Strategic Drift: How to avoid losing competitive advantage

When competitiveness still seems out of reach, they form strategic alliances—often with the very companies that upset the competitive balance in the first place. Managers who secure a strategic drift definition leadership position for their company approach strategy from a very different angle. They nurture ambitions out of all proportion to their firm’s current resources and capabilities.

Strategic management is planned and emergent, dynamic and interactive. To avoid this trap, businesses must stimulate a spirit of inquiry and healthy debate. They must encourage a creative process of self-renewal based on constructive conflict. Moore showed how firms could attain this enviable position by using E.M.

  1. This could be down to the senior managers not agreeing on how the business should progress.
  2. Rogers’ five stage adoption process and focusing on one group of customers at a time, using each group as a base for reaching the next group.
  3. Complexity can be thought of as chaos with a dash of order.[61] Chaos theory deals with turbulent systems that rapidly become disordered.
  4. However, within incremental changethere may be a danger of strategic drift, because change is based on theexisting paradigm and routines of the organisation, even whenenvironmental or competitive pressure might suggest the need for morefundamental change.
  5. Cameron has more than 20 years of enterprise leadership experience driving transformational change, business agility, and market growth.

However, it may be difficult for existing management to agree on what exactly needs to change and how it’ll be done. At this point, management can no longer ignore the gap between what their customers are demanding and what the organization is providing. Although the organization continues to make incremental progress, it’s not enough to keep up with the environment’s accelerated rate of change. Therefore the business will need to look into transformation and changing the way it is operating, providing a service or selling a product. Carry out market research to establish how your product will need to adapt.b. Reviewing external data, informed you that in fact, demand for a similar product to yours was increasing.

Strategic Management Software: What Makes Cascade Stand Out

This school of thought is sometimes referred to as customer experience management (CEM). It’s no coincidence that time series charts are the tool of choice of the data providers mentioned above, such as the ONS. Time series charts inform in a way that’s easy to understand and in a way that helps with decision making and let’s face it, making decisions is what strategy is all about whether it’s strategic planning or recognising the early signs of strategic drift. Consequently, loss of momentum, increase in unnecessary cost, diversion of focus, decline in performance, preservation of status quo, and decline in competitive advantage, innovation and market adaptability may take place due to strategic drift. Strategic drift is a major challenge for organizations as it can lead to unintended consequences and missed opportunities. While leadership sets the strategic direction, it’s important to keep the ship on course especially as conditions change.

At this point, they must either make major transformational change or the business will probably die. Strategic drift happens when the strategy of a business is no longer relevant to the external environment facing it. In our next article, we will be looking at how you can use the information you have compiled to determine whether your organisation is experiencing strategic drift and how to avoid/escape strategic drift. For example, from the software development industry agile software development provides a model for shared development processes.

Bolisani & Bratianu (2017) [86] have defined knowledge strategy as an integration of rational thinking and dynamic learning. Rational planning contains a three-step process where the first step is to collect information, the second step is to analyze the information and the third step is to formulate goals and plans based on information. Emergent planning also contains three steps to the opposite direction starting from practical experience, what is analyzed in the second step, and then formulated to a strategy in the third step.

Strategic Drift: Understanding What It Means and Its Impact on Your Organisation

The previouschapter explained how some managers might achieve change by beingtransactional, whereas others might take a more transformationalapproach. In finer terms, when the firm’s business strategy is not more relevant to the business environment, it is called Strategic Drift. It is the step-by-step decline of the competitive action, leading to the failure of the firm to identify and react to the change in the business environment. Strategic Drift implies a condition in which the company’s management fails to notice or remains unaware of the minute changes in the business environment.

In the 1980s business strategists realized that there was a vast knowledge base stretching back thousands of years that they had barely examined. Military strategy books such as The Art of War by Sun Tzu, On War by von Clausewitz, and The Red Book by Mao Zedong became business classics. From Sun Tzu, they learned the tactical side of military strategy and specific tactical prescriptions. From von Clausewitz, they learned the dynamic and unpredictable nature of military action. Important marketing warfare books include Business War Games by Barrie James, Marketing Warfare by Al Ries and Jack Trout and Leadership Secrets of Attila the Hun by Wess Roberts. The marketing warfare literature also examined leadership and motivation, intelligence gathering, types of marketing weapons, logistics and communications.

Make sure that your company formalizes a mission statement and a set of values to help everyone believe and work toward a shared vision. 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. Not adapting your corporate strategy or keeping up with the times is a recipe for strategic drift. Some companies catch their strategic drift before it’s too late and course correct in time.

Key points

Strategic Drift connotes the slight shift from the predetermined course of action or direction to another one, often unwanted, specifically in the long run. Examples of strategic drift include Kodak, Nokia and Blockbuster videos. The diagram above by Johnson and Scholes highlights how, as change in the environment increases, the business’s strategy may become increasingly inappropriate. Strategic drift occurs when the strategy pursued by a business no longer fits with the environment around it. What may have been appropriate at one point is no longer suitable as conditions have changed.

The cultural web was devised by Gerry Johnson as part of his workto attempt to explain why firms often failed to adjust to environmentalchange as quickly as they needed to. He concluded that firms developed away of understanding their organisation – called a paradigm – andfound it difficult to think and act outside this paradigm if it wereparticularly strong. This emergent strategy would be one that arises from an externalstimulus not envisaged in the planned strategy.

Teaching guide: strategic drift

Carl Sewell,[111] Frederick F. Reichheld,[112] C. Gronroos,[113] and Earl Sasser[114] observed that businesses were spending more on customer acquisition than on retention. They showed how a competitive advantage could be found in ensuring that customers returned again and again. Reicheld broadened the concept to include loyalty from employees, suppliers, distributors and shareholders. They developed techniques for estimating customer lifetime value (CLV) for assessing long-term relationships. The concepts begat attempts to recast selling and marketing into a long term endeavor that created a sustained relationship (called relationship selling, relationship marketing, and customer relationship management). Customer relationship management (CRM) software became integral to many firms.

With a top-down approach and leadership support, unexpected changes can not only become manageable, they can become opportunities for transformation and growth. In today’s hyper-competitive world, collecting customer data and conducting market research isn’t enough. At best, data and research only provide a snapshot of the average customer. There are always exceptions to the average, and failing to attend to these exceptions can often result in strategic drift. When organizations experience flux, they may even acknowledge that market trends or shifts in consumer tastes are leading up to a make-or-break moment. In spite of this realization, decision makers at the company seem incapable (or unwilling) to reach a consensus that turns the tide.

As executives, we tend to spend a lot of our time and energy on setting strategy – the direction in which we want the figurative ship to go. We search for inspiration, high upon the mountaintops, and emerge only after we have a direction we feel confident in sharing with the company at large. Being vigilant and involved as a leader will act as an early warning system for when strategic drift is taking root. Keeping the door open to organizational flexibility and tactical resilience also helps.

But their failure wasn’t overnight, management knew that digital photography represented a serious threat to their existing business and neglected the reality of their environment until they lost most, if not all, of their competitive advantage. Examples of companies that stopped trading due to not being able to transform their business in time to keep up with the changes in the external environment. The first phase highlights that there is not a significant change in the external environment. The business can stay relevant in the marketplace by making small adjustments to their business.