The Causes of Strategic Drift and How to Avoid Them

Over the years many market-leading businesses have suffered from strategic drift and lost their way. The concept of strategic drift attempts to explain why the strategy of a business loses touch with the dynamic external environment in which it operates. The first phase highlights that there is not a significant change in the external environment.

• Determined to turn things around, Jobs would invoke a transformational change.
• While management is caught in indecision, environmental change demand is continuing to accelerate and create more distance between your offering and reality.
• Not adapting your corporate strategy or keeping up with the times is a recipe for strategic drift.
• If possible, interact with customers, gather feedback, and value your most active and loyal users.
• Jeffries eventually stepped down as CEO as A&F targeted a young-adult audience with a mature clothing line and subdued advertising.
• This phase highlights that due to the significant large gap between what the business is providing compared to the demands of the external environment managers are becoming indecisive.
• The takeaway is that when strategic drift is in the incremental stage, a business can still change course, make small adjustments, and maintain its relevance even in the fickle fashion industry.

Phase 1 – Incremental Change

Both run the risk of failure — there is no guarantee that transformational changes will pay off, even if they are focused on better aligning your organization with its goals. Incremental changes are small, gradual shifts occurring within an organization’s internal workings, not the wider external environment — e.g., the economy or technological advances. An organisation’s ability to keep up with external changes determines the extent to which it is impacted by these external factors. Instead, support positive disruption and fresh perspectives at your company. Most often, it’s the employees who work directly with your product or interface with your customers that can provide the insights and viewpoints necessary to stop strategic drift before it becomes a problem.

Is Your Organisation Experiencing Post-Covid Skills Gaps?

If this gradual deterioration of competitive action is allowed to go on, it often results in the total breakdown of a company’s ability to meet its core business objectives. By conducting regular external analyses, you’ll have the ability to react to any of the trends in the external environment by creating a change management strategy to address the change. If you’re short on time, it may be helpful to outsource this project to internal team members or consultants. If you fail to adapt to your environment your business will suffer. Kodak’s failure to seriously pursue digital photography in favor of film photography, their established business line, plunged them into bankruptcy.

Centre Services

Organizations will encounter strategic drift when they’re nearsighted and spend too much time focused on producing goods and services and don’t spend enough time understanding what customers need/want. During this phase, the gradual effect on an organization can be quite insidious. Often, financial performance declines, and the decline and its cause (separation of organization from the external environment) isn’t fully recognized by senior leadership during this phase. This phase highlights that due to the significant large gap between what the business is providing compared to the demands of the external environment managers are becoming indecisive. This could lead to management starting to adjust their strategies but at this stage, it is still not decisive enough to make strategic drift definition drastic improvements required.

Covid-19 is a great example of where being able to adapt to external pressures has been make or break for many organisations. Speaking of culture, how inviting (or uninviting) is the one at your organization? Companies can lose their way by opposing growth and allowing their culture to stagnate. In 1997, Steve Jobs returned to Apple at perhaps its lowest point ever. Only two years earlier, Jobs left in disgrace after losing a boardroom battle to John Sculley, the very man he had handpicked as CEO.

Flexiblility is the Key to Strategy in Volatile External Environment

In this case, if your organization is focused on making the best drill as opposed to making the best hole, you’re falling into a myopic trap. If your company has developed a culture that is highly agreeable or timid, you will not hear what needs to be said (E.g. “what worked before won’t work anymore because of x and we need to pursue y”).

The external environment has now changed by a significant amount to the point that the incremental changes made by the business are not enough to stay competitive. Unraveling Strategic DriftStrategic Drift occurs when a company’s strategy gradually becomes misaligned with its external environment. It’s akin to a ship veering off course due to subtle shifts in the wind and currents. This deviation can be insidious, often unnoticed until it results in significant consequences for the organization. However, the concept of Strategic Drift warns against complacency, emphasizing the need for adaptability and evolution.

• Poor financial performance can be easily blamed on internal issues as opposed to the external environment.
• In the ever-evolving landscape of modern business, organizations are constantly searching for ways..
• It’s difficult for individuals to grasp that what worked before, won’t work anymore.
• The first phase highlights that there is not a significant change in the external environment.
• This drift results in a growing misalignment between the organization’s strategy and the external conditions, leading to performance decline.
• This strategic drift flux can be attributed to other factors, including a bias for advancements in chemistry over hardware or technology.

Learn how to create an innovation engine to consistently deliver innovative products by developing an innovation strategy, managing ideas and executing the best ones. Learn how to plan an engaging and productive team experience for your next strategy planning day with these 7 tips from a workshop and strategic planning facilitator. It is then up to the organization to react appropriately to these changes in order to keep its strategy aligned to its vision.

In the years that followed, Jobs and his team would revolutionize the industry by introducing some of the most influential consumer products of the century, all because he tackled strategic drift head on. MBA Brief provides concise yet precise definitions of organizational concepts, management methods, and business models as taught in an MBA program. Often, there is not decisive action which ultimately leads to little progress. While management is caught in indecision, environmental change demand is accelerating and creating more distance between your offering and reality. Although the organization continues to make incremental progress, it’s not enough to keep up with the environment’s accelerated rate of change. There is no cause for alarm during this phase because there is little distance between external changes and the strategic action of the organization.