Strategic drift
Strategic drift refers to the phenomenon where a company fails to adapt to changing market conditions or technological advancements, instead clinging to the strategies that initially brought it success. This complacency can lead to significant challenges as competitors who embrace innovation and change gain an edge. Companies experiencing strategic drift often find themselves unable to compete effectively, leading to the necessity for reevaluation of their strategies or, in severe cases, closure.
To avoid strategic drift, businesses should regularly assess their goals and market position, staying attuned to customer needs and preferences. An effective approach involves leveraging the internet and other modern technologies to enhance business practices and reach a broader audience. Examples of companies affected by strategic drift include Blockbuster, which failed to adapt to the rise of online streaming; Circuit City, which lagged in establishing a strong web presence; and Kodak, which struggled to transition from traditional photography to digital solutions. These cases illustrate the importance of continuous adaptation in an ever-evolving business landscape.
Strategic drift
Strategic drift is a term used for a company that has not kept up with changes in the market or technological advances and instead continues to focus on its same strategies or business plans that made it successful in the first place. Because of this, some companies find themselves unable to compete with other businesses that have embraced change. Most times, businesses facing strategic drift either have to reevaluate and refocus their strategies or close.
Overview
Not realizing the importance of keeping up with advances in technology or market trends causes strategic drift. Some companies get complacent and do things out of habit. This can be detrimental to a business that fails to recognize that it needs to embrace changes to stay relevant and competitive in the marketplace.
To avoid becoming stagnant, businesses should regularly review their business plans to see if they are obtaining their objectives. They should look to the future and determine if they are on the right path to achieving goals. They should know their customers and their customers' needs and tailor their companies and practices to serving them. Businesses should market and advertise products and ideas to customers and potential customers. Companies should then use all of this information to determine areas where they can make changes and alter business practices accordingly.
Companies should look at the advances of the Internet when formulating business plans. People go online to make purchases; communicate and share information and photographs with others; watch videos and listen to music; play games; and research everything, from which restaurant to dine at to which hotel to stay at while on vacation—even booking reservations for these online.
A company must monitor multiple factors to determine if it is ahead, on par, or lagging behind other companies. Then it should determine the steps, if any, it must take to remain competitive. For example, a company should consider the effects the Internet has on its business. Does the company have a strong web presence? Can it change to incorporate more web use into its business? A business that sells sporting goods can attract online shoppers by setting up an easy-to-use website that encourages people to purchase items at its online store. This helps the business stay competitive with both brick and mortar and online stores.
Examples of Companies Affected
Numerous companies have been affected by strategic drift. The refusal to adapt and change to keep up with growing technology and trends has put once very popular companies either out of business or in financial trouble because they were unable to compete with businesses that embraced these changes.
Blockbuster
Prior to the advent of DVDs, people rented video cassettes to watch movies at home. While many companies that offered home video rentals (later DVDs) and video games existed, Blockbuster was one of the most popular of these during this time. It remained at the top because it stocked numerous copies of titles to ensure people found the movies and games they wanted to rent.
While the company garnered much success, it did not keep up with the growth of the Internet. People no longer had to leave their homes and drive to Blockbuster to rent movies or games. They could instead go online and have DVDs mailed directly to them and later watch movies instantly by streaming the online movie subscription service Netflix. Because Blockbuster failed to embrace this advanced technology, it was forced to shutter its business.
Circuit City
Electronics store Circuit City enjoyed success in the 1980s and 1990s. However, it became complacent and did not make changes fast enough to remain competitive into the twenty-first century against other stores such as Best Buy and Walmart. Circuit City stores were oftentimes located far away from other retail stores, forcing customers to shop at other retailers who were more easily accessible.
At first, Circuit City tried a few strategies such as dropping its appliance line to focus on selling gaming items. However, it did this a little too late. The company missed a pairing opportunity with Apple Inc. to sell computers. Circuit City also developed a poor customer service image. However, its main issue was its failure to establish a strong Web presence and make its website more usable for customers, leaving it unable to compete with other online retailers such as Amazon. It filed for bankruptcy near the end of the first decade of the 2000s and eventually closed.
Kodak
Kodak was a trailblazer in the photography industry. It had developed a camera that instantly printed out photographs and was one of the most popular camera makers. However, the way people take and use pictures changed rapidly in the twenty-first century. Kodak was slow to produce digital cameras, putting it behind companies such as Sony and Fuji.
By the time Kodak had caught up to others in the industry, digital cameras were being replaced. With the invention of camera phones and smartphones, cellular phones that allow people to connect to the Internet, people no longer had to use cameras to take pictures. They instead were able to use their phones. Instead of printing photos or connecting a digital camera to a computer to retrieve the images, people could instantly upload and share photos to social media sites such as Facebook directly from their smartphones.
Kodak remained true to its original business plan and believed that people still wanted to use cameras to take photos and then print these images. Even as late as 2011, the higher-ups at Kodak insisted that the company would be saved by "soccer moms" who wanted photographs of their children's games. Like others, the company experienced strategic drift. Kodak filed for bankruptcy in 2012 and decided to restructure the company.
Bibliography
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