Thursday, May 14, 2009

Strategy when chaos is the new normal

Marketing guru Philip Kotler and business strategist John Caslione say that battening down the hatches in a recession often does more harm than good. The most common mistakes:

  • Resource allocation decisions that undermine core strategy and culture
  • Across-the-board spending cuts versus focused, measured actions
  • Quick fixes to preserve cash flow that puts talent at risk
  • Reducing marketing, brand, and new product development spending
  • Responding to declining sales with price discounting
  • Decoupling from customers by reducing sales-related expenses
  • Cutting back on training and development
  • Undervaluing suppliers and distributors

So what should you be doing in a recession? The same things you are doing during good times, say Kotler and Caslione, co-authors of the new book, Chaotics: The Business of Managing and Marketing in the Age of Turbulence (Amacom). They say that the nature of the business world has changed in such a way that thinking in terms of cycles is counterproductive - rather, companies must create strategies that are capable of responding and adapting to a continuous stream of "disruptive innovations and big unexpected shocks."

The three keys to such a strategy, according to the authors: early warning systems that alert leaders to sources of turbulence; scenario planning to allow fast, flexible response; and a scenario selection process based on prioritization and risk exposure. Read more at their website...