Volatility: speed of change in an industry, market, or overall environment

Uncertainty: lack of predictability in an environment

Complexity: number of issues and amount of confusion that surround the organization

Ambiguity: lack of clarity and potential for misreading situations

Change speed is increasing, number of components in systems increasing, cause-effect logic becoming less linear (digital transformation, service economy, internal/external trends)

1. Digital transformation

Digitization of business and technology’s role in business/operating models introduce new factors to consider:

• The changing role of technology competency in business management
• The increasing pace of competition
• Disruptive digitally native competitors
• The changing roles of IT management and IT teams in business
• The increasing significance of data quality and effective data management
• New legislation and requirements in areas such as privacy and information security
• IT management practices expanding into various business areas
• The return to or introduction of in-house software development
• New dependencies on third parties, such as providers of cloud and communication services

2. Service economy

Different impact within different organizations, most are not ready

All organizations are service organizations (service consumers and service providers)

Sourcing trends: partners, peer-to-peer (P2P), platform- or subscription-based services (PaaS, IaaS…)

Challenges:

• Multiple dependencies
• Lack of control over dependencies
• Complex sourcing models
• Lack of holistic end-to-end understanding of value streams
• Strong and volatile external factors (PESTLE)
• The expansion of service-based business models into traditionally goods-focused industries

3. Contributions of digital transformation and service economy

	Digital transformation	Service economy
Volatility	Technologies are continually changing and introducing new risks and opportunities. Failing to keep pace with opportunities may result in loss of leadership; failing to recognize risks may result in loss of business	Business models and relationship models are continually changing. These changes lead to organizations repositioning in markets and industries
Uncertainty	The current and future states of technology and its role in business are unclear. Technology portfolio decisions are difficult to make, because new technologies emerge before older ones can prove or disprove their effectiveness	Every member of the service relationship network has limited exposure to others; an assessment of other organizations’ capabilities and the associated risks is difficult and never complete. The growing number of external dependencies increases the overall uncertainty of the organization’s current status and forecasts
Complexity	The number of moving parts in the technology landscape is growing. The cause-and-effect relationship is unclear. Technology is increasingly self-organizing. Procedure-based approaches to IT management are no longer effective	The number of stakeholders in a service relationship is growing, and their interdependencies are changing and never fully known. Relationships based solely on formal agreements are ineffective in mid- and long-term perspectives
Ambiguity	It is hard to assess the impacts of a technology event or proposal; even known effects can be contradictory and ambiguous. Few consequences can be forecasted with acceptable levels of assurance	Due to the complexity of stakeholders’ interests and the variability of social norms, it is hard to assess the impacts of a portfolio, relationship, or marketing decision. Only a few consequences can be forecasted with acceptable levels of assurance

 

4. Viability of digital organizations and guiding principles

To act in a VUCA environment, consider the following recommendations and guiding principles to map VUCA challenges (consider all in every challenge):

Characteristic	Recommendation	Focus on value	Start where you are	Progress iteratively with feedback	Collaborate and promote visibility	Think and work holistically	Keep it simple and practical	Optimize and automate
Volatility	Prepare for variations by investing in extra resources	X		X	X	X	X
Uncertainty	Improve knowledge management and quality of information	X	X	X			X	X
Complexity	Restructure for self-organization and agility	X		X	X	X
Ambiguity	Experiment to explore available options	X		X	X	X

 

5. Succeeding in digital transformation From HVIT, five behavior patterns: Accept ambiguity and uncertainty Trust and be trusted: within organization, between it and its external stakeholders; higher levels of autonomy, responsibility, shared objectives, principles Continually raise the bar: readiness to face new challenges; proactive preparation Help get customers’ jobs done: value for customer is top of organizational, team, individual priorities (focus on value)

• Commit to continual learning: underpins all others; having right information combats uncertainty and ambiguity

6. Characteristics for a VUCA environment

7. Strategic methods to address VUCA

Create awareness, embrace it, develop appropriate behaviors

7.1 Addressing volatility

Plan for budget cuts, funding projects, programs, knowledge-sharing, communication, succession planning, decision-making

7.2 Addressing uncertainty

Organization’s absorptive capacity ability to recognize the value of new information, embed it into an existing knowledge system, and apply it to achieve the business outcomes

Must continually develop the organization’s absorptive capacity (knowledge management system)

7.3 Address complexity Cynefin assesses complexity and determines appropriate actions Five domains organized by cause-effect: Clear: Understand facts, locate rules and use to solve Complicated: Analyze the multiple options, choose best Chaotic: Establish order, understand facts, respond (moves to complexity) Complex: Explore, understand facts, respond (safe-to-fail experiments) Confused/aporetic

7.4 Addressing ambiguity Many options are typically available and difficult to choose the best Use experimentation and promote across organization within a safety culture Toyota Kata (mental model for scientific thinking): Get the direction/challenge – aim at specific goals Grasp current condition – baseline measure Establish next target condition – desired outcome and expected conditions to get it Experiment toward next target – generate ideas to overcome obstacle and then experiment

Go back to ITIL 4 Strategic Leader Certification Course: Disruption to finish this chapter or to the main page ITIL 4 Strategic Leader Certification Course.