Learn all you need to know about how strategic drift can take shape in your business, the potential impact, and how you can take control of your strategy.
Written by: James Milsom, Head of Marketing
Strategic drift occurs when a business fails to adapt to its surroundings and does not adapt its strategy in response to changes in its wider environment.
Many factors can lead to strategic drift, and it can severely impact a business’s success - if left unchecked, it can even cause a business to fail.
This blog discusses the definition of strategic drift, the phases of the strategic drift process, and how you can avoid it in your organization.
How is strategic drift defined?
Strategic drift is a term used to describe a situation where an organization’s strategy has become misaligned with its environment. This could be due to several factors, including:
Lack of awareness and interest in the business environment you are a part of and failure to adjust your strategy accordingly.
- Resistance to change
Being set in your ways and reluctant to change processes or strategies you are already using and familiar with.
- Lack of strategic vision
Failing to anticipate or accurately speculate about potential changes within your business environment.
- Poor strategy execution
Being unable, for whatever reason, to implement your strategy correctly.
Allowing strategic drift to occur can have serious consequences for your business.
While preventing it from happening in the first place is an ideal option, sometimes the elements that can cause strategic drift are far outside of an organization’s control.
It is then up to the organization to react appropriately to these changes in order to keep its strategy aligned to its vision.
What are the phases of strategic drift?
Strategic drift tends to happen in four main phases:
1. Incremental change
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.
These changes are often made from stakeholder feedback, publicity, or in response to customers or competitors.
When strategic drift is in the incremental changes phase, a business can still change its strategy and respond to outside influences.
2. Strategic drift
During this phase, shifts are occurring in the wider business environment - and small changes are no longer enough to keep on top of these shifts.
An organization may struggle to remain competitive, and profitability may decline as a result.
Processes and tactics that were once effective fail to produce the necessary results, and yet - for whatever reason, be it complacency or resistance to change - the organization fails to make appropriate changes.
In the flux phase, the gap between your customers’ needs and your organization’s services or products widens further still, and they begin to look elsewhere.
This is usually when an organization realizes that serious changes must be made to its strategy.
Still, indecision at this point in the process is common, delaying the process of necessary changes even further.
The changes needed here are often grand - such as organizational restructuring or investing in new markets or avenues.
However, as we see in the next phase, this is sometimes insufficient.
4. Transformational change (or demise)
In this fourth and final phase, an organization has two options: to embrace the need for transformation and take a leap or to stick to its original strategy.
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.
However, in some ways refusing to change altogether and hoping things will improve is even riskier - after all, the definition of insanity is doing the same thing and expecting different results.
If an organization successfully attempts to transform, it may emerge stronger and more competitive. The key is intelligent and creative responses to strategic drift.
What are some real-world examples of strategic drift?
Nokia and its drifting focus
A real-world example of strategic drift could be seen in Nokia, a former mobile phone manufacturer that dominated the industry in the late 1990s and early 2000s.
Nokia's original strategy was to produce high-quality, reliable mobile phones at an affordable price, with a strong emphasis on hardware. However, as the industry shifted towards smartphones and mobile internet, Nokia failed to adapt quickly.
Instead, it focused on hardware while overlooking the importance of software and applications. This strategic misalignment eventually led to Nokia's decline, and Microsoft acquired the company in 2014.
Nokia's example highlights the dangers of strategic drift and the importance of adapting to changing market conditions.
But could they have taken a different route? Hear what their former CEO had to say:
Kodak not seeing the bigger picture
Another example of strategic drift can be seen in the case of Kodak, the former camera and film company. Kodak's original strategy was producing high-quality photographic film and related products.
However, with the rise of digital technology and the emergence of digital cameras and smartphones, Kodak failed to adapt quickly enough.
Instead of embracing digital technology and transitioning to digital photography, Kodak focused on its film business. This strategic misalignment eventually led to Kodak's decline, with the company filing for bankruptcy in 2012.
Want to learn more? Bloomberg's video is a must:
Kodak's example highlights the importance of recognizing and adapting to changes in technology and market conditions.
Companies that fail to adjust their strategy to changing circumstances risk being left behind by their competitors and may ultimately face a decline in performance or even failure.
How to avoid strategic drift
Strategic drift can be avoided by being proactive and pragmatic in your approach to your business strategy. Embracing the following ideas will help to prevent the risk of your strategy becoming misaligned:
- Conduct regular reviews
Frequent reviews of your strategy and organization’s structure will help identify possible improvement areas.
- Encourage innovation
Fostering a culture where innovation is encouraged and appreciated will create a pool of ideas for staying ahead of competitors.
- Monitor the competitive landscape
Paying attention to your environment and what your competitors are doing (both effectively and ineffectively) will help with your overall awareness.
- Be flexible
Try not to be too resistant to change, as this can harm many areas of your organization.
- Stay connected to your customers
After all, they are the key drivers of change in any business environment.
How i-nexus can help
See how i-nexus’s software can help you track your performance and give you the data you need to adapt quickly to change.
Ready to get hands-on? Book a free trial of i-nexus today, and we'll show you how to avoid strategic drift thanks to one undisputed view of your strategy.
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About the author
James Milsom is Head of Marketing at i-nexus. James has wide-ranging experience in telecommunications, energy, education, and software markets.
As Head of Marketing, his drive is to raise awareness and understanding of the challenges facing enterprises in delivering strategic objectives and transformation amidst changing markets and the obstacles traditional tools and methods present leaders.
If you’d like to talk more about strategy execution, contact James at firstname.lastname@example.org or connect with him on LinkedIn for the latest insights.