A strategy framework is a great tool to keep you focussed on your goals. For organisational growth, a framework that focuses your attention on continually growing your organisation through innovation and creating future revenue streams ensures you do not get stuck in the all-too-familar rut that many leaders find themselves in, fixated on driving current profit margins and consequently exposing themselves and the business to significant risk if changes in the market, customer demand or competitor activity occur within that avenue of operation. Diversity of markets is one way to galvanise your strategic operational efforts, and this framework is the tool to focus your strategy.
McKinsey’s Strategic Horizons:
These three horizons require you to categorise your goals into three different horizons:
Core Business: These are the activities that are most closely aligned with you current business operations. The majority of your current and immediate future revenue producing activities will sit in horizon one. It is those activities that provide the greatest profits and cash flow. In this horizon, the focus is on improving existing performance to maximise value.
Emerging Opportunities: This encompasses rising opportunities and ventures that have the potential to generate substantial profits in the near future, but could require equally substantial investments
Ideas Funnel: This horizon contains all of your ideas for profitable growth down the road. It includes all ideas and new directions for profitable avenues in the future, including small ventures and pilot programs to keep in mind for future directions.
Focusing your attention on these three horizons concurrently ensures that you do not get stuck in horizon one, being so concerned with the daily operations of your business that you miss opportunities for expansion or, worse yet, expose the company to risk through sticking to singular markets that lack diversity.