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When a recession strikes, many customers will reduce their spending. Companies in turn will introduce sharp cuts, particularly in the marketing budget. The marketing department should accept these cuts where there is fat in the budget or unpromising products, market segments, customers, or geographical areas. But the cuts should be guided by strategic considerations of what makes the company successful in the long run.Great marketers don't just rebound from crises. They continuously reinvent business models and marketing strategies during chaotic times so they can adapt quickly as circumstances in the marketplace change. Marketers must further master resiliency if they are to engage the marketplace forcefully, break through turbulence and chaos, and connect with customers and consumers. Resilient thinking by marketers transforms anxiety into action and difficulty into decisiveness. Their marketing budgets must reflect such strategic thinking.The article poses six questions that should be answered before cutting marketing budgets.
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©Philip Kotler & John A. Caslione
1
CHAOTICS: The Business of Managing and Marketing in The
Age of Turbulence
Philip Kotler is an innovative thought leader, a revered educator, an author of
over 50 books. Professor. Kotler is the S.C. Johnson & Son Distinguished
Professor of International Marketing at the Kellogg School of Management at
Northwestern University and the author of Marketing Management (1967), now in
its 14th edition and considered to be the definitive treatment of the discipline.
John A. Caslione is Adjunct Professor at Georgetown University’s McDonough
School of Business where he lectures on business strategy and scenario
planning. He has authored several books and articles addressing the global
economy and global business strategy. He is President & CEO of GCS Business
Capital, LLC, a boutique M&A and investment advisory firm.
Abstract
The world economy has been changed irrevocably and companies must
plan now for the “new normality.” For the foreseeable future the economy will no
longer ebb and flow like the smooth upward rising sine waves of the past, but
rather will look like the choppy spikes of a heartbeat in an EKG—a series of non-
uniform W’s—rather than the traditional sine waves of “normal economies” that
we’ve experienced in previous economic cycles over the past 50 years.
Business leaders need to throw away the old two-playbook strategy
book—one for the up-cycle and the other for the down-cycle (recession)—and
instead create a fresh strategic framework for managing both vulnerability and
opportunity, while coping with intermittent and unpredictable instability—a
CHAOTICS® approach to managing in The Age of Turbulence. Companies
instead must now capitalize on the new heightened and continuously turbulent
environment—the new normalityto steadily grow more responsive, more
robust, and more resilient to achieve Business Enterprise Sustainability as they
seek to anticipate the unexpected detours and make adjustments based on a
multitude of scenarios, and keep on driving forward on the long, and now
turbulent, road to success.
The world has entered a new economic stage: The Age of Turbulence
Today, globalization and information technology are the main forces that
are creating a new phenomenon, interlocking fragility. While interconnectivity
and interdependence work in everyone’s favor in good times, this “interlocking
fragility” spreads much pain and damage, virally, in bad times.
©Philip Kotler & John A. Caslione
2
For the foreseeable future, we can anticipate increasing turbulence around
the world. That means there is greater risk for businesses of all sizes
everywhere in the world. But new opportunities will likely arise and to capitalize
on them, and to protect themselves in an increasingly turbulent environment,
businesses will need to develop new strategies.
The fact is that we have already entered a new age, “The Age of
Turbulence.” In fact, we are now living in a time of heightened turbulence, which
is always unpredictable and often undetectable. Turbulence, when not detected
or addressed properly, creates chaos for businesses, governments and all of us
alike. We can safely say that turbulence, with its consequent chaos, risk and
uncertainty, is now the normal condition for economies, industries, markets and
companies. In The Age of Turbulence, economic cycles will look more like an
erratic EKG heartbeat wave—a series of non-uniform W’s—rather than the
traditional sine waves of economic cycles over the past 50 years. Turbulence,
including heightened turbulence, is the new normality, punctuated by periodic
and intermittent spurts of prosperity and downturn—including extended
downturns and including recessions.
Today’s turbulent economy, wherein we now have heightened turbulence,
is markedly different than the turbulence that occurred in past economic cycles.
Today, we can expect more shocks of differing magnitudes and many painful
disruptions, causing heightened levels of overall risk and uncertainty for
businesses at both the macro-economic level as well as the micro-economic
level. The fact that we now live in a new normality doesn’t mean that companies
did not have to withstand great turbulence in the past. However, the turbulence
of the past was more episodic and coincided with great disruptive events, such
as cataclysmic wars, terrorist attacks and other disruptive events that eventually
subsided, allowing us to again resume the traditional, multi-year economic cycle.
Let’s analyze this further. Over the past 50 years, we’ve come to count on
two essential swings that, when they occur, indicate that an economy is normal.
The first is the upswing that has historically lasted between five and seven years
on average, oftentimes referred to as a “bull” market.” Second is the market
downswing, lasting on average for ten to twelve months, which we’ve referred to
as a “bear market”, or sometimes as a “market correction”. These two swings
were largely smooth, and somewhat predictable. Once a recovery was
confirmed to be under way, the upswing would continue largely unabated and
uninterrupted until such time as the next bear market correction would then kick
in. Then, the next cycle would begin again. (See Figure 1)
©Philip Kotler & John A. Caslione
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Figure 1: Normal Economy versus Chaos Punctuated New Normality
No more. In The Age of Turbulence, companies are stressed,
compressed and tested at many levels, sometimes so much so that they cannot
recover fully, because the former predictable five-to-seven year up-cycle can now
longer be counted upon to run its normal course. Imagine a company that has
been severely buffeted by turbulence and chaos, exposing its weaknesses and
vulnerabilities. Then, just after they’ve had one or two “up” quarters that have
given them the time to repair the damage, turbulence hits them again. These
companies will become weaker still, and may not be able to survive over the mid-
and long-term.
During past recessions in a normal economy, most surveys have shown
that, at most 15%, or one out of seven companies, actually improves its position
once it has emerged from a recession. This begs the question: What happened
to the 85% or more of the companies, who didn’t fair so well in the past, when the
return to the normal economy with its extended multi-year prosperity was so
predictable? The essential point is that, from now on, companies will never again
emerge from a recession to find a normal economy, specifically the extended,
multi-year up-cycle of the bull market that we’ve experienced in the past seven
(or eight) recessions. This reality begs a second disturbing question: What
©Philip Kotler & John A. Caslione
4
percentage of those companies that improved their competitive position after
they emerged from recession, actually did so by basing their “recession-
emerging” strategies on the traditional, predictable and extended multi-year
economic up-cycle?
In fact, the whole talk about a recession is irrelevant. It presumes to a
certain extent that the U.S. economy—or those with vivid imaginations who will
contend that China or India will soon have such economic might—will reclaim its
place as the great Boeing 747 or Airbus 380 lifting off with the rest of the world’s
economies being pulled up in its updraft. But what if, even with all the engine
speed and lift-off power we can muster, the economy never gets past more than
two or three or maybe seven or eight quarters of an upturn before it back-slides
once again? Most indicators today are in fact pointing in that very direction.
The word “recession” can best be described as Jurassic, or grossly
anachronistic. In fact, labeling this global mess as a “recession”— two
consecutive quarters of falling real gross national product— may be a bit
misguided when such a cycle as we knew it may no longer exist. Although
mainstream economists and politicians alike have yet to realize it, the definition
of a recession as “two consecutive quarters of negative growth” may need to be
re-defined, much like the very term “recovery” may require us to redefine the
term “recovery.
The bottom line is that we are witnessing a dramatic shift in our global and
national economic systems. The new economy may very well be one that is
forever punctuated by periodic and intermittent spurts of prosperity and
downturn. This environment of continuous economic fluctuation, where
turbulence, chaos, risk and uncertainty reign, is the “new normal” condition for
industries, markets and companies. It is also a scenario that government and
business leaders around the world—and the rest of us—must be prepared to
confront and eventually, come to embrace.
In The Age of Turbulencean age that will extend far into the future—
even companies successfully emerging from recessions of the past will need to
adjust their behaviors and adopt new turbulence-resistant strategies.
Metaphor: turbulence and chaos; vulnerability and opportunity
Recently, I was preparing to board a business flight from Chicago to
Shanghai. Just then the gate agent announced that take off would be delayed by
30 minutes because air traffic control had detected “turbulence” along our
intended flight path. More time was needed to reroute us onto a different flight
path, so that we would avoid the detected turbulence.
Thirty minutes later, we were flying calmly, until our plane was buffeted by
severe, undetected turbulence. The turbulence was so was so intense that
©Philip Kotler & John A. Caslione
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virtually all of our meals and drinks ended up on the floor. Most of the overhead
luggage compartments opened, spilling out coats, briefcases, packages and
luggage on many of the passengers, who by then, were screaming.
We were all shaken and rattled right down to our teeth, but after what seemed
like several minutes—but was probably only a mere 20 to 30 seconds—the pilots
calmly told us that they had found a more favorable altitude. In fact, this new
altitude was not only calmer, but it had a 200-mile per hour tailwind that enabled
us to land one full hour earlier than originally scheduled.
Like the Boeing 777, our businesses are also subjected to turbulence, some of it
detectable, and some of it undetectable. But unlike the pilots, who are trained to
fly in extreme turbulence, business leaders must undertake their own form of
training to prepare them to manage in turbulence. Specifically, they must find
and develop new business models and adopt new strategic behaviours.
Otherwise, they will find themselves in chaos. The important distinction to keep
in mind is that the pilots were able to manage through and emerge from the
chaos, but untrained, unprepared business leaders will suffer the consequences
the chaos inflicts on their operations.
Turbulence, and the chaos that results, from it, have two major effects.
One is vulnerability, for which companies need defensive armor. The other is
opportunity, which companies need to exploit.
Let’s take vulnerability first. The vast majority of companies around the
world today are ill prepared or not prepared at all to succeed in an environment
of continuous, unpredictable turbulence. And when economic turbulence hits a
company that is ill prepared, chaos will result and vulnerabilities revealed.
Now let’s address opportunity. Opportunity occurs when a company is
responsive, robust and resilient, and has transformed or otherwise prepared its
organizations and business models to manage turbulence and chaos in the new
normality. Business leaders and their companies who will embrace the new
normality will have implemented new systems to detect turbulence that can be
detected, while also instilling new strategic behaviors within their organizations
and their business models to minimize or preempt any ill effects on their
businesses when turbulence strikes unexpectedly. Such companies can then
take away competitors’ business, or even acquire competitors at bargain prices
that have been weakened and made vulnerable by their inability to withstand the
turbulence and it consequent chaos. (See Figure 2)
©Philip Kotler & John A. Caslione
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Figure 2: From Turbulence to Sustainability
The New Normality
Businesses, like the Boeing 777 and other modern aircraft, must become
more responsive, robust and resilient in The Age of Turbulence. In the new
normality, which is characterized by heightened and more frequent turbulence
that will itself be punctuated by unpredictable, intermittent spurts of prosperity
and downturn, governments and businesses alike must able to withstand
turbulence—both detectable and undetectable—to prevent or minumize chaos
that might cause them to lose their way. In the “new normality,” our economies
will be characterized more by a chaotic up-and-down EKG heartbeat wave—a
series of non-uniform W’s—rather than the smooth and more predictable sine
wave of the previous normal economies of the past 50 years. Gone is the
familiar rhythm of the five-to-seven-year average up-cycle (prosperity’s “bull
market”) followed by the average ten-to-twelve month down-cycle (recession’s
“bear market”).
Once turbulence hits a company that is unprepared, if is is unprepared, its
vulnerabilities will be exposed, setting back and disrupting the smooth running of
that company’s business.
©Philip Kotler & John A. Caslione
7
On the other hand, when turbulence hits and a business has: 1)
understood and embraced the new normality (which in turn triggers its inherent
survival instincts to evolve and change), and 2) is more receptive to accept and
embrace new strategic behaviors—Chaotics Strategic Behaviors, ,that business
will more readily capitalize on opportunities created by the turbulence, just as the
Boeing 777 found a very favorable altitude and the 200 mile-per-hour tailwind to
exploit the previously undetected turbulence. Essentially, being prepared for
turbulence enabled the aircraft to stay on course and meet its goal. So too will a
well-prepared business be able to meet its goal, in spite of any sudden
turbulence.
The Chaotics Management System®
What is needed in today’s new normality is not a conservative, risk-
avoiding approach to strategy, but rather an alert and prudent approach that
protects governments and business enterprises from the disruptive forces that
impact both during times of turbulence, and yet still advances its interests—a
Chaotics approach. One such approach is The Chaotics Management System©,
which includes Chaotics Modulated Strategies©, and Strategic Management and
Marketing Behaviors©.
A Chaotics approach may be considered a prophylactic approach to
manage risk and uncertainty, one that wards off the likelihood of hubris and
greed overtaking the more sober and thoughtful management of business affairs.
In addition to the everyday challenges of dealing in a perpetually
competitive arena, as well as business cycles, business leaders need to
recognize that a faster, thicker-flowing stream of major and minor disturbances is
challenging their business planning, and adjust appropriately. There is a need
for business leaders and their organizations to develop a new mindset—one that
takes into account intermittent, unpredictable periods of disturbance, and enables
them to still thrive while under threat of global, industry, market or company
chaos. Beyond developing a new mindset, business executives must drop their
reliance on traditional two-playbook strategies—one for up markets and the other
for down markets—and continuously fine-tune their strategies—or even discard
them when the environment demands it. The primary difficulty lies in the fact that
their strategies begin to settle down, get optimized and become entrenched more
deeply during stretches of normality, which leaves them unprepared to manage
during turbulence, when it eventually breaks out. (See Figure 3)
©Philip Kotler & John A. Caslione
8
Figure 3: Traditional Two-Playbook Approach vs The Chaotics Approach
The Chaotics Management System presents a new system—and a new
set of strategic guidelines—designed to help businesses navigate through the
new normality to be successful and profitable over the extended term, regardless
of the economic conditions.
There are eight (8) key components to The Chaotics Management
System: 1) Development of an Early Warning System; 2) Construction of Key
Scenarios and Strategies; 3) Prioritize Key Scenarios and Strategy Selection; 4)
Implementation of Chaotics Management Strategic Behaviors; 5) Implementation
of Chaotics Marketing Strategic Behaviors; 6) Expansion of the Stakeholder
Base; 7) Flattening of the Organization; and finally, 8) Shortening Strategic
Planning Intervals and Multiple Execution Scenarios. (See Figure 4)
©Philip Kotler & John A. Caslione
9
Figure 4: The Chaotics Management System©
Achieving Business Enterprise Sustainability
Chaotics serves ultimately as a disciplined approach to detecting sources
of turbulence, predicting consequent vulnerabilities and opportunities, and
developing critical and appropriate responses to ensure that the business lives
on successfully and thrives for many years into the future. The eventual goal is
to achieve what is now called, Business Enterprise Sustainability (BES).
Business Enterprise Sustainability is a comprehensive strategy to
maximize the underlying value of companies in the extended long-term, while
optimizing company performance and value in the short and medium term—but
never to compromise long-term value. It involves the implementation of the
Chaotics Management System, a system that enables companies to be
responsive, robust and resilient in its business and operational strategy,
especially in a time of turbulence. Critical to such a strategy are the preservation
of well-maintained assets, ongoing replenishment of innovative products and
services, and a favorable reputation with customers, employees, distributors and
suppliers, governments, and other key stakeholders investing in the business.
(See Figure 5)
©Philip Kotler & John A. Caslione
10
Figure 5: Achieving Business Enterprise Sustainability©
Too often in the past, business leaders have confused high growth with
high performance. They may have unwittingly taken unwise risks in their
businesses to maximize short-term profitability, while at the same time,
jeopardizing the company’s mid- and long-term viability. They may destroy mid-
term or long-term value through their overly ambitious short-term growth plans,
which sometimes include foregoing needed short-term investments to build the
platform for longer-term strategy, as well as unwise and expensive acquisitions in
an effort to increase shareholder value in the short-term. Certainly growth is
important to the sustainability of any business, but longer term sustainability
should override any short-term or even medium-term ambitions—especially in
turbulent and unpredictable environments where chaos, if not managed well,
could cause irreparable harm and even sink a business permanently.
For more information about Chaotics, visit http://www.chaoticsstrategies.com
About the Authors
©Philip Kotler & John A. Caslione
11
Philip Kotler has distinguished himself on many levels. He is an innovative
thought leader, a revered educator, an accomplished author of over 50 books,
well-traveled speaker, social activist, and trusted consultant to the world’s most
recognized corporate brands. Professor Kotler is the S.C. Johnson & Son
Distinguished Professor of International Marketing at the Kellogg School of
Management at Northwestern University and the author of Marketing
Management (1967), now in its 14th edition and considered to be the definitive
treatment of the discipline. Dubbed “The Marketing Guru” and “The Most
Influential Marketer of All Time," Professor. Kotler is considered one of the great
business thinkers of the past century.
John A. Caslione is a global management strategy expert who has executed
global business strategies in more than 100 countries on six continents. He is
Adjunct Professor at Georgetown University’s McDonough School of Business
where he lectures on business strategy and scenario planning and author of five
noted books on the global economy and the globalization of business. He is also
the founder, President, and CEO of GCS Business Capital LLC, a global cross-
border mergers and acquisitions advisory a middle market global cross-border
mergers and acquisitions advisory with offices in the U.S., Europe and Asia.
Chaotics: The Business of Managing and Marketing in The Age of Turbulenceis
copyrighted exclusively by John A. Caslione and Philip Kotler 2009.
“Chaotics” is a registered trademark owned exclusively by John A. Caslione 2009.
... 2. konfrontasi dengan gejolak; diterapkan kebijakan memperluas sumber daya, dapatkan dukungan dari stakeholder untuk sukses, hadapi persaingan, peroleh talenta dan sumber daya baru, amankan dan tumbuhkan bisnis utama. 3. Muncul dari gejolak; diterapkan kebijakan pengelolaan konsistensi, kestabilan dan memenum masa depan yang kuat, gerakkan seluruh daya dan usaha untuk pesaing yang tidak siap (Kotler & Caslione, 2009b). Menurut (Welij, 2016) mengajukan model "sourcing balance" dalam menghadapi pasar turbulent, yaitu mengupayakan penyesuaian sumber daya internal dengan sumber daya eksternal, dilakukan eksplorasi pada dua aspek tersebut, selanjutnya dilakukan tranformasi. ...
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ResearchGate has not been able to resolve any references for this publication.