In my ten years of working with big companies to get them fit for the future at 383, I’ve worked with many wonderful clients. Across all of the companies I’ve worked with, there are some CEOs and teams that we’ve had more success with than others and this is sometimes as a result of their mindset (for the purpose of this post, let’s call them ‘types’). Which type the client falls into can help us to predict the degree of success we’ll have with their organisation in the long term. Having gone through ten years worth of client names and types, I wanted to set these out in the hope that, if you’re client-side, you can help to predict your likelihood of doing great work.
The Three Horizons of Innovation
Before we look at the types of leadership and teams in different companies, it’s important to understand this framework. In 1999, three practitioners, Baghai, Coley, and White developed the Three Horizons of Innovation. I call these practitioners out because the methodology has since been stolen, misunderstood and bastardised by some of the least innovative entities on the planet — global management consultancies, and it just ‘aint right to attribute this to McKinsey.
Baghai, Coley and White's Three Horizons of Innovation
What the framework helps us, our clients and our partners to do is to plot exactly where the programmes within their innovation portfolio fall in terms of time to market and likely value creation.
- Horizon One: Executing to defend the existing business model and increase its profitability.
Deliveries help supermarkets to shore up their existing model
- Horizon Two: Building adjacent models to the existing business that will help the enterprise to capture additional value.
Streaming services from media companies help to capture more of the existing value they create
- Horizon Three: Placing a series of bets on entirely new and disruptive opportunities.
Re-usable rockets are, clearly, an entirely disruptive new model
These help us to ask questions like; are we too focused on short-term, incremental gains in Horizon One? If so we’ll develop some value in a condensed period, but that’s about it. Are we too focused on the radical and entirely new business models in Horizon Three? If so, we’re going to deliver a tremendous amount of value back to the business, but it’s going to take a long time. Equally, if there’s no focus on growing adjacent propositions and business models, we run the risk of not moving the needle sufficiently for the organisation in the medium term.
Daniel Christian Wahl puts it much more eloquently; “The change from the established pattern of the first horizon to the emergence of fundamentally new patterns in the third occurs via the transition activity of the second horizon.”
The Three Types of Leader
The framework got me thinking about the types of company leadership that we encounter and, regarding getting their organisations fit for the future, how their ‘type’ can help us to predict future success.
Horizon One Leader
John Antioco of Blockbuster presided over the tweaking of a doomed model
These are people who by accident or design are squarely focused on creating incremental gains for their business. They’ll look to squeeze as much value as possible out of their existing product without acknowledging (or being able to acknowledge) that the product its model is fundamentally flawed or likely to be in the future.
They’ll struggle to look above the parapet at what is coming over the hill (is it a monster? Is it a monster?), have incredibly short-term KPI’s by leadership standard and will be operating very much in the now.
The problem with this kind of leader is that, while they, their teams and their partners can demonstrate low-hanging, incremental, short-term wins — they are unlikely to be able to lead a company successfully or it’s products in the future in a fit state.
Horizon Two Leader
For all the talk of Amazon being a disruptor, most of their bets are on adjacent rather than new models
These clients are interested in capturing new value in the space that the business currently operates in, and it’s where work gets that bit more interesting. They’ll be looking for areas in which they have the permission and infrastructure to play and work to develop exciting new propositions that create new customer and commercial value.
They recognise that they have operational teams to work on making the existing enterprise more profitable and so can spend their time on adjacencies and developing them for the medium term.
The great thing about these kinds of clients is that we can work with them to develop revenue-generating new ventures in the medium term. The downside is that they are working on the assumption that their business is operating in a category that customers will care about in the future, rather than creating new ones.
Horizon Three Leader
Elon is building a colony on Mars so…
These are rare but extremely inspiring people to work for. To get their company fit for the future, they will be trying to answer the exam question ‘what is the most valuable company that nobody is creating?’ and then trying to build these ventures out. They’ll also be questioning the future of the category that their organisation is in and examining the long-term on behalf of the enterprise.
The reason I think these leaders are rare is that they possess an entrepreneurial mindset that is mostly discouraged by legacy companies. I think most of today’s top listed companies would struggle to attract them too.
Working with these clients is incredible, there are no stupid questions and ‘that’s how it’s always been done’ is tossed out of the ordinary vocabulary early on. These are people that you can not only get fit for the future but create the future with. The downside is that they need a massive runway to get there both in terms of time and capital.
The Best Type of Leader
If you’re working with or for a horizon one leader then you should really be looking for the exits. This should frustrate you. Equally, though, it’s career limiting to be working with leaders who are only focused on Horizon Two and potentially very risky to work with leaders who are only focused on Horizon Three.
The best kind of leader splits focus between the three 10/60/30. They have built a team capable of iterating the core business model in order to allow them to have the space to focus on building adjacent models and placing a series of bets on the future.