Akash Singh | Enterprise Architecture Lead | Strategy and Consulting | Accenture Africa | mail me |
Khulekani Nhlanhla | Industry X Manager | Accenture Africa | mail me |
Organisations need to refocus and prioritise how they operate in today’s digital and modern economy. Delivering a resilient and agile organisation is a business imperative, and there is a greater need to create closer synergies between business and technology.
Most have executed bold plays to create big shifts in accelerating the implementation of their digital and platform-led business strategies. These plays include, creating digital capabilities and embracing modern concepts such as the cloud, platforms, and the introduction of digital twins.
However, implementing these new strategic plays is incomplete without a fluid approach towards change and adoption management. Therefore to address strategic drift, a holistic and agile approach is needed. One that shows the experience of a customer journey (in current and future market conditions) through the foundational IT building blocks that enable these journeys.
Strategic drift is a common phenomenon
Strategic drift occurs when an organisation’s strategies fail to keep pace with changes in the market in which they are competing. Examples of these changes include customer needs, competitors, technology, regulations, and other constraints.
Changes in the market can accelerate while the organisation’s strategy is only changing incrementally. If left long enough, the organisation may have to ‘transform or die’.
There are four main reasons this occurs:
- Uncertainty: The direction and significance of the change in the business environment are not always apparent. A change may be a cyclical downturn that will soon pass. We often see irreversible changes only in hindsight.
- Path Dependency and lock-in: Historical successes may lock companies into old strategies that are not cheap to change. These historical successes may have been due to capabilities that gave them a competitive advantage but have become core rigidities.
- Culture stagnation: Being entrenched in company cultures that don’t have a place in the organisation anymore. These assumptions prevent senior management from seeing the need to change.
- Powerful people: These players have skills and power are based on old strategies and may resist change.
Avoid strategic drift
When a company avoids strategic drift, it avoids Phase 3 confusion in the Strategic Diagram below, multiple efforts to change strategy with loss of direction, and internal disagreements on which strategy to follow.
Substantial strategic drift away from market change, left to drift until Phase 4, then demands a total transformation (not easy or cheap) or company exposure to failure or take-over.
Transformation in Phase 4 may require multiple changes across the entire business model, strategy, new top management, culture, and organisation’s structure. The more undesirable consequence would be failure of the organisation in a form of bankruptcy.
Figure 1. Strategic Drift (Johnson & Whittington, 2020)
A company providing home movie and video game rental services is an excellent example of strategic drift. At its peak, it made an annual revenue of about $6 billion. Still, online streaming services disrupted the industry, and it fell into a strategic drift, which led to bankruptcy.
The company decided against investing in resources to help go online and rejected purchase offers from the over-the-top player (OTT), believing they didn’t want to change their business model for what might not work.
On the other hand, the OTT player disrupted the market. They initially offered DVD-by-mail rental services but later provided an innovative subscription-based movie streaming service. Today, they have over 200 million subscribers on their movie platform.
How enterprise platforms can help avoid strategic drift
Enterprise platforms are a set of tools and technologies which connect applications, processes and people to deliver strategic business goals.
Effective use of enterprise platforms can connect different parts of an organisation, enabling a business to operate as a unit instead of siloed departments. They help companies gather data and generate insights quickly, and they run three kinds of processes for any business – experience, core processing and data insight.
Cloud-based enterprise platforms can give organisations a competitive edge. The accelerated pace in technology evolution calls for innovation in business models. At the heart of innovation is the ability to scale and standardise systems and processes across the business and do both these costs effectively while being part of a large ecosystem of platform users.
Technology advances made by platform vendors ensure constant capability updates to platforms used by companies.
Enterprise platforms can support organisations in keeping pace with a rapidly changing business landscape. Platforms facilitate good experiences based on the standardisation and continuous nature of interface availability with modern experiential interaction points. Users and customers are more engaged and efficiently achieve their desired tasks.
The core processing of platforms relates to technology that allows for day-to-day business activities for functions such as processing data for the supply chain or even processing customer transaction data. Lastly, collecting and managing data from all business transactions using platforms can generate valuable business insights.
Our experience is the critical success factor for selecting, implementing, and operating enterprise platforms. Strong partnerships with enterprise platform vendors, industry and functional knowledge, advanced technological applications, and relevant pre-formed assets enable success.
We bring experience and client collaboration to avoid strategic drift by delivering on the promise of enterprise platforms and human ingenuity. Our global network of consultants and our rich knowledge of platform-driven enterprise transformation delivers on this promise.
In conclusion
Traditional strategies that do not keep pace with evolving market conditions will cause companies to fall into a strategic drift.
Avoiding strategic drift is about having the right tools and capabilities to enable rich customer experiences, core processing and actionable insights allowing an organisation to remain relevant and competitive.
Enterprise platforms are one of the strategic plays that can accelerate the delivery of an organisation’s digital requirements and avoid strategic drift in a modern and digital economy.
