1. Assessment and Realignment: A thorough examination of the current business portfolio, identifying core activities that drive the majority of profits. Key questions include how resources are currently allocated across the Horizons, and whether the organization's investment strategy aligns with long-term growth objectives. The challenge often lies in balancing short-term profitability with long-term strategic investments.
2. Horizon Planning: Developing a detailed roadmap for each Horizon, ensuring that resources and investments are appropriately distributed. This phase involves identifying potential Horizon 2 opportunities and planning for Horizon 3 innovations. A common challenge is maintaining operational excellence while fostering an environment that encourages innovation.
3. Execution Framework: Implementing a management framework that supports the progression of initiatives from Horizon 3 to Horizon 1. This includes establishing metrics for success and creating a cross-functional team dedicated to innovation. The difficulty here is often cultural, as it requires fostering a mindset that embraces risk and learning from failure.
4. Performance Monitoring: Continuous monitoring and adjustment of strategies as market conditions evolve. This phase focuses on the dynamic reallocation of resources as initiatives move across Horizons and ensuring that the organization can respond quickly to changes in the market.

The methodology proposed requires a delicate balance between maintaining the profitability of existing products and investing in future growth. Executives may be concerned about the risk of diverting funds from proven earners to untested initiatives. In addressing this, we emphasize the structured approach to risk management within the methodology, ensuring that investments in Horizons 2 and 3 are both calculated and monitored closely.

Anticipating the need for a cultural shift within the organization, we understand the importance of leadership buy-in and the establishment of a culture that values innovation as a key component of long-term success. Executives must champion this shift and provide the necessary resources and support to foster an innovative environment.

Business outcomes post-implementation include a diversified product portfolio that mitigates risk, a sustainable growth trajectory, and a stronger competitive position in the health foods market. We quantify these outcomes by aiming for a 20% year -over-year growth in new product revenue and a 10% increase in market share within three years.

Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

• Percentage of revenue from new products (Horizon 2 and 3)
• Time-to-market for new product initiatives
• ROI from Horizon 3 investments
• Market share growth
• Customer acquisition and retention rates

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

During the implementation, it became evident that aligning the organization's reward system with the desired innovation behaviors was critical. By incentivizing teams for taking calculated risks and pursuing Horizon 2 and 3 initiatives, the organization saw a measurable increase in the number of viable new products entering the pipeline.

Another insight was the importance of establishing a dedicated innovation team with a direct reporting line to the CEO. This structural change ensured that new initiatives received the necessary attention and were not sidelined by the demands of the core business.

Project Deliverables

• Growth Strategy Framework (PowerPoint)
• Horizon Planning Template (Excel)
• Innovation Pipeline Report (MS Word)
• Resource Allocation Model (Excel)
• Quarterly Performance Dashboard (PowerPoint)

Allocating resources effectively across the three horizons is a critical component of the model. The key is not to treat resource allocation as a zero-sum game but rather as a dynamic and fluid process. According to McKinsey, top-performing companies allocate on average 70% of their resources to core business activities (Horizon 1), 20% to emerging opportunities (Horizon 2), and 10% to creating genuinely new business (Horizon 3).

It's essential to regularly review and adjust these allocations based on performance, market changes, and the strategic importance of each horizon. This ensures that the company can maintain flexibility and responsiveness to emerging trends and disruptions. The use of scenario planning can aid in understanding how different allocations can impact the future state of the business, allowing for more informed decision-making.

Embedding innovation into the company culture requires more than just a mandate; it necessitates a shift in mindset at all levels of the organization. Leaders must champion innovation by setting a vision, providing the necessary resources, and by rewarding risk-taking and learning from failures. According to BCG's most innovative companies report, 79% of strong innovators have well-defined innovation strategies compared to just 47% of weak innovators.

Moreover, creating collaborative spaces, both physically and virtually, where employees from different functions can come together to brainstorm and test new ideas, has proven to be an effective strategy. This not only fosters a culture of innovation but also drives cross-functional learning and cooperation, which are critical for innovation to flourish.

Horizon 3 investments, by their nature, are long-term and inherently riskier. Measuring their success should focus on learning and future potential rather than immediate financial returns. Metrics such as the number of new ideas generated, percentage of ideas that progress to development stages, and the learning outcomes from failed projects are useful indicators of Horizon 3 success. According to Accenture, companies that focus on 'innovation performance' as opposed to 'innovation input' are 2.4 times more likely to achieve above-average growth.

It is also important to track how Horizon 3 initiatives contribute to the overall strategic goals of the company. This could include their impact on brand reputation, market positioning, or their role in driving future revenue streams. Establishing clear criteria for success in Horizon 3 is essential for maintaining support and investment in these initiatives.

While pursuing new growth opportunities is essential, it comes with strategic risks that must be carefully managed. Diversifying too quickly or too far from the core business can lead to overextension and dilution of the brand. Additionally, entering new markets or developing new technologies can expose the company to new competitors and regulatory challenges. PwC's Global CEO Survey indicates that 40% of CEOs are concerned about the speed of technological change, which underscores the risk of misaligned innovation efforts.

Risk management strategies should include robust market analysis, competitive intelligence, and a clear understanding of the company’s capacity to absorb and integrate new ventures. It's also critical to maintain a portfolio approach to innovation, spreading risk across multiple initiatives and being prepared to pivot or divest as necessary. This balanced approach allows a company to explore new opportunities while safeguarding its core business.