When I work with boards and executive teams I am often heard to say, “hold your hands on your hearts and swear you will meet your objectives for this year. “
Now normally I am asking this during a planning session or risk workshop not with 24 hours of the year left to play out. So it is a given that the level of uncertainty over a 12+ month period is such that no one can swear they will achieve their objectives.
I quickly follow up with a question about how the board or exec currently tackle the uncertainty of achieving their objectives. Fortunately, these days most include comments about the use of the risk management process.
I then turn the discussion to considering objectives over three-time horizons and what that means for the levels of uncertainty. To do so I introduce the Three Horizons of Growth concept of Mehrdad Baghai, Lar Bradshaw, Stephen Coley and David White¹. Their thesis was that in order to sustain growth you need to be monitoring which parts of the business were in mature, emergent and embryonic phases and that you need to keep feeding the growth pipeline with new products and services as existing ones fade away.
In the diagram below I show the difference between the horizons in terms of the type of planning you should be doing at appropriate intervals. I also highlight how the concepts of opportunity and risk change in context over the three horizons. It re-emphasises for me that uncertainty is a strategic leader’s best friend. Within uncertainty is the opportunity. Learn to harness it and the future will be bright.
¹Baghai, M., Bradshaw, L., Coley, S., & White, D. (1999). Performance measures Calibrating for growth. Journal of Business Strategy, 20(4), 17-21.
For more on objective setting, please see my past blog Do you have the right objectives?