September 2019 > Originally posted on Medium
McKinsey’s 3 horizons model is dead
About 10 years ago the book
The Alchemy of Growth
introduced the 3 horizon model, which has since often been referred to
McKinsey 3 horizons of innovation. Credit where credit’s due, because the 3 horizon model has done a
great job in highlighting that not all “innovation” is the same.
A few days ago
Steve Blank wrote a nice HBR article
where he highlighted that the world has changed, and the 3 time
horizons are actually no longer bound by time. Especially time horizon
3 type innovations can disrupt the status quo a lot faster than the
originally projected 36 to 72 months.
Whilst I absolutely agree with
Steve, I also believe the 3 horizon model has additional flaws beyond the
irrelevance of the time aspect of its horizons. For fans of a
3-pronged approach I have previously already shared that I prefer
Clayton Christensen’s efficiency, sustaining and market-creating to describe his 3 types
The 3-type world
It is still true that not all innovation are the same, but perhaps
it’s time to reevaluate the value of categorising innovation in 3
buckets. Different types of innovation are often referred to during
discussions over investments, over where funding for which types of
“innovation” should come from.
The lines between which type of innovation should fall under which of
the 3 horizons can be — very — blurry … and we all know that people
who need funding can be very creative to position whatever they are
trying to do in another “time horizon”.
A dual culture
There are plenty of others who have identified 2 rather than 3
innovation types or cultures. Personally I found that the authors of
Dual Transformation did a pretty good job at describing the
Both worlds are funded differently, require a different culture and
Remain relevant and/or continue to grow
A well-oiled specialist product team must have a good handle on the
things that need fixing/refactoring. At the same time, this star team
that knows their product inside-out as well as what their competition
is up to will need to generate plenty of promising ideas of how to
make things more efficient, improve functionality/usability.
This team has clear revenue targets based on past results and to
manage investments in this portfolio it is important to prioritise and
find the right balance between ideas to make things more efficient
(H1) and sustaining innovation initiatives (H2) to grow.
Whilst this team may also well positioned to explore expanding into
new markets or address new customers …. this is where it can get
fuzzy. Depending on the similarities and level of uncertainty, it
could also suggest a new separate team to “explore the new”.
Explore the new
Market-creating opportunities to solve problems significantly better
to entice customers change behaviour requires a different approach.
The first key difference is how ideas to explore a new opportunity get
support. LinkedIn founder Reid Hoffmann shared in a podcast some time
ago that the most promising ideas are those that polarise investors.
Reid said “What you want is some people going, ‘You guys are out of
your minds,’ and some people going, ‘I see it’” based on the idea that
universal approval means that the idea is so obvious that it will soon
face a stampede of competitors.
Ideas that cannibalise the current products rarely come from inside
the same business. Other differences are a result of the team size and
number of uncertainties. The small team will need to consist of
generalist who can take on multiple roles and an experimental culture
to quickly seek answers to questions or come up with better questions
Having a clear
Business Plan Blueprint with a Purpose, Goal, Strategy, Status,
Plan and request for Support
to team agreed to applies to both, but the funding and governance must
be adapted to give each the maximum chance of being successful.
Not “when/how” do I fill in my “Canvas” but “why”
… and the
various innovation methodologies
should be used on either side.