In today’s rapidly changing world, organisations face increasingly dynamic and unpredictable transformations. This concept is encapsulated in the acronym VUCA: Volatility, uncertainty, complexity and ambiguity. To successfully navigate such an environment, companies must rethink their holistic approach. Agility, openness, and resilience are the watchwords of this new reality.
What is VUCA?
Since “VUCA” is now everywhere, it’s important to precisely define what this acronym encompasses.
VUCA’s origin and definition
As early as the 1st century, Pliny the Elder outlined the idea of an unpredictable world: "The only certainty is that nothing is certain." In the 1990s, the US Army War College formally codified this concept with the acronym "VUCA", used to describe the world that had become multilateral after the Cold War.
With globalisation and technological developments, this term has become widely popularised in the business and management world. Every organisation now strives to understand it to adapt to changes, make informed decisions, and gain resilience.
Behind this four-letter acronym are four interconnected dimensions: Volatility, uncertainty, complexity and ambiguity.
A volatile world
Volatility refers to sudden, frequent, and significant changes. Market fluctuations and new consumer expectations are among the factors contributing to this volatility.
An uncertain world
Uncertainty highlights the lack of knowledge, or even confidence, in the future. This is characterised by incomplete or contradictory information that makes decision-making difficult. Regulatory and technological developments can be sources of uncertainty for companies.
A complex world
Complexity echoes the multiplication of interactions and interdependencies between different elements of the same ecosystem. This gives rise to chaotic situations that companies struggle to understand and whose challenges are difficult to prioritise due to a lack of clarity. Geopolitical, economic, and social dynamics are perfect examples.
An ambiguous world
Ambiguity refers to the difficulty in understanding a situation and thus reacting to it correctly. These are situations where cause-and-effect relationships are unclear, and outcomes are unpredictable.
How to evolve in a VUCA world?
H2 - Companies in a VUCA environment
In a VUCA world, companies must embrace a new dynamic. They learn to welcome change while seizing new opportunities that arise. To achieve this, they rely on three key elements: a clear vision, an agile culture, and adapted skills.
H3 - Developing a clear vision
Leaders must define a strategic vision for their company, with long-term ambitions. This provides a clear direction for all employees. To remain agile in a VUCA world, all the steps to achieve this are defined in the short term. Antoine Compin, Managing Director of Manutan France, explains: "Once the direction is set, and the strategic objectives are clearly identified and co-constructed with our teams, we allow ourselves more flexibility. Because in this world of uncertainty, being able to both react to risks and seize new opportunities is necessary."
H3 - Fostering an agile culture
In a VUCA world, establishing a corporate culture that values agility, innovation, and calculated risk-taking is important. This involves reducing organisational silos and promoting cross-functional collaboration. All this with the aim of fostering the emergence of new approaches and creative solutions, without fear of questioning established facts. This will enable teams to react quickly and effectively to changes.
H3 - Investing in lifelong learning
In a VUCA environment, the skills required for success are constantly evolving. It is therefore essential to focus on continuous training and skills development for teams. This ensures that employees are well prepared to face current challenges and equips them with the skills necessary to anticipate and adapt to future developments.
H2 - Optimising your procurement strategy, a necessity
Like all other company departments, the procurement function also has levers to activate to excel in a VUCA world. Buyers will then focus on their relationships, expertise, and digitalisation.
H3 - Strengthening supplier relationships
To improve supply chain resilience, building strong and transparent relationships with suppliers is important. Open and regular communication allows for rapid identification of potential problems and collaboration to find effective solutions. We can also work with strategic suppliers on risk analysis and the implementation of joint business continuity plans. This can even lead to genuine partnership relationships with co-innovation or co-development projects.
H3 - Adjusting procurement strategies
To limit exposure in case of crisis, it may be necessary to review the overall approach. It’s up to procurement departments to question their strategies, relying on their market knowledge:
- The visibility of their supply chain;
- The diversification of their supplier portfolio;
- The relocation of their purchases;
- Their stock management;
- "Make or buy".
By analysing each situation, they can, for example, consider reducing the number of intermediaries, focusing on "dual sourcing" or "made in Europe" for their strategic procurement, planning safety stocks, internalising certain key activities…
H3 - Accelerating digitalisation
Lastly, procurement departments have a whole range of digital solutions to support them in a VUCA world. To boost visibility and anticipate risks, they must first equip themselves with tools such as Supplier Relationship Management software or an e-sourcing solution.
They can also arm themselves with emerging technologies to improve their forecasts and automate certain decision-making processes. For example, there are "early warning" tools that rely on predictive analytics and artificial intelligence to analyse supply chains and anticipate and react before a crisis.
Manoeuvring in a constantly evolving environment is a considerable challenge for companies. By adopting a flexible approach, investing in skills and technologies, and improving decision-making, they can transform these challenges into opportunities. It’s no longer just about surviving, but about thriving, serenely and efficiently, in a VUCA world.
