With hindsight, retail observers could see signs of strategic driftin the M&S of the late 1980s – the arrogance of assuming thatconsumers would adapt to M&S assumptions about shopping behaviourrather than vice versa. Mintzberg argues that strategy emerges over time as intentionscollide with and accommodate a changing reality, rather than being dueto a deliberate planning process. An emergent strategy is a set of actions that is consistent over time,has not been stated in a formal plan and has developed or emergedoutside the formal plan and between planning reviews. Strategic Drift is the increasing gap between the demand for change by the forces of the environment and the actual strategic change in the firm. Therefore, its effect on the firm is insidious, which can be visible in the drop in financial performance.
This is usually when an organization realizes that serious changes must be made to its strategy. An organization may struggle to remain competitive, and profitability may decline as a result. These changes are often made from stakeholder feedback, publicity, or in response to customers or competitors. Instead of re-inventing the wheel, consider starting a free trial with Cascade Strategy. We have the software, guidance, and content in place for you to begin effectively combating strategic drift. If Nokia would have focused on their customer, they would have seen their demand for GPS, flashlights, calculators, etc, and may have still been a market contender today.
- The changes needed here are often grand – such as organizational restructuring or investing in new markets or avenues.
- While management is caught in indecision, environmental change demand is accelerating and creating more distance between your offering and reality.
- Moore showed how firms could attain this enviable position by using E.M.
- I want to be clear here and say that any deviation from the plan is not inherently drift.
- For change to be effective an organisation will often have tochange its culture.
A large group of theorists felt the area where western business was most lacking was product quality. The business theory must be notable and interpreted by the members of the organization. Strategy has been practiced whenever an advantage was gained by planning the sequence and timing of the deployment of resources while simultaneously taking into account the probable capabilities and behavior of competition. If everyone is aligned on your “true North,” then those decisions will align with the strategic vision and you’ll be more likely to keep your course. There is the immediate, sunk cost of the resources spent moving in a direction that wasn’t aligned with the vision.
What Does the Term ‘Strategic Drift’ Mean?
Hence, till the time they come to know that the environment has changed, it is very late. In 1989, Charles Handy identified two types of change.[92] « Strategic drift » is a gradual change that occurs so subtly that it is not noticed until it is too late. It is typically caused by discontinuities (or exogenous shocks) in the business environment. The point where a new trend is initiated is called a « strategic inflection point » by Andy Grove.
However, as we see in the next phase, this is sometimes insufficient. Still, indecision at this point in the process is common, delaying the process of necessary changes even further. However, some companies waited too long to review their strategy and are now struggling to catch up with their more proactive competitors. 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. Because stress runs in tandem with poor organizational results, it’s important to solve group dynamic issues sooner than later because groupthink will gradually become more difficult to combat.
Functional objectives
Strategic drift happens for many reasons including management complacency, a bad culture and marketing myopia. One well-documented example is that of the British motorcycle industry. Management complacency due to previous success, a culture of merely believing they were better despite evidence to the contrary, and, crucially, a steadfast refusal to listen to their market all contributed to the industry’s downfall.
Strategic actions that were once enough for success is becoming gradually less competitive. Kodak’s failure to seriously pursue digital photography in favor of film photography, their established business line, plunged them into bankruptcy. Avoiding strategic drift is about understanding your markets and the numbers that drive it. It’s also about having a clear sight of your own company’s performance and, importantly, having the tools and mechanisms for actioning initiatives that will stop the strategic drift that’s threatening your future prosperity. Time series charts illustrate performance over time and make it easy to see trends, and where strategic drift is concerned, it’s the trends that tell the story.
One of the more powerful examples of how operating managers canhave a huge impact on the real-life strategy of the firm is Intel. As that more profitable market grew, Intel became amicroprocessor company, not a memory company. These operating-leveldecisions changed the de facto strategy of the firm prior to thecorporate office’s conception of the company strategy. Zuboff claimed that information technology was widening the divide between senior managers (who typically make strategic decisions) and operational level managers (who typically make routine decisions). In 2000, Gary Hamel coined the term strategic convergence to explain the limited scope of the strategies being used by rivals in greatly differing circumstances.
GOOD CORPORATE GOVERNANCE
The PESTLE Analysis Framework is a really useful tool for considering external factors that do, or could in the future, impact your organisation. Strategic drift can be extremely difficult to spot until it’s too late and your organisation’s strategy is evidently outdated and your business is struggling to stay afloat. Covid-19 is a great https://adprun.net/ example of where being able to adapt to external pressures has been make or break for many organisations. For transformational change to occur you need management who are savvy, bold, and who have the foresight to recognize the direction that needs to be taken. It’s likely that they will begin to create a change management strategy.
Stay Ahead of Your Competition
If you feel like your strategy does not align with these external changes, there’s a chance you may be experiencing strategic drift. 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. 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. Analysing these factors gives you greater insight into external influences that might affect your strategy, helps you foresee and assess potential risks, and enables you to use this knowledge to make better-informed business decisions.
Change introduced through the use of power or manipulation islikely to add to anxiety. Education and communication will rarelysucceed on their own when introducing major change. However, they areuseful as a support for a negotiation or participation approach. In thesecases, strategic drift definition participation offers the best opportunity of allaying staffanxieties by involving them early in the change process and continuingthat involvement through to completion. The process of changing the level of quality of customer service comprises three stages.
As an organisation who has adopted an agile approach to strategy, you recognise that waiting for the next annual strategy planning session, which might be many months away, is high risk. The external and internal data, in the form of time series charts, is telling you a clear story, so it’s time to act. There are usually many factors that contribute to the failure of a business, above and beyond the already mentioned management complacency, culture and marketing myopia. In our view, there are three things most companies are not doing that they should be if they want to avoid potentially fatal strategic drift, and we’ve outlined them below. Today managers in many industries are working hard to match the competitive advantages of their new global rivals. They are moving manufacturing offshore in search of lower labor costs, rationalizing product lines to capture global scale economies, instituting quality circles and just-in-time production, and adopting Japanese human resource practices.