Book review: Chaotics – The business of managing and marketing in the age of turbulence (scenario planning)

Posted on: July 14, 2011

By Philip Kotler and John A Caslione

This review appeared in Professional Marketing magazine (http://www.pmforum.co.uk/magazine/index.aspx) a while back. But I keep mentioning the book to people so thought I’d publish it here.

This book about scenario planning actually cheered me up. Why? Because it provided a huge amount of information about what is going on in the world right now – key news events and an analysis of the causes of chaos – then presented lots of concise, pragmatic advice to help everyone in management – with special support for marketers – get on with the business of generating success and profits. It also provided a valuable round up of all the latest management theories and research which acts as a fabulous update for MBAs.

It eloquently explains a range of recent phenomena including disruptive technologies, cloud computing, the rise of the BRIC countries and SWF and hypercompetition. It deals elegantly with the impact of environmentalism, the rise of customer sophistication and the use of social media.

Worryingly, reading the list of the most common mistakes made by business leaders when turbulence hits is like reading the action plans for the majority of professional service firms right now. There are other provocative lists – like the top ten innovation mistakes and the top ten marketing mistakes that companies make in a recession.

It suggests what sort of cuts to implement during a recession and advises bravery to swim against the tide of conventional wisdom. It advises to prepare for the worst while focusing on what your firm does best. It provides hope through many illustrations and examples of those who succeeded despite difficulties and reminds us of McKinsey research that during the 2000-2001 recession when so many companies and a third of banks failed, 15% of the companies that were not industry leaders vaulted into that position during it.

The chaotics management system – a systematic approach to detecting, analysing and responding to turbulence and its chaos – is then described in some detail. The three components are detecting through the development of early warning systems, responding by the construction of key scenarios and selecting strategy based on scenario prioritisation and risk attitude.

Professional firms should pay particular heed to warning that silos prevent firms from having the necessary helicopter or balcony view. It suggests that a business’s leaders must draw together the views from all departments as well as other experts and stakeholders to begin to construct highly probable key scenarios that should be confronted. At the very least there should be a worst case scenario, a most expected scenario and a best case scenario.

“To thrive you must first learn to survive” – the book explains how to become more responsive, robust and resilient and to embed Business Enterprise Sustainability (BES). It explores Simon-Kucher & Partners’  latest book “Hidden champions of the twenty first century” and sets out nine lessons.

There is a five step process to set up and execute chaotics strategic behaviours for the entire organisation and each department. Cut/delay, outsource and increase/accelerate decisions are applied to the finance, IT, purchasing, manufacturing/operations, HR and there is a chapter dedicated to marketing.

I particularly liked the list of major shifts in the marketer mindset, the table of good, poor and great marketing characteristics, the eight factors to consider as you create chaotics marketing strategies, the six key steps for sales teams and six principles for building loyalty.

The key messages is that the world keeps changing and we need new management systems in order to cope and that we do this by having dual vision – with planning for today and planning for tomorrow and triple planning – the short, intermediate and long term.

At a time when many professional firms are panicking it gives immense reassurance to those of us who are trying to steer them through the current crisis and to embrace fundamental change. If I was being critical, I would say that the book does little more than reinforce the need for good environment scanning and the detection of weak signals, the examination of alternative possible scenarios (as Shell has been doing for decades) and flexibility in strategy and management. But I guess it is reassuring to know that these basic tools are still are stock in trade during these turbulent times.

Chapters:

  1. The world has entered a new economic stage: from normality to turbulence
  2. Management’s wrong responses to turbulence now become dangerous
  3. The chaotics model: Managing vulnerability and opportunity
  4. Designing management systems for resilience
  5. Designing marketing systems for resilience
  6. Thriving in the age of turbulence; achieving Business Enterprise Sustainability

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