Chaotics The Business of Managing and - Kolegji Fama

225 Pages·2004·1.36 MB·English

More Praise for Chaotics from Around the World
“Turbulence is erratic—and it’s unpredictable. Nevertheless, we must handle it. In
Chaotics, Kotler and Caslione don’t just remind us to pay attention to early signs;
they give business leaders an outstanding map for how to successfully navigate a
company through crises.”—Friedrich vonMetzler, Member, Partners’ Committee, B.
Metzler seel. Sohn & Co. Holding AG
“Turbulence and unpredictability are the inevitable realities of the next few years.
We are in truly uncharted waters, with no good maps. Chaotics will help your organ-
ization to navigate without one. This incredibly useful and helpful book provides
clear and practical guidance to the many difficult decisions that managers and lead-
ers need to make in turbulent times. It is like having the authors and their wisdom at
your side while having to ride the white waters of the rapids ahead.”—Peter Schwartz,
Monitor Global Business Network
“[A]n operations manual to help management teams guide their companies through
this global disaster. Chaotics is a must read for those seeking a lifeline to save their
business.”—Ed Kaplan, Chairman Emeritus, Zebra Technologies
“A very timely and practical book on how to manage and market the enterprise
through prolonged turbulence. The Chaotics Management System provides an excel-
lent blueprint for making each major business function more resilient.” —Jagdish N.
Sheth, Ph.D., Charles H. Kellstadt Professor of Marketing, Goizueta Business School,
Emory University, Atlanta, GA; author of The Self-Destructive Habits of Good
Companies: . . . And How to Break Them
“Chaotics is about real events in real time. World authorities on marketing and strat-
egy Philip Kotler and John Caslione address the global financial crisis with experience,
wisdom, and hands-on advice.”—Dr. Evert Gummesson, Professor ofMarketing, Stock-
holm University School of Business, Sweden; author, Total Relationship Marketing
“Chaotics provides rich food for thought in turbulent times. This book helps you to
more deeply understand the crisis. And only if you understand will you avoid mak-
ing the fatal mistakes, which are the greatest danger in a time of crisis.” —Hermann
Simon, Chairman, Simon-Kucher & Partners Strategy & Marketing Consultants;
author, Hidden Champions of the 21st Century
“Today, few business leaders really understand what will change in their industries
post the 2008–2009 credit crunch. Every industry will be playing by new rules. Chaotics
is essential reading for those who want to be winners during these turbulent and
uncertain times.”—Stefan Barden, Chief Executive Officer, Northern Foods plc, UK
“In Chaotics, Philip Kotler and John Caslione make sense of the new turbulent
world order. Chaotics provides a powerful and timely guide to the new realities.”
—Stuart Crainer, editor of Business Strategy Review; creator of the Thinkers 50, UK
“Chaotics provides business leaders with an invaluable framework to help them
guide their enterprises wisely through the turbulence of contemporary markets.
The definitive navigational map for every business leader today and for our chaotic
future.” —Walter Giorgio Scott, Distinguished Professor, Università Cattolica del
Sacro Cuore, Milan, Italy
“Chaotics provides an extremely valuable guide to help managers transform chaos into
order and take advantage of market turbulence to strengthen company leadership. This
reading is a must.” —Fernando Trias de Bes, economist and writer, ESADE Business
School, Barcelona, Spain; coauthor, Lateral Marketing
“With the financial tsunami, Kotler and Caslione keenly proposed a significant new
theme—Chaotics—to help design more management and marketing resilience in
companies aiming to steer profitably through the turbulence. This book moves
beyond static equilibrium economic theory to dynamic management and marketing
theory.” —Professor Taihong Lu, Sun Yat-sen University; Director, China Marketing
Research Center; coauthor, Marketing Management—A China Perspective
“The appearance of Chaotics is extremely important at a time when many economists
and financial experts are guessing—with most only giving belated explanations of the
world financial crises. Kotler and Caslione have a clear view of the present economic
situation, emerging trends, and even more valuable, they give practical advice on how
business leaders can successfully navigate through the new turbulent economy. Chaotics
should be the reference book for every businessman in ‘The Age of Turbulence.’”
—Alexander Izhorsky, Ph.D. in economics; CEO of the Association of Marketing
Research, Russia; Editor-in-Chief of the international magazine Marketolog
“A book that should have been written ten years ago and is much in need today has
finally arrived. Chaotics offers concrete recommendations in a systematic way, pro-
viding much needed hope in the midst of the current global economic crisis.”
—Waldemar Pfoertsch, China Europe International Business School, Shanghai, China
“Chaotics gives business leaders critical insights and a roadmap of systems and tools
essential for today’s new conditions—unpredictable turbulence. The authors’ evi-
dence is compelling, their analysis incisive, and their advice priceless for thriving in
the age of turbulence.” —Linden R. Brown, Chairman, MarketCulture Strategies,
Inc., Australia
“Like turning on a bright light in a room of darkness, Chaotics illuminates today’s
formidable challenges and goes that extra step to provide a clear and practical frame-
work for mastering the turbulence. An important and timely contribution to man-
agement and marketing.” —Randall Ringer, Managing Partner, Verse Group, LLC
“With mastery, Kotler and Caslione describe “The New Normality of Turbulence”
and elaborate on its implications for all the functions in business. The Chaotics
Management System is timely and will be a lasting contribution to management.”
—Eduardo Braun, Corporate Director, HSM Global
“The metaphor of turbulence in nature is brilliant because it leads seamlessly into
the need for an ‘early warning system’ for business. Weather forecasters have been at
this a long time, and while we can’t prevent the tornado, drought, or hurricane, we
can prepare for it. Businesspeople must do the same . . . and the authors help you do
that with tools and strategies.” —Joe Plummer, Columbia University and Olson
Zaltman Associates
Chaotics
The Business of Managing and
Marketing in The Age of Turbulence
PHILIP KOTLER
AND
JOHN A. CASLIONE
AMERICAN MANAGEMENT ASSOCIATION
NEW YORK ❚ AT LANTA ❚ BRUSSE LS ❚ CH I CAGO ❚ MEX I CO C I TY
SAN FRANCISCO ❚ SHANGHAI ❚ TOKYO ❚ TORONTO ❚ WASHINGTON, D.C.
Special discounts on bulk quantities of AMACOM books are available to cor-
porations, professional associations, and other organizations. For details, con-
tact Special Sales Department,AMACOM, a division of AmericanManagement
Association, 1601 Broadway, New York, NY 10019.
Tel: [phone]. Fax: [phone].
E-mail:
To all MBA students and to those MBA students from the Kellogg
School of Management, Northwestern University, who we have
trained to deal with the “rough and tumble” world of business
where risk and uncertainty rules but can be handled with insight
and preparedness.
Philip Kotler
To my guiding light, Donatella: my most cherished friend and
dedicated partner in all that I do in my life, whom I so proudly
call my lovely, beautiful, and tremendously gifted wife, for her
boundless patience and unwavering commitment to me, which
has inspired me to write the thoughtful chapters of this book, and
to write the most inspiring and joyous chapters of my life.
John A. Caslione
This page intentionally left blank
C O N T E N T S
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 THE WORLD HAS ENTERED A NEW ECONOMIC STAGE:
FROM NORMALITY TO TURBULENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
What Is Market Turbulence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Factors That Can Cause Chaos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2 MANAGEMENT’S WRONG RESPONSES TO TURBULENCE
NOW BECOME DANGEROUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Resource Allocation Decisions That
Undermine Core Strategy and Culture . . . . . . . . . . . . . . . . . . . . . . . . . 49
Across-the-Board Spending Cuts versus
Focused and Measured Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Quick Fixes to Preserve Cash Flow,
Putting Key Stakeholders at Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Reducing Marketing, Brand, and
New Product Development Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Declining Sales and Price Discounting . . . . . . . . . . . . . . . . . . . . . . . . . 58
Decoupling from Customers by
Reducing Sales-Related Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Cutting Back on Training and Development
Expenses in Economic Crises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Undervaluing Suppliers and Distributors. . . . . . . . . . . . . . . . . . . . . . . 62
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
3 THE CHAOTICS MODEL: MANAGING VULNERABILITY AND OPPORTUNITY . . 69
Constructing an Early-Warning System (EWS) . . . . . . . . . . . . . . . . . 79
Construction of Key Scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Scenario and Strategy Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
4 DESIGNING MANAGEMENT SYSTEMS FOR RESILIENCE . . . . . . . . . . . . . . 101
The Chaotics Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Finance and Information Technology. . . . . . . . . . . . . . . . . . . . . . . . . 110
Manufacturing/Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Purchasing/Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
5 DESIGNING MARKETING SYSTEMS FOR RESILIENCE . . . . . . . . . . . . . . . 139
Common Marketing Reactions to Crises . . . . . . . . . . . . . . . . . . . . . . 143
Strategic Marketing Responses to Crises. . . . . . . . . . . . . . . . . . . . . . . 148
Operational Issues Facing the Marketing Department . . . . . . . . . . . 155
Operational Issues Facing the Sales Department . . . . . . . . . . . . . . . . 160
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
6 THRIVING IN THE AGE OF TURBULENCE:
ACHIEVING BUSINESS ENTERPRISE SUSTAINABILITY . . . . . . . . . . . . . . . 167
Business Enterprise Sustainability (BES) . . . . . . . . . . . . . . . . . . . . . . 170
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
P R E F A C E
When the U.S. financial meltdown struck in 2008, with the seeds
laid much earlier, we were asked by our clients and friends, “How
deep will it be? How long will it last?” They wanted to know if it
would be a short-run recession, a deep recession, or even a great
depression. When asked the same question in October 2008, Gary
Becker, the Nobel Prize–winning economist, said, “Nobody knows.
I certainly don’t know.” The message: Don’t trust economists who
say they know.
The fact is that we are entering a new age of turbulence, and
moreover, heightened turbulence. In his book The Age of Turbulence
(Penguin Press, 2007), Alan Greenspan describes his diverse experi-
ence as the Federal Reserve chairman and one of the most powerful
men in the world.Greenspan had to deal with a great number of eco-
nomic disturbances and shocks for which the only recourse was to
muddle through and pray. He was confronted with major issues fac-
ing the United States, such as burgeoning trade deficits and retire-
ment funding, as well as the proper role of government regulation.
The world is more interconnected and interdependent than ever
before. Globalization and technology are the two main forces that
helped create a new level of interlocking fragility in the world econ-
omy. Globalization means that producers in one country are
increasingly importing resources from other countries and increas-
ingly exporting their output to other countries. Technology—in the