Strategic Drift Reference Library Business

Examples of strategic drift include Kodak, Nokia and Blockbuster videos. James has wide-ranging experience in telecommunications, energy, education, and software markets. See how i-nexus’s software can help you track your performance and give you the data you need to adapt quickly to change. However, with the rise of digital technology and strategic drift definition the emergence of digital cameras and smartphones, Kodak failed to adapt quickly enough. Still, indecision at this point in the process is common, delaying the process of necessary changes even further. This is usually when an organization realizes that serious changes must be made to its strategy.

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This could be down to the senior managers not agreeing on how the business should progress. The business will end up in a state of flux, ie managers are uncertain what to do as they have fallen so far behind the trends in the market. At this point, they must either make major transformational change or the business will probably die. 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.

Transformational change (or demise)

It means connecting work silos, building trust, and giving all employees a voice. And don’t be afraid to challenge the status quo to keep the company moving forward. Under his guidance, Apple received a cash influx of $150 million from Microsoft to allow them to ship Microsoft Office (and Internet Explorer) on Mac devices. More importantly, Jobs would push Apple to innovate beyond the computer market and tackle other technological breakthroughs. Helming the brand since 1992, A&F CEO, Mike 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.

Phase 4 – Transformational Change or Death

• Strategic drift is defined as unintentional deviation from the agreed-upon direction, resulting in sunk costs and missed opportunities.
• Nokia for example, once a market leader in the mobile phone industry, lost significant market share to Apple and Android after assuming mobile phones are only useful for messaging and snake games.
• And although strategic drift can easily sneak up on you if you aren’t diligent.
• Covid-19 is a great example of where being able to adapt to external pressures has been make or break for many organisations.
• With mall traffic down 30% in 2014, market freefall was inevitable.
• Keeping the door open to organizational flexibility and tactical resilience also helps.

While in the flux phase, management seemingly fails to grasp how (or why) tactics that worked before don’t work any longer. For transformational change to occur, management needs to be bold, savvy and smart, having the foresight to recognize the direction that needs to be taken. 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. 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. However, as the industry shifted towards smartphones and mobile internet, Nokia failed to adapt quickly.

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• Therefore the business will need to look into transformation and changing the way it is operating, providing a service or selling a product.
• The diagram above by Johnson and Scholes highlights how, as change in the environment increases, the business’s strategy may become increasingly inappropriate.
• 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.
• 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.
• Companies can lose their way by opposing growth and allowing their culture to stagnate.
• 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”).
• This could be down to the senior managers not agreeing on how the business should progress.

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. Fortunately, it’s also one of the more preventable causes of strategic drift. Make sure that your company formalizes a mission statement and a set of values to help everyone believe and work toward a shared vision. Apple’s transformational change was an intelligent response to strategic drift that would soon awaken a creative renaissance.

Therefore the business will need to look into transformation and changing the way it is operating, providing a service or selling a product. And yes, there are absolutely reasons for strategic drift, as well as ways to avoid it. Stay tuned for our next blog, where we discuss the three reasons for strategic drift and the four strategies that you and your organization can implement to avoid it. Organizations need to be aware of the dangers of strategic drift and be proactive in making sure they stay ahead of the curve. Strategic actions that were once enough for success become gradually less competitive. The diagram above by Johnson and Scholes highlights how, as change in the environment increases, the business’s strategy may become increasingly inappropriate.

But by the 21st century, the store failed to embrace ecommerce and the digital transformation sweeping the retail industry. But by this time, A&F’s once-reliable teenage audience had grown up and moved on. With mall traffic down 30% in 2014, market freefall was inevitable. 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. The slower you react, the larger the delta between what you offer and what the customer demands, the harder it will be to transform.