Strategic Drift

What is Strategic Drift?

Strategic Drift connotes the slight shift from the predetermined course of action or direction to another one, often unwanted, specifically in the long run.

It is obvious, that in some situations shift is important, but too many shifts over the time may result in the company to lose its focus and it might turn out as highly reactive, which is going to adversely affect its success.

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.

In finer terms, when the firm’s business strategy is not any more relevant to the business environment, it is called Strategic Drift.
Example: Failure of Kodak and Nokia, are the classic examples of Strategic Drift.

Stages of Strategic Drift

There are four stages in strategic drift, as represented in the figure:stages-of-strategic-drift

As shown in the figure, the green line represents the changing business environment, whilst the red line indicates the strategic position of the firm.

Incremental Change: It takes place prior to any remarkable change in the technology, demand, preference and economy. Firm adapt to such change, in order to stay aligned with the dynamic business environment.

Strategic Drift: When the business environment experiences change in an increasing rate, but the business organization continues its operations, as per the previous stage, i.e. it only makes incremental changes. However, such incremental change is not enough to match with the actual change in the business environment.

Therefore, its effect on the firm is insidious, which can be visible in the drop in the financial performance, as well as the causes of such decline are not fully ascertained by the top management. At this stage, the strategic actions turn out as less effective.

Flux: Now, at this stage, the company’s management cannot fail to consider the gap amidst the product demanded by the customers and products offered by the firm. And, the firm clearly understands that they have to implement the change, but it is not easy for the management to concur on what they need to change and how they are going to do it.

Hence, here the change required should be transformational, rather than incremental.

Transformational Change or Death: At this stage, the firm has two alternatives:

  • The firm can formulate and implement a change management strategy, so as to make the desired change in the firm, which may result in success or failure of the firm.
  • The firm can also continue with their old strategy, whose result will be dying a slow death.

What are the effects of Strategic Drift?

The effects of the strategic drift can be seen in:

  1. Damage to Employee Morale: Because of the psychological fallout, from the continuous shifting and change of long term effect on the firm, usually tends to develop a regressive state of mind, which makes the staff members indifferent to a constant state of alert.
  2. Change for change sake: Due to continuous shift, change is not anymore perceived as a strategic move, but it is considered as a change for change sake.
  3. Sceptical: Managers and executive become sceptical, because of the lack of certainty, due to which the motivation to stand up and the fight for survival diminishes with time.

How to prevent Strategic Drift?

There are certain ways, which the organization can implement to prevent strategic drift, these are:

  • Develop a culture in the organization which is not just openly tolerant of both positive as well as negative feedback, but also gladly receives it.
  • Ensure that the firm accepts change as and when required, as well as it is not reluctant to question the change when it seems irrelevant.
  • Develop a flexible environment in the organization, in a way that all the levels of the management take part in the decision making process.
  • Identify new challenges and prioritize them as per their significance.
  • Formulate comprehensive and clearly defined strategies for business.

Consequently, loss of momentum, increase in unnecessary cost, diversion of focus, the decline in performance, preservation of status quo, and decline in competitive advantage, innovation and market adaptability may take place due to strategic drift.

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