MBA Fancy Dancing: Three Horizons
February 4, 2019
In a world of bits and bytes, MBAs have to do some fancy dancing. A good example is the essay “McKinsey’s Three Horizons Model Defined Innovation for Years. Here’s Why It No Longer Applies.” The write up assumes that the reader knows about consultant speak, the value of simplicity to most CEOs, and the need to sell time. Ka-ching.
You can read the essay for an explanation of what a company has to do to grow. Three tips:
The basic idea is to do things better (reduce costs, put more seats in a commercial aircraft. Make breakfast bars smaller but keep the larger packaging. Efficiency. Firing workers, reduce quality, and trim customer support humans.
The second task is to make more money; for example, puts ads everywhere and make it tough for an advertiser to figure out what actually happened as a result of the ad spend, bill parents for a child’s in game “purchases”, and generate shelves of different types of spaghetti sauce for a person who wants “regular” spaghetti sauce, and so on.
The third job is to do something new; for example, put health monitors in shoes, solve the problem of death, push the idea that people in cities with lots of rain and snow will ride electric scooters, and similar “outside the box” innovations.
But the three ways to grow — called horizons in consultant-speak — are no longer bounded by time. This means that in today’s go go world, a CEO has no time. Every activity is like the two minute warning in American football. Game tied. Win it or sell used cars for a living.
Consequently businesses have to rethink everything — again. Then implement more new things to deal with the problem the new view of time demands. I can hear the cheers from the consulting firms now.
Here’s what the pressured, desperate, and insecure CEO must do:
- Outsource (yep, an old idea needs to be amped up)
- Hire consultants or buy hot start ups
- Do the “me too” and duplicate what’s working for another outfit
- Innovate, either think up something new (very risky) or buy a start up and stock up on scapegoats (less risky).
I don’t want to rain on this recycled parade of MBA chopped liver, but I would suggest that one big idea be kept front and center.
The assumption of the MBA world is that growth is darned near infinite. Competition will produce winners, and to be a winner, one has to do the stuff that wins. The old methods work when there are plenty of resources, barriers to entry, and not too many other desperate people looking for a winner.
The problem is that infinity, while a good idea, does not work when cash is tight, competition is a mouse click away, and execution is often complex.
The signs of a change in the business climate are easy to spot. No MBA needed. Monopolies characterize the present US business landscape. Who will fund a company to knock off Google or Alphabet? Er, still waiting for a hand to go up.
Governmental entities worldwide are not exactly humming along. Whether it is the on going chaos of certain Middle East countries or the slow motion disintegration in South America or the weekly drama of French protesters wearing “colors”— wind downs on display.
Concomitant with the is a bit of that Einstein magic. The amount of time available to accomplish a task is shrinking. CEOs command star ships, but the time required to build a business is getting longer.
Check out the meeting monsters fueled by digital calendars. People work anywhere but find time chopped into nanoseconds. I assert it is tough to do certain types of thinking and work in tiny perturbations in a quantum clock.
One interesting characteristic of reduced time and reduced resources I would suggest is an surge in pragmatic amorality. Example: The Facebook professional allegedly remarked, “The heck with ethics. I want my bonus.”
Therefore, for the MBA in the foreseeable future, here are the trigger points:
- Expediency
- Abandonment of social responsibility
- Clever and cute tricks designed to deceive
- Obfuscation, prevarication, and denial.
There’s nothing like a horizon. But what if it is an event horizon or a recycling of management bromides. Timely.
Stephen E Arnold, February 4, 2019
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