In an earlier article of the Organizational Strategist, I wrote about the 3 Horizons of Growth strategic model (link here). This model segments an organization’s innovation pipeline into three parts (Operational, Entrepreneurial, and Futurist). It’s based on the Alchemy of Growth book, by authors Mehrdad Baghai, Stephen Coley, and David White, which can be used for both creating an organization’s innovation pipeline strategy and assessing its health. This article will be delving into how to assess the measure of health in each horizon.
-Assessing the 3 Horizons of Growth-
These questions are built upon the foundational questions in the Alchemy of Growth. I customized them to fit my style preferences and organizational focus.
Operational Horizon Questions
- Is the organization generating enough earnings & cash to invest in growth?
- Has market share been stable or growing?
- Has operating performance been stable?
- Is there a strong performance orientation to drive profit in the next few years?
- Is the organization’s cost structure competitive with the industry?
- Is the organization reasonably safe from new competition, technology, or regulations that could change the industry?
Entrepreneurial Horizon Questions
- Are there any new products or services capable of creating as much economic value as the Operational horizon’s product and service mix?
- Is the organization comfortable making a substantial investment to speed new growth?
- Is there mounting investor and stakeholder confidence in the new opportunities?
- Are the new opportunities attracting entrepreneurial talent into the organization?
- Are the new products and services gaining momentum in the market?
Futurist Horizon Questions
- Does the leadership team dedicate enough time to think about growth opportunities and industry evolution?
- Has the organization developed a rich portfolio of prospects for reinventing existing and/or creating new opportunities?
- Is the organization developing attractive ways to turn the opportunities into new revenue streams or funding mechanisms?
- Have these ideas been made into concrete, measurable steps?
- Are or will these new ideas markedly different from those on last year’s list? Three years ago? Five years ago?
Determine the health of each Horizon by getting one or more knowledgeable organization employees to answer the questions candidly and completely. For a horizon to be healthy, the majority of the questions in that horizon should be responded to with favorable remarks. I’ve ordered the questions by importance. The initial questions influence whether or not the horizon is considered healthy more so than the following questions. The Operational horizon is the most needed area for the short term efforts of the organization. The Entrepreneurial horizon is the most necessary area for upcoming developments and to maintain the Operational core of the organization over time and as the industry evolves. The Futurist horizon is the vital element for the organization to harness distant possibilities and adapt to market volatility. Ideally all will be very healthy. If none are healthy, the organization is likely to die.
The different blends of some horizons being healthy while others are unhealthy each have challenges and opportunities. There’s too much to go into in this short article, but suffice it to say that the Alchemy of Growth book explores all of the assessment outcomes with helpful descriptions of what is at risk, what can be harnessed, and the direction the organization should take to improve.
Strategic models are tools. They can be used to create and to deconstruct. A hammer can pound in nails to build a structure or pry up nails to reassess and realign. The 3 Horizons of Growth framework is straightforward and powerful. It is easy to use for clear communication, yet can lead to very in-depth and valuable dialogue. Additionally, as noted in this article, it can be used to assess the thoroughness and completeness of an organization’s innovation pipeline. Through these uses the 3 Horizons of Growth is well suited for inclusion in an organizational strategist’s cache.