VUCA: Its Meaning and Implications for Hospitality
By Chris Mumford Managing Director, AETHOS Consulting Group | September 01, 2019
Co-authored by Dominic Maurer, AETHOS Consulting Group
The US Army War College introduced the term VUCA during the Cold War - a time when the world was facing especially high levels of Volatility, Uncertainty, Complexity and Ambiguity. Since being introduced, this framework has become a trendy acronym that strategic business leaders regularly use to assess the suitability of their environment or market for launching new products, entering new markets, and embarking on other key initiatives. It allows them to pinpoint where the four challenges in their respective business are situated or skewed, as well as how to create appropriate responses.
Many today would assert that, given the current geopolitical climate, the world's VUCA level has again spiked to higher than normal levels. People and corporations must increasingly adjust to unpredictable events. In fact, the one thing we can almost certainly predict these days is that something unpredictable is just around the corner. The hospitality sector is no exception and has in the very recent past witnessed numerous events that have exacerbated the VUCA state in which its players operate.
VUCA in hospitality manifests on many different levels and can affect individual hotel properties, tourism demand within certain areas, an entire company, or even impact the industry on a global basis. Examples of symptoms of VUCA in the hotel world include impending Brexit in the UK, US-China trade war, les gilets jaunes in Paris, and Hong Kong's weekly protests. On a broader scale, the launch of the disruptor Airbnb in 2008 shocked the industry at large. Companies and their business models that had been unchallenged over centuries suddenly faced fierce competition. More recently we learned about the massive data breach at Marriott, exposing private and sensitive information of some 500 million guests.
Katharine Le Quesne, Managing Director at HoCoSo attests, "Disruptors so often come from outside the traditional confines of the hospitality industry – look at Airbnb (students renting out beds to pay rent), OYO, ACE (Alex Calderwood went from party promoter, to vintage clothing, to reinventing barber shops before hotels), even Ian Schrager … they all possessed the ability to look at the industry with fresh eyes. The sector is not very good at being self-critical. The story of the emperor's new clothes may seem to some as an outdated parable, but we ignore it at our peril. Anticipating and expecting the rules of engagement to change is the new normal."
Businesses therefore must possess an awareness of the unstable environment in which they operate and be prepared to react and respond quickly. As Bruce Harkness, author of "Performance Matters: The Ultimate Career Survival Guide," put it, "To survive and excel in today's global economy companies must be highly adaptable, light in structure and fast in terms of decision-making. Technology and the application of supporting processes is mission critical but above all is the need to be adaptable."