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Horizon 1-2-3 Leadership Discipline Equals Growth
The examples cited above highlight the need for leadership to have an objective, holistic,
enterprise-wide portfolio view of their growth initiatives as well as an understanding
of the different operating models required to be successful across all three horizons.
The graphic below describes some of the characteristics of each horizon.
| Characteristics |
 Businesses at the heart
 of the organization
Analysts and customers
identify with
company name
Usually account for
most of profits and
cash flow
Critical to near-term
performance
Generate cash and
nurture skills for
future growth |
|
Businesses on the rise
Fast-moving,
entrepreneurial
ventures – concept
taking root or
growth accelerating
Attracting investor
attention
Could transform
company with
substantial investment
Customers, revenue, and some profit
Expected to be as
profitable as H1
some day |
|
Contain seeds of
future business
More than just
ideas – real activities
and investments,
however small
Research projects,
test-market pilots,
alliances, minority
stakes, memos of
understanding
Promising, but
rarely proven |
Each horizon has distinctive goals and measures. H1 is measured on margin, H2 is measured
principally on revenue growth, and H3 is measured on the number and potential of validated
growth ideas.
Each horizon demands a unique leadership mindset. We characterize H1 leaders as Operators,
H2 leaders as Builders, and H3 leaders as Inventors.
And each horizon requires some different skills and motivations. H1 leaders
must be able to shore up competitive positions, capture remaining potential, and continue
innovation to extend growth and profitability incrementally. H2 leaders must have the
single-minded drive to increase revenue and market share, to continue investment, to demand
new skills, and to be ruthless when growth potential diminishes. H3 leaders face the challenges
of seeding numerous options, keeping options open without committing too much capital or
resources, and being ruthless when they see diminishing potential.
Getting the right leader assigned to each horizon is essential. At some level, senior
leaders understand this concept but, time and again, strong leaders are assigned to the
wrong horizons and the consequences are unrealized growth results.
From the perspective of senior leadership, it is admittedly easier to manage the growth
portfolio across horizons in the Holding Company model. But much trickier to pull off
when the initiatives have to be integrated and the tensions managed within one business
entity.
Stepping Lively
H1-2-3 is simply a tool to help senior leadership more effectively build a stronger long-term
portfolio of growth initiatives. We have been working with this growth portfolio framework
with our clients for many years and the critical first step in using H1-2-3 is to understand
the clients’ unique context: where the market pressures are coming from, what the
core value proposition is, what the basis of competition is, what growth opportunities
already exist with the business, and where others which need to be pursued lie. H1-2-3,
in effect, enables a more insightful dialog amongst leadership on how to orchestrate
their unique plan for growth as well as build the appropriate operating model across
all three horizons which will foster greater levels of success. Pitfalls exist, but missteps
can be reduced if leaders know where to look in their pursuit of growth.
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