The balancing act
Organizations tend to focus innovation resources on when offers are ripe for their markets. Is it in 1-3 years (H1), 3-5 years (H2) or 5-15 years (H3). Read more about the Three Horizon model here
Note! Horizon time zones are different for different organizations, and digitalization has greatly shortened time-to-market for H3 innovation, especially for new companies being able to move rapidly and without any constraints from the organization regarding past attempts (labelled “Shit of Yesterday”).
Are you playing not to lose?
If you are really good at your core offers and incrementally improving them (also known as product development), and have survived for a long time in doing this, you may think you will continue to do so. Your survival, growth and revenue strategy is to excel at playing chess.
When playing chess, you know the moves of your opponent, you can plan well ahead and can adjust to the moves accordingly. The same is valid for your core, Horizon 1, where the main objective is not to lose.
Losing in H1 is not an option, therefore the failure rate has to be very low. In Horizon 1 you will most likely reward people who save projects from failing, those who sort out quality issues etc. The creators and innovators are seldom visible.
…or are you playing to win!?
While excelling in chess, the world changes and you realize that you cannot continue doing exactly as you have in the past, then you will start looking at Horizon 2 and Horizon 3. Especially valid in H3, where focus lies on new offerings on new markets, the strategy looks more like a game of poker. In poker, the calculated risk lies in limiting the bet in order to see your cards and build a strong hand. Like bets in H3, you know nothing about what other players are doing, and everyone in the game play to win. Lots of bad starting hands (ideas) are immediately folded (kill the idea), every bet is small, you get to see many hands and that is part of the game.
Poker is failing fast, cheap and fail to learn. When you have an interesting start hand you need a process in the organization to get additional funding to be able to improve the hand by exchanging cards. Every bet gets more expensive as the pot increases. By the time you are going all in, your hypotheses have been tested and validated and you are ready to go to market.
Our offer within innovation strategy
Establish or update your innovation strategy by answering these questions: How likely are certain trends to affect your existing or future business models? What portion of your R&D investments should be made in each of the horizons? Let’s start by defining what is your chess and what needs to be your poker?
Identify opportunity areas: To identify the AIM areas to bet in, we use a mix of structured and exploratory methods, own and established, such as Rapidly Improvized Futures, Scenario planning, What if generation, Backcasting, etc.