Strategic Drift Theory

Strategic Drift Theory

Strategic drift occurs when the strategy pursued by business no longer fits with the external environment and trends around it. Therefore the service or product the business is currently selling is not suitable for the current trends or market conditions.

Therefore the business will need to look into transformation and changing the way it is operating, providing a service or selling a product.

Strategic Drift Theory – Diagram

Source: aqa.org.uk

The Four Phases of Strategic Drift

Phase 1 – Incremental Change

The first phase highlights that there is not a significant change in the external environment. The business can stay relevant in the marketplace by making small adjustments to their business.

Phase 2 – Strategic Drift

The external environment has now changed by a significant amount to the point that the incremental changes made by the business are not enough to stay competitive.

Phase 3 – Flux

This phase highlights that due to the significant large gap between what the business is providing compared to the demands of the external environment managers are becoming indecisive. This could lead to management starting to adjust their strategies but at this stage, it is still not decisive enough to make drastic improvements required. This could be down to the senior managers not agreeing on how the business should progress.

Phase 4 – Transformational Change or Death

This is the point where management has to recognise the immediate need for a transformative change of the business into a new strategic direction. If the management does not change rapidly then they are doomed for failure. 

Examples of Strategic Drift

Examples of companies that stopped trading due to not being able to transform their business in time to keep up with the changes in the external environment.

1. Blockbuster
2. Woolworths
3. HMV
4. ToysRus