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Study notes

Strategic Drift

  • Levels: A Level
  • Exam boards: AQA, IB, Eduqas

Strategic drift happens when the strategy of a business is no longer relevant to the external environment facing it.

Revision Video on Strategic Drift
The Process of Strategic Drift

Why Does Strategic Drift Happen?

Strategic drift usually arises from a combination of factors, including:

  • Business failing to adapt to a changing external environment (for example social or technological change)
  • A discovery that what worked before (in terms of competitiveness) doesn’t work anymore
  • Complacency sets in – often built on previous success which management assume will continue
  • Senior management deny there is a problem, even when faced with the evidence

The Four Phases of Strategic Drift

These can be outlined as follows:

Phase 1 - Incremental Change

In this phase there is little significant change in the external environment. A series of small, incremental changes to strategy enable the business to remain in touch with the external environment.

Phase 2 - Strategic Drift

Now things are starting to drift apart. The rate of change in the external environment is accelerating and small, incremental changes in strategy are not enough on their own to remain in touch. The business will be losing its competitive advantage.

Phase 3 - Flux

This phase is characterised by management indecision. There is now a significant gap between what the market expects and what a business is delivering. Management may have recognised this gap and begun to alter strategy, however there is no decisive improvement. There may be disagreement between the senior management team about how to address what is now significant strategic drift.

Phase 4 - Transformational Change or Death

The moment of truth. Either management recognise the need for a transformational change in strategic direction, or the business fails. It often takes new, external leadership for this recognition to be made and the relevant strategic change programme implemented. For some businesses, this phase comes too late.

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