Chaotics

“Chaotics: The Business of Managing and Marketing in the Age of Turbulence” is a recent book by Philip Kotler and John A. Caslione. There are many books on crisis management and this topic is very popular.

In a world that’s always in crisis in recent decades, trying to learn how to cope with a crisis is very important. However, many people become disappointed when they first start reading books on crisis management because most books about crisis management evaluate crises like earthquakes, floods or fires. But this is not what many readers are looking for. People are looking for a book or seminar on how to deal with economic crises. “Chaotics” is the first comprehensive book on managing in turbulent times. Not only big corporations, but small and medium enterprises can also benefit from this book. So, what are the strategies and tactics that the authors suggest about coping with a crisis? The authors classify approaches to crises as traditional or chaotics approaches. In the earlier stages of an economic crisis, traditional companies present a confident business-as-usual attitude to minimize a pending potential torrent and to quell employees’ fears. They develop a wait-and-see attitude before making structural changes. Chaotics strategies are very different to this strategy. These companies see a crisis as an opportunity and try to build new strategic behaviors into key operations and functions to protect the core business and to grow at the expense of weaker, less-prepared competitors. In the mature stage of a crisis, traditional companies undertake aggressive across-the-board cost cutting, including cutting staff. They cancel new projects, new product research and introductions and cancel acquisitions. Companies with the chaotics approach broaden their resources and enlist all strategic stakeholders as partners to guarantee success. They acquire new competitors, new talent and new resources to secure and grow the core business and make it stronger. In the final phase of a crisis, companies with a traditional approach try to make up for past mistakes, downsize to become profitable and attempt to rebuild the business (employees, customers and other stakeholders). Whereas companies with a chaotics approach maintain a consistent steady forward momentum. They move purposefully and deliberately to build growth against faltering competitors. The authors believe that investing in the core business during turbulence is a productive strategy. They give an interesting example of Ryanair. Ryanair is the biggest budget airline in Europe. The company grew during the 2008 crisis while other budget airlines were in trouble. The divergence between Ryanair and easyJet was highlighted during a recent period of overall uncertainty for the airline industry when, during the same week, Ryanair boss Michael O’Leary announced a dramatic plan to expand Ryanair while easyJet’s Stelios Haji-Ioannou urged his management team to adopt exactly the sort of caution that O’Leary was throwing to the wind. According to the authors, O’Leary sees economic downturns pressuring weaker carriers to cut routes, allowing his airline to move in. He also sees the opportunity for Ryanair to benefit during a downturn from falling jet fuel prices, declining labor costs and the possibility of cash-strapped rivals reneging on orders for new planes. So as the recession landed in Europe and other airlines shrank and merged, O’Leary’s expansion plans lifted off, with O’Leary claiming Ryanair could double its profits and its passenger numbers by 2012, despite signs that short distance air traffic was declining. In October 2008, against the backdrop of Ryanair’s bold moves, Sterling Airlines, a fast riser on Europe’s low-cost airlines scene, went bankrupt after its Icelandic owner ran out of money (seemingly overnight), adding Denmark’s second-largest carrier by fleet size to a list of more than two dozen carriers around the world that ceased operating that year. Only those courageous few, like Ryanair’s O’Leary, are willing to swim against the current and defy conventional wisdom. This gives them the greatest chance to strategically position their companies to gain market share and grow shareholder value. The best executives resist any such desperate extremes by preparing for the worst while focusing on what their companies do best. Chaos has a way of giving providing an advantage for those who find opportunities in present circumstances -- whatever those circumstances are.