In plain English, strategic drift is the gradual fall from grace experienced by businesses who fail to recognise their customers’ needs have changed. Put another way; they keep doing what they’ve always done because it used to work, refusing to accept it isn’t working anymore.
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.
The story is told in great detail in the book “The Strange Death of the British Motorcycle Industry” by Steve Koerner.
Google "list of global free data sources" or something similar
We Can Learn From Their Failures
Now, it’s easy to be critical of businesses or in the case of British motorcycles an entire industry, who have failed because of strategic drift, especially with the luxury of 20:20 hindsight. What’s important is to learn from the mistakes of those who have become less dominant, or worse, to protect our businesses today.
The excellent news for 21st-century organisations is that it’s never been easier to see the warning signs. Strategy management systems that do most of the heavy lifting and help executives decide & execute strategy are now mainstream.
Crucially, these systems give people the power to combine their strategic thinking with external economic insights, essential internal KPI’s and agile and collaborative implementation tools; it’s a killer combination.
3 Ways Your Organisation Can Avoid Strategic Drift
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.
1. Don’t Ignore External Data
There is a wealth of external data, readily and freely available, that can inform your strategic decision making and help you avoid strategic drift. For example, in the UK, the Office for National Statistics is responsible for “collecting, analysing and disseminating statistics about the UK’s economy, society and population”. The same goes for the Australian Bureau of Statistics.
As some people on social media often say, let that sink in. There are organisations who collect data, make sense of it then share it, for free. That’s data about the overall state of the economy, data about your markets and data about the actual people who buy what you’re selling — all for free.
Any company going through a strategic planning process should use data to inform their decisions. Whether it’s the painful, outdated and ineffectual annual process, many large businesses use, or the agile process most forward-thinking companies use, making use of data makes business sense and is an essential aspect of avoiding strategic drift.
To find external data to help your business, Google “list of global free data sources” or something similar. There will be data out there that will help you, and it will remove those “I reckon” moments from the strategic planning process. Furthermore, the use of external data can be beneficial for silencing those annoying “It worked in the past and will work in the future” people. You know, those guys who refuse to accept the world has changed.
2. Monitor Useful KPI’s With Time Series Charts
Most businesses are guilty of confusing Key Performance Indicators or KPI’s with Performance Indicators. Wait; what? Let me explain. Just because you can measure something doesn’t mean you should, and it doesn’t make it “key”. In a world where we gather data about everything, and where there are multiple tools such as Microsoft’s Power BI, it’s easy to get lost in beautiful dashboards with funky dials.
However, plenty of failed businesses will cry, “but we measured stuff, our dashboards were amazing.” The trouble is, sexy dashboards often seduce their users into a false sense of adequacy. In our opinion, robust, dependable time series charts are all that most businesses need to ensure they are not slipping into a strategic drift.
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.
It’s no coincidence that time series charts are the tool of choice of the data providers mentioned above, such as the ONS. Time series charts inform in a way that’s easy to understand and in a way that helps with decision making and let’s face it, making decisions is what strategy is all about whether it’s strategic planning or recognising the early signs of strategic drift.
3. Lean In On Agile Company Wide Collaboration
If there’s one aspect of strategy that most companies mess up, it’s actioning their agreed strategic initiatives.
Assuming you’ve reviewed the available external data, and it’s favourable, and you’ve looked at your own KPI’s and they, in turn, support your planned strategic initiatives then the remaining bear trap will almost certainly be the lack of a simple mechanism for implementing your plan and monitoring your progress.
As with KPI’s, there are plenty of sophisticated project management tools on the market rammed with all manner of intricate trickery designed to help you get things done. The reality is, this complexity can lead to confusion and inaction.
The way to implement a strategic initiative is to map out, in simple clearly understood language, a series of time-bound actions, or ToDo’s, that will deliver what’s required.
For example, you may have recognised the early signs of strategic drift by looking at a time series chart that showed how demand for a previously lucrative product line was in decline.
Reviewing external data, informed you that in fact, demand for a similar product to yours was increasing.
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.
Using your strategic management tool of choice, you instigate an initiative to pivot and improve your product in line with your customers’ new requirements. To get this done, you need a series of actions, which might be:
a. Carry out market research to establish how your product will need to adapt.
b. Evaluate the required changes to make sure the numbers work.
c. Implement the changes to your production line.
And so on.
These actions are most likely cross-departmental, and so having a company-wide collaboration tool is essential, as is assigning them to a specific person with a definite delivery time.
In Conclusion
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.
It isn’t particularly sophisticated, but given the almost daily news headlines telling of how previously well-performing businesses, sometimes household names, have gone bust, it does warrant your close attention.