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

For example, you may have recognised the early signs of strategic drift by looking at a time series chart that showed how demand for a previously lucrative product line was in decline. However, plenty of failed businesses will cry, “but we measured stuff, our dashboards were amazing.” The trouble is, sexy dashboards often seduce their users into a false sense of adequacy. In our opinion, robust, dependable time series charts are all that most businesses need to ensure they are not slipping into a strategic drift. Crucially, these systems give people the power to combine their strategic thinking with external economic insights, essential internal KPI’s and agile and collaborative implementation tools; it’s a killer combination.

  1. Put another way; they keep doing what they’ve always done because it used to work, refusing to accept it isn’t working anymore.
  2. They can provide certainty andfocus in an uncertain and changing situation.
  3. Strategic drift occurs when the strategy pursued by a business no longer fits with the environment around it.

Established companies find success by identifying and establishing a profitable business model. 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. At this point, because the organization is so far behind, change needs to err strategic drift definition on the side of transformational as opposed to incremental. After all, management still may not understand their environment and therefore the root of their problem; this issue is exasperated if the same management who found success during the organizations past, are present and still hold powerful positions. It’s difficult for individuals to grasp that what worked before, won’t work anymore.

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. The most difficult step is making the transition between introduction and mass acceptance. If successful a firm can create a bandwagon effect in which the momentum builds and its product becomes a de facto standard. Fortunately, it’s also one of the more preventable causes of strategic drift.

Leadership: Tough Decisions to Turn Starbucks Around

The search for best practices is also called benchmarking.[117] This involves determining where you need to improve, finding an organization that is exceptional in this area, then studying the company and applying its best practices in your firm. Michael Hammer and James Champy felt that these resources needed to be restructured.[115] In a process that they labeled reengineering, firm’s reorganized their assets around whole processes rather than tasks. In this way a team of people saw a project through, from inception to completion. This avoided functional silos where isolated departments seldom talked to each other. It also eliminated waste due to functional overlap and interdepartmental communications. J. Moncrieff (1999) stressed strategy dynamics.[98] He claimed that strategy is partially deliberate and partially unplanned.

Competitive advantage

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. However, as the industry shifted towards smartphones and mobile internet, Nokia failed to adapt quickly. When strategic drift is in the incremental changes phase, a business can still change its strategy and respond to outside influences. When trying to assess your exposure to market myopia, it’s helpful to have a solid vision statement, to ensure your organization is focused on achieving your vision as opposed to the success of a single product offering or business model. Incremental Change occurs before there is any significant change in the economy, technology, or customer demand (the external environment). Organizations make incremental change and remain in touch with the environment.

Strategic drift is not malicious.

These two approaches are combined to the “integrated view” with the Bolisani and Bratianu research implications. To start the planning process for knowledge and KM strategy creation, company can prepare a preliminary plan with the basis of rational analysis from internal or external environments. While creating rational and predictive plans, company can similarly utilize practical adapted knowledge for example learning from the ground. The idea behind the integrated view is to combine the general visions of knowledge strategy with both the current practical understanding and future ideas. This model will move the decision-making process in a more interactive and co-creative direction.

For example, a supplierpursuing modern ideas on supplier/customer relationships might encouragea partnership approach to sourcing. It is easy to imagine that buyersin the customer organisation might see benefits in this, and couldpursue the idea to the point where sourcing strategy took on an aspectnot at all contemplated when planned strategic developments were laiddown. In 1999, Constantinos Markides reexamined the nature of strategic planning.[97] He described strategy formation and implementation as an ongoing, never-ending, integrated process requiring continuous reassessment and reformation.

But by this time, A&F’s once-reliable teenage audience had grown up and moved on. Helming the brand since 1992, A&F CEOMike Jeffries felt bold enough in 2006 to proclaim, “We hire good-looking people in our stores and attract other good-looking people. We don’t market to anyone other than that.” At first, all of the controversy and negative publicity helped boost sales.

Tools such as the balanced scorecard and strategy maps help crystallize the strategy, by relating key measures of success and performance to the strategy. These tools measure financial, marketing, production, organizational development, and innovation measures to achieve a ‘balanced’ perspective. Advances in information technology and data availability enable the gathering of more information about performance, allowing managers to take a much more analytical view of their business than before. James Gilmore and Joseph Pine found competitive advantage in mass customization.[133] Flexible manufacturing techniques allowed businesses to individualize products for each customer without losing economies of scale. They also realized that if a service is mass-customized by creating a “performance” for each individual client, that service would be transformed into an “experience”. Their book, The Experience Economy,[134] along with the work of Bernd Schmitt convinced many to see service provision as a form of theatre.

This third phase of strategic shift is characterized by a widening gap between operations and the market, as well as ongoing indecision by management on how to address strategic drift. By this phase, the strategic drift is already underway and the business is increasingly distanced from its once-loyal core audience. This is also when a business noticeably loses its competitive edge and its grip on market dominance. 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. Strategic drift occurs when an organization fails to pay attention to the current industry trends and consumer demands. 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.

Overall, this can mean that an organisation’s actual or realisedstrategy can be very different from the original planned or designedstrategy. As discussed in chapter 1, the rational approach involves the following steps. Understanding that the vision can adjust, conditions can (and will) change, is the first step toward staying aligned.

The net result was thelowest price/lowest cost structure in the world for a fine watch. Potbelly Sandwich Works began in 1977 as a small antique store runby a young couple. Despite the fast-paced, never-a-dull-moment world ofantique dealing, the couple decided to bolster their business by makingsandwiches for their customers. Soon, people who couldn’t care less about vintageglass doorknobs were stopping by to enjoy special sandwiches andhomemade desserts in this unusual atmosphere. Booths were added, along with ovens for toasting sandwichesto perfection, hand-dipped ice cream – even live music. The littleantique shop had become the full-fledged, totally unique sandwich chainwe see in America today.

Ford redesigned their business and manufacturing process from justmanufacturing cars to manufacturing quality cars, where the number onegoal is quality. Ford has accomplished this goal by incorporating barcodes onall their parts and scanners to scan for any missing parts in acompleted car coming off the assembly line. Hence, here the change required should be transformational rather than incremental.

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