Friday, April 09, 2010

Book: Chaotics

Title: "Chaotics - the business of managing and marketing in the Age of Turbulence"
Authors: Philip Kotler and John A Caslione
Published: NY: Amacom, 2009, (208pp).

This is an updated business book for the new age of turbulence and uncertainty. Marketing guru, Philip Kotler, most famous for his marketing classic, "Marketing Management," has updated and applied marketing concepts for the new environment. Taking a leaf from Alan Greenspan's voluminous work (The Age of Turbulence), the authors assumed turbulence, rather than questioning it. Essentially, the authors seek to call businesses to recognize the age of turbulence as the 'new normal.' They urge businesses to exchange old paradigms for new ones. They propose a new system called the 'Chaotics Management System.' In this system, the authors teach the need for 3 Rs:
  • Responsive to the 'new normal;'
  • Robustness of their responses and strategies, designed toward tackling the challenges of a rapidly changing environment;
  • Resilience of the business organizations.
A) The New Normal
In a passionate plea for companies to recognize that turbulence and uncertainty is going to be the 'new normal,' the authors argue convincingly that old strategies are unhelpful, even fatal. Economic cycles are no longer present. Booms and recessions are no longer predictable. Potential losses are high. More investors are becoming more cautious and risk averse. Customers are increasingly insecure and they prefer options that enable safety and security. The authors further comb the landscape and identify the factors that lead to chaotic situations. Factors like:
  • Technological advances and Information Revolution;
  • Disruptive technologies and innovations
  • Impact from the small guys
  • 'Hypercompetition' that makes competitive advantage unsustainable
  • Sovereign wealth funds
  • Social concernsand,
  • customer empowerment.
B) The Chaotics Management System
This model is specifically geared toward managing vulnerability inside, and maximizing the use of opportunities outside. There will be chaos and companies must do more than simply recognizing it. They need to make decisive strategic plans and steer the company with focus and resilience. The authors put it very well:

"Today and into the future, it may not be as critical to ask what businesses own and produce as it is to ask about their ability to detect turbulence, anticipate chaos, and manage risjs. Identifying and managing risk is far from straightforward. Constructing scenarios and strategies to deal with anticipated risks, and conversely, exploiting opportunities, requires business leaders to instill new strategic behaviors and disciplines in the organization. . . . . And when these new and necessary behaviors are instilled in the daily decision-making processes, it creates a momentum and a culture that systematically overcomes turbulence's chaos and routinely beats the competition. Such companies will succeed in the Age of Turbulence, despite the turbulent gale-force winds blowing forcefully against them." (100)
In a nutshell, the CMS proposes the following
  • When approaching turbulence, be prepared to change organizational behavior;
  • In confronting turbulence, broaden one's strategic resources rather than blindly cutting resources across the board;
  • When coming out of turbulence, maintain a steady stream of focus, to pick up speed when necessary.
My Comments
At one look, the reader may be tempted to dismiss Kotler and Caslione for adding fuel to the fire of panic. I will hesitate to do that. I think the book does exceptionally well to remind all that 'the new normal' has come. We must not behave like ostriches that stick our heads into the sand of old thinking and archaic paradigms, while the world screams for a wise response. If one does not embrace the opportunity, it could mean the end of one's business. I like the way the authors instill the idea of change that is broad-based throughout the organization. With attention to detail, the authors apply the strategy to all parts of the company, like Human Resources, Marketing, Sales, Technology, Management teams etc. This represents a desire to build resilience to all parts of the organization. The points brought up are easy to understand and should provide fodder to stimulate thinking rather than supplying ready made answers. Strategic management is never one that can be canned like processed food for consumption. It involves hard work and a clear recognition of the culture and identity of the company's mission and vision.

However, my main gripe is that it is still very North American focused. One can argue that it is primarily written for the American audience. Though there are some references to international matters, I think this American-centric presentation will limit the usefulness of the book at an international level. Moreover, this book will be less impactful due to the limited examples, compared to the classic 'Marketing Management' which contains frequent illustrations and anecdotes of real businesses.

I guess, this is because of the nature of the 'new normal,' we cannot rely too much on examples as they would have become irrelevant by the time the book is printed. Sigh. Welcome to the new normal.


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