Three horizons-basics

Three horizons-basics
Originally uploaded by IC Pod.

Bruno Giussani's blog brought what I thought was a tool that people all knew about to my attention.... maybe it is so commonplace we forget to mention it?
We began to use three horizons in 2000, inspired by having one of our companies as a case study in "The Alchemy of Growth". My Design Group used it to define what projects we should be working on in the short, medium and long term to keep our service activities fresh, valuable and desired by the rest of the organisation... when you are twelve people in an organisation of 250,000 every competitive advantage needs to be excercised!
The heading picture shows the three horizons as explored on the book. They are defined as:

Horizon 1
Extend and defend our core activities:
(mature businesses that generate the profit)
-Competitive positions
-Marketing
-Product extensions
-Productivity
-Cost reduction

Horizon 2
Build emerging capability and new revenue streams:
-Fast moving, entrepreneurial
-Extensions of, or moves away from H1
-Have customers
-Generates revenues
-Profits 4-5 years away
-Needs significant investment

Horizon 3
Create viable options for the future (seeds of tomorrow):
-Numerous options to seed
-Most will fail
-Unproven opportunities
-Nurture/kill
-Internal external criteria for support

If organisations are not managing all three horizons they will run into problems. If only H1 is supported the business is vulnerable to its competitors, period!
If only H1 and H3 then There may be a funding shortfall to keep H3 going until they can be H2 projects.
H2 and H3 means disaster too as the cash flow doesn't!

The concept can be used at any level in the organisation; it can show what the strategic drivers are short medium and long-term, perhaps showing why we are diverting funds from your pet H1 project to fund someone else's H2 project so limiting your marketing spend.

At a group level it can show why "Fred" is always at trade shows and conferences rather than helping the "daily grind".

At personal level it can be used to challenge why your boss twitches when you talk of the next upgrade to what is arriving today!

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.....Alex

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