Growth Horizons
With the maturity of a company, it often faces a decline
in its growth as innovation gives rise to new inertia. In order to achieve a
consistent growth throughout their lifetime, a company must attend to the
existing businesses without even thinking about their areas of development. It
is very important for a company to develop so as to remain competitive in the
market. There are three horizons that are used to give a structure to a company
so as to assess potential opportunities in the overall growth of the company
and also ensure that the company gets most out of the money that they had
invested.
The Three Horizons the entrepreneur
must address
The three horizons provide a structure for a company so
as to evaluate its potential opportunities for growth without neglecting its
performance in the present.
Horizon
1
It is the increase
in the growth that is generated by the talented people in a company. They use
the resources, capabilities and technologies we already have which includes
opening a new market for existing products or even offering more services to a
customer or commercializing a new application of a core technology.
The growth of a company mainly depends upon the products
or services that it provides. In order to attract more customers a timely
improvement in the products is required. However, this means an increase in the
price as well; this improvement keeps a company well established and competent.
Along with this even opening franchise in different places is considered to
play a very important role in a company's growth.
Horizon
2
The projects which are under horizon 2 can be categorised
as fast-moving, entrepreneurial ventures which expand our core capabilities so
that new products can be created and also exploited. The projects under horizon
2 can be the extensions of the existing businesses or it can even be the built
on alliances so that it can move a company into new strategic direction. The
projects of horizon 2 are mostly of six months to two years away from achieving
revenue. They mostly require time, development of new skills along with
investments and resources.
Horizon
3
The activities in
horizon 3 are the initial elements of work that will grow into substantive
ventures in about two to five years and correspond to the expected revenue in
two or more years down the line. These initiatives can either become a form of
research projects, investment, alliances or companies or the pursuit of any
long term business idea. These activities are very much speculative due to
which most of the activities will die along its way. However, the effort is
necessary so as to ensure our participation in the area of substantive promise
in the future.
Resources needed for the three
horizons
The three horizons can be used to promote the growth of a company. They
can help the managers to assess the prospects for growth at all the levels in
an organization. They offer a reasonable way to communicate with the employees
and its investors. With the growth of a business it is also necessary to protect
it from its competitors and for that it is important for a company to use the
three horizons effectively.
Resources
for Horizon 1
Every company
manages their market offer with the help of certain processes that they follow.
In terms of complexities , large companies have large portfolios which compete
for resources along with number of customers who demand attention. They also
have self-serving internal momentum and are extensively into internal
competitions between their portfolios.
In order to make a firm place in the market it is very
important for a company to increase the sales of its products by increasing its
production. An increase in the manufacturing limit, creating more space along
with decreasing the price of the product and offering promotions means
expanding a company which results in its growth.
Resources
for Horizon 2
It is a challenge to manage the
emerging opportunities if there is no one in the executive or management level
to assume the risk, as considerable amount of investment is required before it
can start generating revenue for the company. Also, as money is required to run
large and successful programs within a company, it impacts horizon 2
negatively.
So, it is very important to have
right people in the team who can take right decision at the right time. As soon
as a product or service is launched, the market analysis and research should go
on to check the initial response of the customers. If there are any adjustments
required, they should be handled properly. All the employees in a company
should be placed in their proper position so that they understand and take up
their responsibilities appropriately. Also, it should expand geographically so
that a better quality products or services along with a good customer service
can be furnished.
Resources
of Horizon 3
The main spirit
behind all the investments in horizon 3 is to renew the business and focus on
the future. It is very important to clearly establish the criterion which is
required to determine the opportunities between horizon 1 and horizon 3.
For emerging businesses, the
policies and procedures should be as per the product or services that it
provides which may not be the same as the core business. More number of
talented resources should be included within the company so that they can
concentrate more on the outcomes. They should be team players with good
communication skills. The individuals are required to come up with new ideas
and convert them into opportunities. They should be focused on growth and
revenue and have the ability to take it easily to the emerging business from
the core business.
Transitioning from One Resource to
the Next
In order
to transit between the horizons, it is required to re-prioritize the existing
programs, introduce new people and processes, build teams etc. Transition may
be considered a difficult task and more number of people are required to take
the responsibilities of the new risks. Besides, within transition it is also
important that the new people take care of the manager's concern about the
sales as the customers wait for new portfolios.
The products should be sold at such a price that the
company succeeds in attaining the top position in the market. One of
the companies that have followed this transition is Stars, which generates so
much cash that they are among the top market leaders and shareholders.
Strategy for Addressing Growth
Horizons
A company should make effective investments. If it is a
large company, it has to face additional complexities where they need to
satisfy their customers and come-up with new ideas to tackle the different
market challenges. For this, an effective leadership is very much required. To
manage across the horizons companies should be able to develop and execute a
strategy so that it can overcome any distractions. Along with that it can also
facilitate re-prioritization of the programs that already exist. The people
should be able to analyse the data on business performance and make the right
decision.
Geographical expansion with the help of franchises and
increase in the products and services offered leads to a horizontal growth of
the company. These companies remain in the market for a long time and maintain
their top position.
