Philip Kotler Says:

LONG PROSPERITY THING OF PAST

Philip Kotler is one of the world’s leading management and marketing gurus. So, since I had the ear of the oracle, I thought I’d ask him an important question: when will this recession be over? Stuart Smith said.

The answer was surprisingly straightforward. “We’ve hit the bottom,” he said, “but the recovery will be slow.” Could he be more specific? Well, yes he could, though it wouldn’t offer much comfort. “We’ll get some strength back in 2010, not 2009 and even then, I’m doubtful about how strong it will be.” But, having stuck his neck out, he then wisely retreated into Delphic ambiguity: “Those who have strong opinions on this subject have no basis for it, I can tell you that.”

Kotler, a trim, 78-year-old jet-setter, was over here to promote his latest book, Chaotics, which he has co-authored with John Caslione, who hails from the self-same Kellogg School of Management in Chicago. As a matter of fact underlining his commitment to a prodigious rate of productivity it’s one of two coming out simultaneously. Chaotics deals with the macro geo-political issues of our time; it’s about and for the people who have money to lose. Up and Out of Poverty, by contrast, is about the 4 billion people too grindingly poor to participate in the world economy. It’s about micro social marketing solutions - like the effective provision of micro-finance, mosquito nets or condoms that can, for a small price, make a big difference.

Up and Out may well be a useful textbook, but it is unlikely to have the same portentous impact as Chaotics, or to give its full title, The Business of Managing and Marketing in The Age of Turbulence. There is a clear, evangelical theme running through the book to the effect that businesses are getting it wrong - and not just businesses, policy-makers too. They need to see the error of their ways, or suffer profoundly uncomfortable consequences.

In a nutshell, most companies have a mind set locked into the peaks and troughs of the business cycle. They have only two manuals (or playbooks, as the authors call them), one dealing with the short term crisis-management tactics needed to cope with a steep downturn, the other with maximising their harvest once “normality” returns and we clamber back to the long plateau of prosperity.

But what if this strategic vision is marred, what if - like old generals chief executives and chief marketing officers are fighting tomorrow’s wars with yesterday’s tactics and materiel? Kotler and Caslione believe they are. It’s not that they think the business cycle has been abolished. On the contrary, the book was conceived in the midst of the credit crunch, just after Lehman Brothers went down and the Dow Jones began to see saw with unprecedented volatility around the introduction of the Republican administration’s asset relief programme. Caslione, however, is adamant this is not a recession book: “When we witnessed these events, we were convinced that the tectonic plates had shifted and that we had entered a new economic age. So, last November, we began mapping out what this might look like around Phil’s kitchen table.”

Prime among their conclusions is that the new “normality” is not a long period of unencumbered prosperity but a series of more, or less, controllable crises, which they characterise as “turbulence”. Turbulence need only be frightening for those who are unprepared for it; for others, it is a golden opportunity. Caslione compares the situation to a flight he recently took to Singapore in a Boeing 777. Mid journey, the plane ran into turbulence so severe that it turned many passengers ashen-faced. The air-crew successfully wrestled the plane into an atmospheric sweet-spot and, with the aid of a favourable tail wind, it arrived in Singapore one hour early. The point, he says, “is we were never really in trouble. The aeroplane was built well within those tolerances, the crew was trained to deal with it, only the passengers were unprepared for the rough ride.”

Switching from analogy to reality, the authors believe that a series of developing trends have, and are continuing, to make the world a place of “interlocking fragility” where events and their ramifications are a lot less predictable than they used to be. Among these trends they count globalisation, the increasing pace of technological development with its threat of almost instant product obsolescence (computing power, for example, doubles roughly every six months); the shift of wealth from West to East, particularly through the mechanism of profoundly undemocratic sovereign wealth funds; and the unpredictable regulatory constraints being imposed in the name of environmental control.

If you go along with this theory, it follows that businesses need a new rule book, and it just so happens the authors have one in the guise of the Chaotics Management System, which promises to provide companies with an early warning system, armouring them against unexpected shocks while at the same time equipping them with the weapons to exploit windfall opportunities.

Do I buy their theory? Well, the book tends to treat the phenomenon of Turbulence as a kind of epiphany, whose nodal significance is the present (topically coinciding with the publication date of the book, of course). In fact, as the authors readily concede, the idea of permanent, or at least growing, instability is nothing new. Alan Greenspan, Andy Grove and Peter Drucker have all addressed the same issue. However, it’s fair to say that Kotler and Caslione have done two things better than their predecessors. They have elevated Turbulence to a trend of universal significance; and they have spelt out the practical implications for businesses.

Among these is some important advice for marketers. For example, if Turbulence really does become the order of the day, it stands to reason that marketing and marketing budgets must be used more strategically. Product development should not be choked off and windfall opportunities will be lost if budgets are unimaginatively constrained.