On the horizon: The best view to take

On the horizon: The best view to take

Three horizons of growth for business were defined by management consultants McKinsey & Company. In summary, I call these: 

Horizon 1: what we are doing now and in the near term;

Horizon 2: what are our actions for the medium term;

Horizon 3: what are the long-term or over-the-horizon activities.

The first two horizons take up most time in businesses, with horizon 1 getting by far the most attention, often at the cost of the last horizon.

Recent studies show that horizon 3 attracts less than three per cent of executive time. In many businesses one wonders if horizon 3 gets any attention at all, especially in these days of tight economies with many businesses literally struggling to survive.

Forming innovation teams is the best way to continually improve your products and services. However, innovation teams usually get stuck on horizon 2, which is the medium term.

Horizon 3

Horizon 3 is the one that needs the attention of senior executives.

But even when we make a concerted effort, such as having an off-site executive retreat, it’s all too easy to focus on business unit reports and discussion of daily issues and problems.

Then the day arrives when horizon 3 becomes horizon 1. That’s what happened to Kodak and the entire US automotive industry. There is a long list of businesses that have failed to see the longer-term big picture and have subsequently gone to the wall or been forced to take emergency corrective action to avoid catastrophe.

Make retreats effective

Retreats do have a useful purpose. They provide a time and place to develop and pore over the horizon activities. The secret is to maintain a razor-sharp focus on the task at hand, and find tools to systematically explore long-term predictions.

You will find that if you put your executive team to work and look at the longer term (ie. horizon 3), you can almost guarantee that your rivals will not be doing so and you will assume a commanding position.

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