During the past few weeks only, I have had the opportunity to address many audiences with different presentations and coaching sessions, all related to strategic foresight, strategic planning, and strategy execution:
- selected top executives of many industries (pharmaceuticals, finance, etc.) learning more about strategic foresight and strategic planning at an open program by Aalto Executive Education
- futurists, enthusiasts and executives interested in platform business models, at an event organized by the Finnish Society for Futures Studies
- executives of car resale and service organizations interested in future scenarios, strategic management, and strategy execution, participating in Aalto Executive Education’s industry-specific training program
- startup executives and managers interested in strategic awareness, attending the GrowSmart program arranged by HUB13, a business innovation accelerator and co-working space
- IT Service Management professionals looking into digitalization and strategy execution, at the ITSMF annual conference ‘Focus’
- quite a few of our own customers, but that’s another story 😉
I am proud of even having been invited to speak to a group of MBA students and alumni of the prestigious China Europe International Business School (CEIBS) in early December. For them, I’ll try and give my very best regarding the business model trends and transformations of the recent and upcoming years.
Now, the interesting part is this. My presentations have all been different, but one aspect remains the same and always raises a lot of attention: the “Three Horizons Approach”, the framework I myself find quite useful during these uncertain times. This is also one of the frameworks under which we’ve been working with our customers for some time now. And this very simple framework really, really seems to meet all the audiences even if the implications are obviously different to different people.
Basics of the Three Horizons
There’s nothing really groundbreaking about the Three Horizons. The basic concept was first featured in Alchemy of Growth (Baghai et al) already in the late 1990s. Thinking quite similar to mine has been published even by McKinsey&Company almost a decade ago. What I think, in addition, is that many strategy, innovation, and management models by giants such as Vijay Govindarajan, Gary Hamel, Clayton Christensen, and Geoffrey A Moore, and others, are in parallel to the concept of the Three Horizons. I’ve just taken the simplest parts of all these ideologies, and built a compilation for myself that seems to add value in many environments.
What is remarkable is that not too many organizations really work with all of the Three Horizons. Let me explain. At least I wish to use “my version” of the Three Horizons for a very simple and straightforward concept:
- you need to continuously optimize your current business operations in order to keep them competitive and profitable (Horizon 1)
- at the same time, you have to identify new ways of doing business – “the next mainstream”, one might say – and develop new offerings and operations correspondingly (Horizon 2)
- at the same time, you must explore and experiment across industry boundaries and beyond what is currently possible, in order to stay relevant in the long run (Horizon 3)
How to Juggle it All?
The real challenge here is the call for working on all those Horizons concurrently. This requirement brings in major implications, such as:
- how to offer real guidance to your strategy execution, i.e. how to proactively set rules for allocating resources to the different Horizons?
- how should you organize for each of the Horizons, understanding that all those require different leadership and competence?
- even in terms of financials only, what should be the business criteria for working with the different Horizons, understanding that corporate overhead or pay-back expectations for Horizon 1 would severely discriminate Horizon 2 and Horizon 3, if applied
- with regard to Horizon 1, how to keep people motivated if your grand vision clearly relates to Horizon 3 like it should?
- in practical terms, how to arrange for learning of experiments related to Horizon 3 that might be even fed into Horizon 1?
- how to ensure scaling of Horizon 2 new offerings or Horizon 3 experiments when the time is right (and how to know when the time is right)?
I will now begin a series of “Three Horizons blog posts”. In those I am going to tackle all the different implications and points of views. Please share your thoughts and questions, so that we can discuss the topic as widely as possible! Reach out to us in comments below or via Twitter (#3Horizons).
(Article picture via Pixabay)
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