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Writer's pictureBalesh Raghurajan

Strategic Thinking with 3 Horizon approach

Post 2020, everyone experienced shifts in the economy triggered by multiple events. After the lockdowns were eased, a V shaped economic recovery was expected and probably witnessed as well.


Some companies had a tough time during 2020-2021. Many wound up. The ones that survived into 2022, saw a sudden surge in business and even mistook that surge to be sustainable.


Then came the supply chain glut, Ukraine-Russia conflict, Israel-Palestine conflict, soaring inflation, consumer apathy, funding winter in startups, shrinking IT budgets, extreme caution in mature economies, a surge in right wing affiliations across Europe and Americas – the list could go on and on.


What we saw in the last few years is a change in pattern. From the days of the US financial crisis in 2008, may economies experienced VUCA – Volatility, Uncertainty, Complexity, Ambiguity.

What we are seeing today is much different business environment. Its BANI – Brittle, Anxious, Non-Linear and Incomprehensible.

The severe inflation we are experiencing shows how brittle our world is to events such as Ukraine-Russia war which immediately created panic and food shortages in several countries that were dependent on these two countries for their supplies of wheat and sunflower (oil and seeds).


Anxiety levels are high due to the growing divide between rich and the poor that is creating a sort of consumption crisis. Many organizations such as FMCG are directly impacted by this and so are those heavily dependent on discretionary spending such as personal electronics.


Non-linearity has two faces. There are several instances of hockey stick growth and de-growth across industries. While high-end automobile manufacturers thrived from affluent buyers, the ed-tech sector saw a huge plunge in business fortunes resulting in several CVs flooding the market.


Amidst all this, what is incomprehensible is how the macro events influence our business and how to capture the trends at macro level and related to what needs to be done today. Are we all puppets in a world controlled by Futures and Options trading? Will GenAI really turn 50% of the workforce redundant? Are we expected to plan for another phase of a multi-polar world with more than 2 power centers around us?


The BANI world offers unprecedented challenges, but also unparalleled opportunities for those willing to adapt. It demands leaders who are not just smart, but wise; not just strong, but anti-fragile; not just visionary, but grounded in reality.


As we navigate these turbulent waters, remember: the most successful leaders and organizations won't be those who predicted the future correctly, but those who built the capacity to respond to whatever future arrived.


How do I ring fence my business from BANI environment? Are there variables to look at and control? This is the question ringing in the mind of many CEOs



Here are possibly two dimensions to consider in dealing with BANI.

Mindset Change: From a strategy perspective, are we doing enough to Think Big, Think Far and Think Different. Strategic thinking is about higher order thinking, that ensures the thought process is implementable across multiple timelines while recognizing all market influences on the business.

Structured Approach: Its probably a good idea to look at one of the old wines still stored in an old bottle. From the Alchemy of Growth – the 3 Horizon approach from McKinsey. While taking the structured approach, its important to bake in the mindset change into it as the two are very interdependent.





Horizon 1:


Losing market share or wallet share is the biggest cause for anxiety in most businesses. For most organizations, there is a legacy business that keeps chugging or a core offering that brings most revenue.

A key aspect of strategy is to reimagine existing revenue streams and Think Different in terms of

  • Building a moat around your business to protect it from competition. This could be through regular upgrades or value additions to current products. Toyota, Tata Motors are good examples here.

  • Tweak your product or service to stay in tune with market movements. IT service organizations embedding AI and automation into their service are measures to stay relevant.

  • If necessary, discontinue a product or service if its no longer relevant in the market or not core to your business. This is tough and could be emotional as well. Lets learn from Kodak, Nokia and others who failed to see the trend in customers not buying their products.

  • Being your core business, focus on efficiency of operations and maximise profits


By taking a protect + maximise profit approach, you bring better predictability to the business and reduce brittleness as well as anxiety.


For well established organizations, Horizon 1 businesses could be a well oiled machine that is run by the senior leadership team.


While the CEO/Board is still involved in governance, the senior leadership team is more heavily invested in driving this business forward.




Horizon 2:


Think Big in terms of creating a wave in the market place for what you are known for. As Jim Collins would say, identify a BHAG – Big Hairy Audacious Goal. An aspirational but yet achievable business objective.


For mid-sized organizations, one key mindset change needed for thinking big, is to visualise yourself as a “big” organization and act like one. The BHAG could be a “north star” that you would like to reach in the next 2-3 years.


What offerings can you create using your strength in Horizon 1 (or adjacent to it) that will bring you hockey stick growth.


Thinking Big requires a change in mindset to zoom out and find answers:


  • Drive goal oriented behaviours in your team to achieve your objective. TCS made significant strides through their BHAG of “Top 10 by 2010” early this century.

  • New markets to explore using a blue ocean approach. Citizen M hotels in Europe used the blue ocean approach to tap into the single-business-traveller market segment that enabled significant growth while adding extreme value to clients

  • New products or services to offer that make you stand out. Samsung and Apple stand out in acquiring new customers with regular new product launches.

  • Create a sales engine that can create mindshare as well as market share. Marico and other FMCG brands are great examples of creating mindshare and market share.

  • Courage to sign up for outcomes to be delivered rather than delivering the goods.


Achieving non-linearity requires a strong balance sheet and financial discipline in managing P&L. The investments needed to bring in hockey stick growth need to be planned for. Its not just about booking revenue, but managing with financial acumen to win BIG!!


Horizon 2 businesses are usually the cynosure of all eyes in the leadership team as they bring in the crucial topline needed to take the company forward. Once these business reach their full potential, they could become the future Horizon 1 business that are core to the enterprise.


Horizon 3:


Visualise the future of your business and think far to create the next Horizon 2 for your business. This is usually a collective effort from the senior leadership team. Leverage the wisdom of the crowd to see patterns - What are the emerging trends and what can you sow now to harvest later? By capturing the emerging trends and potential implications, what are the business possibilities to explore further and for those possibilities, are there solutions can be incubated?


The solutions need to be tested in the market to validate that they can withstand any brittleness in the economy. By testing the market, any pivot or course correction can be made to strengthen the solution. The key to thinking far is to create products or services that can stand the test of time and become the next wave of hockey stick growth.


Horizon 3 might need to be setup with an entrepreneurial mindset in addition to thinking far. These businesses will be ideas that should be incubated, market tested and venture funded for growth before they turn into the next Horizon 2 business.


Typically, the CEO is heavily invested in Horizon 3 businesses for multiple reasons.

  • Scanning the horizon to be the early adopter on new technologies that impact the industries being served. Tesla is a standing example of early adoption of technology for mass consumption

  • Potential partnerships with industry eco-system such as start-ups, academia, research organizations, etc to emerge as a thought leader

  • Explore varied business models that could be different from Horizon 1 and Horizon 2 to differentiate from competition and create value for customers. TCS’ entity in the UK – Diligenta is a classic example of creating value in the insurance industry by taking a platform based business model.

  • Evaluate capital needs and ROI on a regular basis and ensure balance sheet is not impacted.

  • Create policies and structures to promote entrepreneurial spirit as a foundational mindset change to help setup and govern Horizon 3 businesses.


By taking the 3 horizon approach for formulating strategy and governance, impact of BANI could be well addressed
  • Brittleness: Protect core businesses for revenue streams and profitability by building a moat around Horizon 1 business

  • Anxiety: Predictability of Horizon 1 businesses reduces the “unknowns” in new revenue streams while at the same time, Horizon 2 brings in the sales focus to bring more upside to revenue generation

  • Non-Linear: To realise the revenue upside in Horizon 2, businesses will need to be ready to sign deals that are outcome based and not just based on products/services. Platform based delivery is key to drive non-linearity

  • Incomprehensible: The best way to understand incomprehensibility in the marketplace is to place bets on what can be understood and create business models of the future. Horizon 3 initiatives are the answer to this. Keeping an eye on the future and developing new business opportunities that have the potential to become your next growth engines will help breakdown incomprehensible aspects into comprehensible chunks that bring revenue and profit.


Effilor is a leadership advisory firm that has helps its clients with mindset changes for Strategic Thinking. Effilor’s clients have significantly benefited by leveraging the 3 Horizon approach and its constituent elements such as creating a BHAG, driving goal oriented behaviours and fostering an entrepreneurial mindset.

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