There's a stream of strategy literature-using the word "literature" loosely-about three time horizons: short, medium, and (you guessed it) long. The strategic idea is that you should work on all three simultaneously, sort of like a gardener who selects plants so that something is in bloom all season long. It was developed in McKinsey's "alchemy of growth" research at the turn of the century. While not the most daring concept in the history of ideas, it's shrewd and a potentially valuable antidote to the kind of herky-jerky investment rhythms that budget-driven planning produces. I've been thinking about it in a different context: as a framework for developing a great working relationship between a person and his boss.
Before we get there, I need to talk about the often-fatal weakness in the three-horizons idea: the middle horizon. This is where you’re supposed to build emerging businesses–investing capital and developing capabilities to scale up the handful of ideas that have demonstrated commercial viability and that can become the core business of the future. Trouble is, in the real world Horizon 2 is an orphan, as the brilliant Geoffrey Moore points out. Horizon 1 (today’s business) gets all kinds of attention through budgeting, reporting, bonuses, and the like. The long-term receives its due, too, and the CEO and executive committee have a capital-spending account. But the stuff in the middle is no-man’s land, belonging neither to the business unit nor the ExCom, neither to this year nor to the future. The opportunity has no natural owner or source of funds. It’s where you really want to invest your capital and place your best talent. Everyone knows it. But when trade-offs need to be made–those tough decisions I decried a few weeks ago–Horizon 2 gets the shaft. The institutional failure to attend to Horizon 2 is one reason companies over-rely on mergers to deliver growth.
It seems to me there’s an analogous shortfall and opportunity in the relationship between boss and subordinate. Individuals, teams, and departments also have short, medium, and long time-horizons. We, too, should be working on all three at once. When it comes to teams and departments, it’s the stuff in the middle that gets left for last, same as with the company as a whole. Everybody’s focused on this year’s activities and results. If you don’t believe me, check out the agenda of your weekly staff meeting, the items on your quarterly dashboard, and the annual goals on which your bonus depends. Odds are nothing there talks about building capabilities for the business of the future. Sometimes your team will set aside time to talk about the topic, but somehow it drops off the agenda before it gets traction.
It’s different in your personal life. If you’re like most people, your biggest weakness is the long term. You’re underfunding your 401(K) and not studying Mandarin–but you’re delivering on your day job and actively scouting opportunities for a stretch assignment, promotion, or a new gig. In other words, you’re building capabilities more assiduously than your team is.
So here’s the deal: Align what you’re doing in Horizon 2 with whatwe’re not doing yet. In most organizations, those middle-term opportunities aren’t hard to identify, at least in headline form. In my shop, if we had a few million to invest, we’d clearly put it into next-generation digital marketing, significantly improved global coordination, and a couple of other items I shouldn’t name here. Remember, a Horizon 2 scale-up requires both capital and capabilities. One fine day we’ll allocate the capital–we’ll have to. Meantime, though, a smart employee keeps aware of Horizon-2 projects and ideas and moves them forward without being asked. She runs an experiment, proposes a pilot, sets up an informal task force, and buttonholes me and says, “Boss, you know how we keep talking about X? Well I’ve been working on it and have an idea we can do on the cheap that will at least get us partway there.” By doing what you can to develop capabilities now, you accomplish three things: You give me tangible evidence with which to make a pitch for the capital; you put yourself on the side of the future; and you show me that you’re thinking strategically.