What impact does VUCA and BANI have on the life sciences sector?

How the life sciences industry is affected by VUCA and BANI and what options for action there are will be discussed in the following article by way of example.

Hannes Sommer
Hannes Sommer
Founder & Managing Director Sinceritas Executive Search

Various industries in the western world have been struggling with structural change, energy crises and staff shortages in recent years and are currently doing so. The world, i.e. social, political and economic coexistence, seems to be changing constantly and rapidly. There has been a concept to describe this world since the early 1990s. While the acronym VUCA was used in the 1990s, the term BANI was added in April 2020.  
How the life sciences industry is affected by this and what options for action there are will be discussed here by way of example.

Defining terms: VUCA and BANI

The acronym VUCA is used to describe a world that is increasingly volatile (Volatility), uncertain (Uncertainty), complex (Complexity) and ambiguous (Ambiguity).In the early 1990s, it originally referred to a changed global situation that had arisen after the end of the Cold War and emerged from a military context.
Since then, the term has also been used to show how the VUCA world shapes conditions in civil relationships and in companies. For example, VUCA is used for corporate management concepts. 

Fig.1: VUCA Welt: Das Modell einfach erklärt, Examples + Bani

In order to describe current dynamics in the life sciences sector, the term can therefore be used to describe processes and conditions that companies from hospitals to the pharmaceutical industry have to adapt to.

This is because VUCA requires an adaptation of everything from production conditions to corporate management. The framework conditions for strategic management no longer apply as usual. This also affects employees, who no longer necessarily pursue their careers in a linear fashion, but change employment relationships more frequently. Personally, they also have to deal with the fact that the certainties they believed in are changing.
As if that were not enough, the VUCA world has also changed.
Just as the world had to deal with a new force for order in the 1990s, there are several crises in the 2020s that are throwing the world into disarray. Another acronym helps to take the VUCA model even further: BANI, which is seen as a further result, an update or simply an addition to VUCA.

The environment in the BANI world is fragile (Brittle) and anxious (Anxious). Cause-effect relationships are non-linear (Non-linear) and incomprehensible (Incomprehensible).

Fig.2: executiveacademy.at

For a context analysis, the BANI model makes it possible to identify the changed framework conditions and consequently find solutions.
As the current crises, from the coronavirus pandemic and wars to climate change and increasing digitalization, are so complex that they are frightening and seem incomprehensible. At first, there no longer seem to be any simple, linear solutions or answers due to VUCA.

Brittle, for example, is a situation that does not announce itself, it suddenly collapses. The pandemic suddenly changes the contact regulations in hospitals, a war of aggression suddenly calls energy security into question. And even if the pandemic has been successfully overcome, the apparent security can hardly be restored afterwards

"Facing the Age of Chaos" is the name Jamais Cascio has given it, and with BANI he has created a new "framework" that provides parameters other than those of VUCA. It is intended to help prepare for what is and what may come. Ultimately, however, the BANI world is such that it is unpredictable and concepts that are too rigid are in danger of breaking.

Employees, for example, are increasingly insecure and are feeling the effects of inflation, energy shortages and insolvencies first hand. In addition to the structural challenges, the healthcare sector also needs to motivate its already scarce workforce.

Volatility and fragility: challenges for supply chains in the pharmaceutical industry

In the life sciences industry, volatility refers to the speed of change, for example in regulations, innovations, market trends and changing suppliers or employees. The interplay between VUCA and BANI can be illustrated well and possible solutions can be presented using the example of supply chains.

For the pharmaceutical industry, it is particularly important to pay attention to regulations that affect transportation and storage, among other things. Supply-chain-solutions ensure that medicines are cooled accurately and are not stored for too long. Solutions already exist to ensure that supply chains function smoothly and agilely, for example with a digital twin. This allows possible future scenarios to be visualized and the company's respective key figures to be included. Supply chain volatility can thus be regulated.

During the coronavirus pandemic, the pharmaceutical industry has proven that it can react very well to a volatile environment. At the same time, the upward trend of 2020 to 2022 is no longer a given for the pharmaceutical industry in 2023. Inflation and the energy crisis have also taken their toll on this industry. What was considered stable now seems fragile.

Using supply chains as an example, Thyssenkrupp Materials Services manager Ilse Henne  therefore suggests using networks to create more resilient supply chains. End-to-end data collaboration (end-to-end analytics) would create transparency along the entire supply chain. The freely available data could then produce important insights into difficulties such as supply bottlenecks and at the same time predict trends and market developments.
The requirement to work as transparently, open and collaboratively as possible also applies to management concepts (and managers) in hospitals.

Uncertainty and anxiety: personnel management in hospitals

As Prof. Dr. Christian Schmidt concludes, the reality in hospitals has always been in a state of VUCA: changing daily routines and personnel resources and the resulting uncertainty in planning; complex processes in the diagnosis and treatment of serious illnesses, which require complex collaboration and technology; finally, ambiguous illnesses, which require complex explanations.

Dr. Christian Schmidt proposes management by objectives (Objectives and Key Results (OKR)) as a solution. This involves employees in the company goals (objectives) and can be measurably monitored with the key results. Employees make suggestions and can thus achieve project goals bottom-up (as opposed to top-down) and advance the entire company. It can be particularly important to involve all employees in the complexity of interdisciplinary collaboration when dealing with difficult diagnoses, for example. This also enhances the prestige of the entire organization.

Whether and how OKR is possible in the daily hospital routine described above must be decided on an individual basis. However, it is also evident here that open or transformational leadership seems to be in line with the current quality of time. Ultimately, it increases employee satisfaction when they are involved in decision-making processes, creates transparency and leads to staff loyalty to the hospital.

Similar to supply chains, it would make processes so flexible that they can also exist in the BANI world.

Complexity and non-linearity as an opportunity for interdisciplinarity

Complexity in the life sciences sector arises from a variety of factors, including the interaction between biological systems, technological developments, regulatory requirements, market conditions and the social environment. This complexity requires interdisciplinary collaboration and an integrated approach to solve complex problems and develop innovative solutions.

To deal with this complexity, companies in the life sciences sector must increasingly rely on interdisciplinary teams that bring together experts from different fields such as biology, chemistry, computer science, engineering, medicine and business.

Various specialist areas in hospitals also benefit from interdisciplinary collaboration. For example, the German Society for Thoracic, Cariovascular and Vascular Surgery recommends expanding "shared decision making" in a heart team for patients with cardiovascular diseases. This involves specialists from different disciplines working together, similar to the "multidisciplinary tumor boards" that already exist in oncology. The diagnosis and treatment recommendations made by the "multidisciplinary heart board" combine expertise from cardiology, cardiac surgery and anesthesiology. In this way, patients can be treated very individually.

Structures and certainly funding options are needed to be able to offer this type of work across the board.

For specialists, it also means opening up to other disciplines so that they do not have to make decisions alone, even in a management position. Similar to managers in hospitals, the challenges of a complex and non-linear world offer new opportunities for collaboration. In turn, everyone can benefit from this. This will also apply to the interpretation of data.

Ambiguity and incomprehensibility: Interpretation of data, biological mechanisms and predictions

Ambiguity refers to the difficulty of obtaining clear information and predictions in an uncertain and complex environment. In the life sciences sector, this can mean that companies have to work with incomplete or contradictory data to make decisions and assess risks. Or that certain processes in new fields of research, such as the molecular mechanisms of fine control in the translation of genetic information, are still unknown or incomprehensible.

Due to the amount of data collected in companies, at a certain point the interpretation can only be done by artificial intelligence (AI) and therefore leaves a feeling of incomprehensibility. Especially when using AI in hospitals, however, data must be "of high quality, easily available and usable for AI applications", writes PwC.  

It is therefore up to a company to develop investments in the area of data collection and processing and at the same time "take the employees along". Staff must be well trained and informed in order to be transparently involved in this process. This creates security for the data and for the employees and makes the company fit for the future.

This supports the need for agile development processes and adaptive research approaches. Complexity can therefore also emphasize the importance of interdisciplinary collaboration and integrated approaches. And ambiguity can offer the opportunity to develop new data collection and analysis technologies in order to gain clear insights and make informed decisions.

Conclusion and recommendations for action

VUCA and BANI factors present companies in the life sciences sector with unprecedented challenges. However, the associated uncertainties can be overcome with processes that also offer opportunities for innovation and growth.
Recognizing the prestige of the profession is one of the ways to survive in this world. In addition, it is important to bring resilience to all processes and to act with mindfulness towards the individual requirements. In a VUCA world, it is important to demonstrate resilience, empathy, adaptability and transparency.

Loyalty to certain brands is decreasing, the pressure to innovate is increasing and changes in the world are unpredictable. Becoming resilient in the face of this means demonstrating the greatest possible "agility" and flexibility and at the same time finding your way back to your usual stability without it becoming fragile.

While in the VUCA world it was still a matter of facing the imponderables as agilely as possible as an individual company, the VUCA-BANI world shows that collaboration and interdisciplinarity are the best means of adaptation. Data analysis and forecasting methods improve flexibility and adaptability, and evaluating data with AI opens up new possibilities.  

The networking of players with customers or patients and even within supply chains also offers opportunities that generate new experiences and successes. It will be important to give employees meaningful tasks and give everyone a say.

Ultimately, management can also benefit from the backing of the team. The aim is to involve all employees in their own responsibility in order to tackle the crisis together in a team effort. Apart from the fact that drug research and the treatment of diseases progress faster when a team comes together.
Through interdisciplinary collaboration, improved data analysis and interpretation, agile decision-making and supply chains and continuous innovation, life sciences companies can operate successfully in a VUCA-BANI world. This enables companies to achieve long-term success and remain attractive to qualified applicants.