To classify initiatives into horizons, we first map company initiatives to a prioritization grid. Then we are able to prioritize investments into horizons based on where the initiative falls in the grid.
Map initiatives to a prioritization grid
Start with a matrix with four quadrants that organizes planned initiatives by strategic impact on one axis and business model impact on the other.
The matrix’s horizontal axis represents a spectrum of “tactical” to “strategic” initiatives. “Tactical” initiatives are confined to a single team or use case. “Strategic” initiatives represent larger investments that might affect the entire organization. The matrix’s vertical axis represents a spectrum of business models. Existing business model initiatives address competitive and disruptive threats, improve operations, or empower employees. New business model initiatives create new value propositions and revenue streams.
As you map initiatives, it’s helpful to involve the Chief Financial Officer (CFO) office and other stakeholders to ensure you’ve made the right assumptions around the opportunity valuation.
Let’s try filling in the prioritization grid using the earlier manufacturing example. You might place automation of quality control in the lower left quadrant. It’s an initiative that digitizes and optimizes an existing business model without requiring systemic changes.
Scenarios that fall below the middle line help the organization survive more than thrive. They might address competitive and disruptive threats, improve operations, or empower employees in the organization. Scenarios above the middle line help companies create new value propositions, revenue streams, or business models.
Once you are done classifying your initiatives on the grid, you can map the quadrants to horizons. The quadrant that an initiative fits determines which horizon it belongs to. The initiatives in quadrants one and four belong to Horizon 2. The initiatives in quadrant three belong to Horizon 1. The initiatives in quadrant two belong to Horizon 3.
Prioritize investments based on horizons
We recommend prioritizing initiatives in phases: start with foundational initiatives in the bottom left of the Prioritization framework quadrant and move towards transformational initiatives in the top right of the quadrant.
Having mapped the initiatives to their horizons, you tackle them in order: Horizon 1 initiatives first then Horizon 2 initiatives, and finally Horizon 3 initiatives.
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