The frequency and the intensity of change in the business world, strikes me as similar to how we experience change throughout our lives.
Childhood and adolescence, for example, are both important and often frenetic phases in life, where any and every change dramatically impacts our development and invariably teaches us a lesson or two.
Later in life, as our experience of change grows, we either accept it, coming to terms with the truth that ‘change is the only constant’, or waste precious resources fighting to remain set in our ways.
In our personal and business lives, the speed of change is getting faster and faster. How we respond to and cope with this increased pressure will determine our survival and growth.
In the business realm, a lack of leadership and experience places younger organizations more at risk in volatile economic climates. However there are no guarantees, not even for the most established companies.
Turbulent times are often intensified by constantly evolving customer demands, fueled by advances in technology and market dynamics. 2011 has certainly dished up its fair share of business and social change.
VUCA is an acronym and business concept used to characterize the challenges brought about by the Volatility, Uncertainty, Complexity and Ambiguity of our ever changing business environment.
Volatility refers to the nature and dynamics of change, including the speed at which it occurs in a society. It brings instability to companies, and often hits unexpectedly, creating confusion and uncertainty.
The second characteristic of VUCA, uncertainty, is the consequence of an inability to predict performance or behavior. The ability to forecast accurately, which is critical to management, is compromised. Lack of clarity muddles the picture and obstructs management’s ability to understand and evaluate the threats and challenges that face them.
Complexity is created by the magnitude of the forces that confront companies, mostly presenting itself as chaos that clouds our thinking and judgment, creating frustration and feelings of vulnerability.
The haziness of one’s reality in volatile times and the potential for misinterpretation defines the last characteristic; ambiguity. Dual interpretations of concepts create confusion in companies, which is worsened by cultural diversity and global influences; all reinforcing ambiguity.
I believe correctly implement Enterprise Resources Planning (ERP) software and services are crucial tools to assist businesses proactively deal with VUCA.
In order for an organization to be agile and flexible enough to deal with this constantly changing world they should first consider thoroughly architecting and modeling their business functions, systems and processes.
Only once this has been done can the most suitable ERP solution be selected and implemented according to the architected model. This approach will substantially enhance the organization’s agility and responsiveness to weather VUCA challenges.
The ERP solution will then provide the organization’s leaders with the information and flexibility to better anticipate the changes that shape the particular conditions in their sectors.
It will also enable them to understand the consequences of the changes, and of the activities they choose to address these changes with.
At SYSPRO, we will continue to build tools and capabilities into our software and services to assist our customers deal with volatility, uncertainty, complexity and ambiguity in their respective sectors.
As this is my final post for 2011, I wanted to take the opportunity to wish you all the best for the remainder of the year. If you are taking a break, enjoy the relaxation and your time away from VUCA.
I look forward to 2012 and posting my perspective on ERP throughout the year. If there is a particular topic you would like me to address, please do leave a comment below.