In my role as a strategic planning facilitator over the years i have met and worked with numerous leaders and i always love the process.
Recently i facilitated a number of Third Horizon ideation and new revenue growth opportunity sessions with a range of different leadership teams and thought I would share my basic approach.
The Third Horizon framework was developed by Merhdad Baghai, Stephen Coley and David White in a book called The Alchemy of Growth (1999).
Like all good models it was simple, easy to explain and built on the S-curve model popularised by Theodore Modis (1998).
According to Steve Coley at McKinsey the 3 Horizons are:
Horizon 1 represents those core businesses most readily identified with the company name and those that provide the greatest profits and cash flow.
Here the focus is on improving performance to maximize the remaining value.
Horizon 2 encompasses emerging opportunities, including rising entrepreneurial ventures likely to generate substantial profits in the future but that could require considerable investment.
Horizon 3 contains ideas for profitable revenue growth down the road—for instance, small ventures such as research projects, pilot programs, or minority stakes in new businesses.
These are often represented in a graph with time on the x axis and value or fit with the environment on the y axis.
The key point in this type of strategic or innovation development is that leaders need to be aware of and be able to concentrate on all three horizons simultaneously.
In effect, this model attempts to build a bridge between the demands of the present with the opportunities of the future.
With this in mind here is what i do to create and facilitate a successful third horizon session:
– Invite and engage the entire leadership group for a half a day at least (preferably 1 day).
– Ask them to plot their key priorities on each of the three dimensions.
This exercise usually reveals a lack of 3rd Horizon initiatives and hence provides a convincing reason why the session is being held.
– This is also a great way to end the session — you as the group to compare the two frameworks (i.e. before and after the session).
– I believe it is far more productive to go out at least 5 years with their third horizon thinking — in this way leaders can escape their current business as usual thinking.
– The Third Horizon session is the start of a process rather than an end in itself. I like to follow up this session with a series of quarterly updates with the same team.
– I particularly like using the latest consumer trends and placing these alongside what the organisation is really good at.
– One of the keys to a successful session is to ask more original questions — these are questions where you do not know what the answer is e.g. Who might our competitors be in 5 years time?
Where will our revenue growth come from?
Who could we partner with? What new consumers might purchase our product?
What sort of employees do we need in the future?
– Remember there is no right or wrong way to run this session.
The aim is to explore alternative scenarios and then to start planning now to take advantage of these.
I have become a great fan of this approach as it provides any leadership team with a portfolio type approach to strategy development and can potentially future-proof your organisation.
I will leave the final word to President Obama:
We did not come to fear the future. We came here to shape it.