledge that you want to transfer. It’s a whole contextual set of lessons that you have to learn almost at the muscle memory level, to make them real”

– Bob Johansen, 2012, Distinguished Fellow, Institute for the Future.

Driving business success is traditionally built on careful research, forecasting, strategizing, implementation, and measuring results.

Working with such precise measurement is no longer possible. In today’s world, change happens too fast, the future is too uncertain, systems are too convoluted, and markets are too unclear for us to follow traditional ways of working.

However, when equipped with the right skills, leaders and organizations can successfully navigate and thrive in a VUCA world.

Living and working in a VUCA world

Though the term VUCA has existed since 1987, it has been more popular since the early 2000’s, and after the financial crisis of 2008-2009 has been widely used to describe today’s business context.

Volatility refers to the pace of change in the marketplace or surrounding world, and the more volatile a market is, the faster things change. Uncertainty relates to how confidently we can predict the future; in an entirely uncertain world, we are not able to statistically predict anything. Complexity has to do with the number of factors we need to consider; a more complex environment with more interconnected factors makes it more difficult to conduct analyses and come to rational conclusions. Ambiguity refers to how vague or unclear a situation is: the more ambiguous, the less clear it is what is happening.

What is business acumen?

A study by President of Celemi Americas Jay Jacobson has gathered over 30 published definitions of business acumen to present the following characteristics:

  1. Business acumen is behavioral and experiential, and is not simply technical business knowledge, concepts, or practices.
  2. Business acumen requires the synthesis of technical knowledge, personal business experience, broad organizational exposure, global awareness, and analytical insight.
  3. High levels of business acumen result in improved financial performance, operating efficiency, human capital value, and market share growth.
  4. Having business acumen leads to decisions that incorporate a balance between short-term objectives and long-term strategic goals.
  5. Business acumen enables organizational agility to quickly exploit opportunities and defend against threats.

How can business acumen help in a VUCA world?

Given the above characteristics, how can having a strong business acumen help in a VUCA world?

Volatility:

When change happens faster, decisions also need to be made faster. This means market analyses, strategic planning, marketing strategy, financial planning, HR questions, and everything in-between needs to be swiftly handled. Having a strong business acumen enables the quick execution of these decisions, as leaders have the competence to quickly gain insights and can rely on their past experience to help make choices conducive to success.

Uncertainty:

High levels of uncertainty mean that leaders need to be able to adapt their plans to the environment as it changes. Gone are the days of being able to set and follow a rigid strategy, but instead flexibility and high sensitivity to change are necessary to drive success. The ability to be sensitive to change and flexible with your plans can only come from years of experience and a big-picture understanding of what is going on in your organization.

Complexity:

Complex environments require more than just technical knowledge – they also require experience and a deep understanding of the complexity of an organization and the results of decisions in the organization. Business acumen means have experience with many different facets of the organization, which helps in understanding the organization in its entire complexity.

Ambiguity:

When it is hard to see what is happening, it is important to be able to sense what is happening. Being able to sense, or having a “gut feeling,” for what is going on is only possible for those who also have an in-depth understanding of business. In unclear times, someone with a strong business acumen will find themselves much more capable of navigating through the fog than a person with little to no business acumen.

Though ways of working are shifting in order to thrive and adjust to a changing world, business acumen is still one of the most important competences for driving a successful organization. It helps us to anticipate change, align on strategy, and adapt to the market as it shifts. Having a business acumen helps us to develop a muscle memory that enables fast decision-making and instincts.


At Celemi, our gamified learning programs help move your people and organizations to higher levels of performance.  

Contact us today if you would like to learn more about how we can help develop your business acumen to thrive in a VUCA world.  

2019-11-04T16:48:47+01:00November 5th, 2019|Insights, Uncategorized|