John Caslione (pictured below) navigates through the chaos of the financial storm to a new normality.

The world is more interconnected and interdependent than ever before. National economies are now all intimately linked, interconnected and interdependent upon each other.

While global interdependence works in everyone’s favour in good  times, globalisation’s ‘interlocking fragility’ rapidly spreads much pain and damage virally in bad times. 

Globalisation and technology are the two main forces that helped create a new level of interlocking fragility in the world economy.  In the next decade and for the foreseeable future we can anticipate increasing turbulence around the world.

All of this will certainly be felt: rapid political leadership change in emerging markets; major policy shifts; increasing armed conflicts; local and national government budget cuts and the spill-over effect on business. 
We are living in uncertain times. That means there is greater risk for businesses of all sizes everywhere in the world. Businesses need new strategies to protect themselves and to capitalise on the opportunities hat will undoubtedly arise.

The fact is that we have already entered a new age, ‘The Age of Turbulence’ and, moreover, heightened turbulence, which is always unpredictable and is often undetectable. When turbulence is not detected nor addressed properly, it creates chaos for businesses, governments and all of us alike.

Turbulence, with its consequent chaos, risk and uncertainty is now the normal condition of economies, industries, markets and companies.

In The Age of Turbulence, economic cycles will look more like an erratic ECG heartbeat wave — a series of Ws — rather than the traditional sine waves of economic cycles over the past 50 years in what we term the ‘new normality’.  Turbulence is the new normality, punctuated by periodic and intermittent spurts of prosperity and downturn — including extended downturns and recession. 

And although mainstream economists and politicians alike have yet to realise it, the very notion of a ‘recession’ must be redefined away from two consecutive quarters of negative growth, just as the contemporary usage of the term ‘recovery’ must be defined differently.

Today’s turbulent economy, wherein we now have heightened turbulence, is markedly different. Today and for the foreseeable future, the new normality economy is more than normal times interrupted by business cycles that brought some predictability to businesses at the macro level.

Today we can expect more big shocks and many painful disruptions, causing heightened levels of overall risk and uncertainty for businesses at both the macro-economic level as well as the micro-economic level. While it certainly doesn’t mean that companies did not have to withstand great turbulence in the past – it was just more episodic and coincident with great disruptive events, such as cataclysmic depressions, wars and other critical events in history.

Let’s analyse this further. 
Over the past 50 years, we’ve come to count on two essential swings that mark a normal economy.  First is the upswing that has historically lasted between five and seven years on average, oftentimes referred to as the ‘bull market’. Second, is the market downswing lasting on average for ten months, which we’ve referred to as the ‘bear market’, or sometimes as the ‘market correction’. 

These two swings were largely smooth and somewhat predictable in their movements. During the average of ten months for recovery, while businesses would continue to battle competition as they’ve always had, once the economic upswing began, it became substantially reliable – if not even substantially predictable – that the upswing would continue largely unabated and uninterrupted until such time as the next bear market correction would then kick in. 

Then the next cycle would begin again. 

 No more. 

In The Age of Turbulence, companies are stressed, compressed and tested at many levels, sometimes so much so that they cannot fully recover because the former predictable five to seven-year up-cycle can no longer be counted upon. 

Imagine a company which has been severely buffeted by turbulence and then experiences chaos exposing their weaknesses and vulnerabilities. Then, when they’ve just begun to experience one or two quarters of upswing in the economy – allowing them time to begin to repair the damage to their business – turbulence hits them again. These companies will become weaker still and may  not be able to survive over the mid and long-term.

Turbulence, and the chaos that results from turbulence, have two major effects. One is vulnerability, against which companies need defensive armour. The other is opportunity, which needs to be exploited. 

First, vulnerability  
The vast majority of companies around the world today are ill prepared or not prepared at all to be successful in an environment of continuous, unpredictable turbulence that will hit their businesses. Just as turbulence will buffet an airplane during flight – often with that turbulence undetectable despite the most sophisticated detection systems available – the airplane and its passengers and crew will be rocked about, just as companies will be when they encounter turbulence. 

It is when economic turbulence hits a company that chaos will be created, and especially for those companies which have not prepared their organisations and business models to withstand turbulence.

Now – opportunity 
Opportunity occurs when a company is responsive, robust and resilient and has transformed its organisations and business models to compensate for turbulence and chaos in the new normality. 

Business leaders and their companies who will embrace  the new normality will have implemented new systems to detect turbulence that can be detected, while also instilling new strategic behaviours within their organisations and their business models to minimise or pre-empt any ill effects on their businesses when turbulence strikes unexpectedly. 

Such companies can then take away competitors’ business, or even acquire competitors at bargain prices, that have been weakened and made vulnerable by their inability to withstand the turbulence and chaos.

On top of the everyday challenges of dealing in a perpetual competitive arena, as well as business cycles, business leaders need to recognise a heightened stream of major and minor disturbances challenging their business planning, and to adjust appropriately. 

The heightened turbulence and increasingly frequent and intense periods of turbulence in the global economy is the new normality that challenges business and government leaders to better understand, fully accept, and then create new ways and new strategies to deal with, if we are to succeed in the years ahead. 

There is a need for business leaders and their organisations to develop a new mindset – one that takes into account intermittent and unpredictable periods of disturbance and still thrives while under threat of global, industry, market or company chaos. Beyond developing a new mindset, business executives must drop their reliance on two-playbook strategies – one for up markets and the other for down markets – and continuously fine-tune strategies, or even discard them when the environment demands it. The primary difficulty lies in the fact that their strategies begin to settle down, get optimised and become entrenched more deeply during stretches of normality, which leaves them unprepared when turbulence breaks out.

We have a new set of strategic guidelines, designed to help businesses navigate through the new normality to be successful and profitable over the extended term, regardless of the economic conditions
– whether it’s the turbulence we’re experiencing now, or the turbulence that we’ll be certain to experience for many years in The Age of Turbulence.

John A Caslione is CEO of Chaotics, LLC, and has co-authored a book with Philip Kotler entitled, ‘Chaotics: The Business of Managing and Marketing in The Age of Turbulence’ (published by AMACOM).

John Caslione