Britain’s recent withdrawal from the European Union reminds me of the US Military acronym: V.U.C.A. Referring to the volatility, uncertainty, complexity and ambiguity that characterize conditions and situations, particularly when influenced by significant change, V.U.C.A. has rapidly become a trendy managerial contraction.
The shift into the corporate world was not unexpected. Businesses want uncomplicated clarity and maximum control over their entire operation – no different from a military strategy.
I don’t think that there has ever been a better example of a V.U.C.A. era than the years following the latest turn of century. The USA’s terror attacks of 2001, the economic meltdown of 2008, Japan’s 2011 earthquake, and now the Brexit fiasco have all brought their fair share of chaos where order and predictability would have been far more welcome.
Let’s look at each of the concepts and understand their effect on modern day businesses:
Volatility refers to the nature of change, including the speed at which it happens. It creates sudden and profound instability within companies, creating uncertainty and anxiety.
Uncertainty is the consequence of an inability to predict behavior. There is uncertainty about the future; about demand and stock needs; about new competitors entering the market; about new government policies, etc. A lack of clarity muddles the picture and obstructs management’s ability to understand and to value the threats and challenges facing them.
Complexity is created by the magnitude of the forces that confront companies. They get faced with cans of worms and apparent chaos that clouds their thinking. The challenge is to gain a sober perspective on the situation and not to confuse threats and opportunities as collectives.
Finally ambiguity is brought about by the haziness of one’s reality; the potential for misinterpretation; the confusion of causes and effects. Diversity and global influences strengthen ambiguity, demanding a multi-visional approach to evaluate and to judge reality.
In a world that is rapidly shrinking as a global village, change has become unavoidable and the speed and volume of change is growing exponentially. New technology and inventions shape and alter the world profoundly, often within short time frames. For example, consider the impact of mobile technology, open access to IT solutions and cloud computing on businesses.
From an ERP perspective, the first step to managing V.U.C.A. is to select and implement an ERP system that addresses the exact needs of the enterprise’s business model and all its functions, today, with the agility to adapt and scale as the need arises.
In effect, the solution should strengthen management’s foresight while simultaneously enhancing its insight into the business. The management principles of Planning, Executing, and Controlling are all neatly accommodated in any effective ERP system, covering not just the flow of resources and material through the value chain, but also allowing clear visibility and providing relevant critical business information on a real-time basis on any aspect of the organizational process.
In a nutshell: any ERP system should smooth the kinks out of supply chain management across all aspects of the business. A really good system will cut through the haze of dust kicked up by V.U.C.A. and offer a clear and unambiguous view of processes and systems, allowing for flexibility and effective management in the most changeable times.
Further Reading: Weathering the Storms of Change