Innovation Horizons:

As an innovation leadership coach and consultant, I spend a lot of time helping people get past the buzzwords and into the serious science, practice, and mathematics that drive actual innovation.

Because what is innovation, really?

Innovation is: new ideas that are implemented and deliver value.

If any one of these things is missing, it's not innovation. You can be creative; you can be productive; and you can create value. Those are all good things by themselves. Successful innovation brings you the whole way through a step-by-step process from ideas through implementation and ultimately to a valuable outcome.

One of the first puzzle pieces to cut through the confusion and understand successful innovation is the horizon model.

I introduce this concept with almost every client I work with. I also find the horizons just a great way to look at life in general.

Here are some basics:
 

• Innovation happens on multiple horizons at the same time.
  
  
• We are all part of the innovation story. That is to say, everybody in your organization works in innovation. This isn't grade inflation or everyone gets a trophy. It's just that someone may work in one horizon, while others work in a different horizon, and many will work in more than one horizon.
  
  
• Which horizon you are working on is not about distance - it's not about time - it's about uncertainty: how much is known or unknown?
  
  

Let's take a closer look at each horizon.

HORIZON 1 is operational excellence.
H1 is your core day-to-day work. The budgets, costs, services, tools, etc. are all well known. I also like to call it everyday innovation because everyone in your organization can be involved in the continuous improvement of your basic operations.

Consider that the vast majority (80 percent or more) of people, time, budgets, investments, and attention should be focused on H1. I call this "keeping the lights on" and generally doing the work you are known to do really well. If you don't deliver consistently on what you are really good at, you will close down your organization.

What we look for in H1: do the work and meet the budgets! We set business goals, key performance indicators, financial reporting, etc. H1 is easily measurable in terms of quantifiable success.

Horizon 2 is making evidence-based recommendations for growth and change.
H2 is where you go beyond continuous improvement into new growth areas and incremental innovation. You try things out and develop new concepts - maybe offering a new service or product to your best customers, or offering your best services or products to new audiences.

You can recognize H2 because the budgets, costs, and services are not as tried and true as for H1. There is often a struggle when the certainty of H1 business practices is applied to H2 initiatives. You will find yourself estimating what you need and not being sure of the outcomes. You'll have doubts and you'll add more buffers, risk factors, and ranges to cover the unknowns.

Maybe 15 percent of your people, time, budgets, investments, and attention should be allocated for H2. In doing so, using skilled approaches will ease the strain. In H2 we use rigorous innovation management cycles that support the process of:

• selecting only the most promising Big Ideas
• prototyping and testing to address uncertainties
• scaling up, implementing, and commercializing in ways that feed the growth of H1.

In H2, we don't use the same kinds of metrics for success as in H1. Instead, we look for good data and information that help us make better decisions about next steps. The organization also gains skills, competencies, and knowledge by using this disciplined learning cycle to continuously test emerging ideas.

Horizon 3 is developing insights and working skillfully with your biggest uncertainties.
H3 addresses big unknowns, future needs, and unexpected disruptions to day-to-day operations. While all active organizations work in H1 and some work a bit in H2, very few consistently and effectively work in H3.

You'll know you are in H3 anytime the details are not and cannot be known. It's impossible to create accurate line-item budgets and costs in the way you would for H1 (or that you might try to estimate for H2).

Unless you are a start-up, you should not be spending too much of the organization's resources in H3. For a mature organization, maybe five percent of the people, time, budgets, investments, and attention should be allocated to working with the biggest risks and uncertainties facing your organization. While this effort is small by comparison to H1 and H2, it is absolutely crucial for resiliency and sustainability of the organization. Those leading H3 must be visionary, disciplined, organized, and consistent. Without the right skillset working in this horizon, it is easy to get distracted or overwhelmed.

H3 is sometimes called "radical" innovation. It asks and answers questions like: What might happen? What CAN we do? In this horizon a huge quantity of ideas and possibilities are generated. These ideas act as metaphorical fuel for a process that seeks to find out what the organization must do now to be ready for the next big thing.

The insights and learning from H3 are fed into H2:

• a lot of ideas and concepts are generated
• insights and learning are drawn out of the ideas 
• a selection of insights will "qualify" or "graduate" into H2 Big Ideas

Many organizations believe they are radical innovators, but they apply too much H1 thinking when they need more H3. For example, they generate far too few unique ideas and then quickly apply H1 concepts like cost/benefit and return on investment. This leads nowhere because it applies today's norms to tomorrow's world. Your H3 team must understand the difference and respect that unknowns are unknowns. They must also understand how to turn ideas into actions that can be tested (this is not easy).

In H3, our metrics for success are very different from H1 and H2. We look to pose challenges and hypotheses that will change our status quo. We do not look for specific outcomes or financial targets, because we know there is much to be learned through the evidence-based work of H2. The organization gains skills in developing its strategies, confidence in risk management, and a proactive approach to business continuity and resilience. This is where true transformation of an organization is sustained over years and generations.

What's next? How do we use the Innovation Horizons?
Great innovation cultures work in all three horizons:

• Generate ideas, insights, and calls-to-action in H3
• Create great new solutions and recommendations in H2
• Deliver great products and services in H1
  

The people in your organization likely gravitate to one or two horizons.

Some of your team really love to deliver on the core work, and you'll find if you put them in H2 or H3 they don't thrive. This is great news! We need people who love the work we do and want to be the best at that.

You'll also find that if you ask those who love new ideas and experimentation to deliver efficiently on core business day after day, they may develop a reputation for getting bored, frustrated, and out of their lanes. That is totally understandable for people who do better with more novelty and risk. If the organization understands how to take advantage of this, it will reap much more benefit from it.

If leadership understands these concepts and the step-by-step processes that can support every horizon in the organization, you can allow people to move in and out of horizons as their interest and skills match up. The right people, in the right places, at the right times.

There is also much more to discover about best practices of each horizon so that they work for your organization.

To learn more, please reach out to us!

Source credits go to:

• Innovation360 www.innovation360.com
• ISO 56000 www.iso.org/obp/ui/#iso:std:iso:56000:ed-1:v1:en
• Baghai, M., Coley, S., & White, D. 1999. The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise. London: The Orion Publishing Group Ltd.

First posted November 30, 2024
Written by Erin (Pink) Mosley
©️ 2024 Erin Mosley, Inc.