boutta make a milli like we drag racing limosEdit

  • Why promising ventures fail
    • After transforming ideas into businesses, some companies drop them when executives realize they won’t pay off quickly
    • Managers poach new projects resources to boost established businesses’ short term returns resulting in killing young businesses by wasting the resources already invested in them
  • Suggestions to avoid this fate:
    • Imagine innovation pipeline as three horizons
      • Horizon 3 – ideas for future businesses
      • Horizon 2 – young businesses
      • Horizon 1 – established businesses
    • Ensure horizon 3 ideas survive transition to horizon 2 and horizon 1
      • Avoid holding horizon 2 businesses to horizon 1 standards
        • Accept that horizon 2 efforts will pay off in medium term, not immediately
        • Safeguard horizon 2 resources so nascent projects can mature

Idea in PracticeEdit

Rules for managing horizon 2 projects:

  • Insulate horizon 2 from horizon 1
    • Ensure young businesses get resources they need
      • Ex. Cisco knew that greatest growth opportunities were in developing economies, so the company created a separate “developing countries territory” with its own workforce
      • Designated several asset-rich new markets for horizon 2 treatment, in these countries, sales teams focused on winning transformational deals
  • Use acquisitions to help fill any horizon 2 vacuum
    • When the high tech downturn hit, Cisco found itself with a serious horizon 2 vacuum in several emerging high-growth categories
    • Revived growth by acquiring in order to anchor entry into storage area networks to attack the wireless network market
  • Establish different norms for horizon 2 efforts
    • Horizon 1 processes and metrics are geared to profitably underwriting the operations of a large, established business
    • These norms are toxic to horizon 2 ventures which need time to attract new customers – negotiate exceptions for horizon 2 timeline
  • Assign best leaders to horizon 2 projects
    • Led by people who understand entrepreneurial deployment and know how to build a business to a level where existing operations can take over
    • Measure leader success by growth coming from timely and effective entry into a hot market category
  • Block cross-horizon resource migration
    • Once you’ve determined which leaders and how much funding you’ll devote to a horizon 2 effort, stick to that resolution
    • Don’t let horizon 1 managers hoard or poach resources

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