The UK has a radical new security strategy. Can David still beat Goliath?
Feb 01, 2022That is the question that came to mind when we read the UK Government’s new security review, called Global Britain in a competitive age. It was quickly followed by others: is this the right strategy for the UK? When and how will we know? Is it deliverable? And if the document contains the Government’s best thinking, why has it published it online? Presumably strategic surprise is no longer considered important…
It is a much anticipated document and it does not disappoint. It has startling modern language and concepts. Speed, agility, interoperability, resilience and operating models are all straight from the start-up playbook. The big idea is to maximise impact by integrating all the levers of power that the Government has at its disposal: defence, intelligence, diplomacy, aid, economic, and science and technology. Alongside the ‘Indo-Pacific tilt’ and increased nuclear deterrence, there is mention of improving national health, climate change and sparking a green industrial revolution. Forget hard or soft Brexit. What matters is hard and soft power working seamlessly together to make Britain more ‘match-fit’ for a fragmented, competitive world.
The idea that the UK could single-handed defeat or even stand up to its principal adversaries (Russia, China) is quixotic. The UK may not even be united for much longer, which would torpedo the whole plan. But there is every hope that the strategy will lead to improved performance and better outcomes over many years. It is a delight to see evidence of creative thinking and the realisation that the future will be very different rather than a continuation of the past (which has been the default defence position for too long).
Moreover, it will be fascinating watching how the entire state apparatus modernises itself to deliver the vision. This particular challenge is one that will be familiar to every founder and business leader. How do you modernise while still operating? I like to imagine the scene from the film Master and Commander, when the battered ship is completely renovated at sea. In many ways it was easier to do this in a 19th century warship than it is in a 20th century company. Twenty years ago the ‘failure rate’ for big transformation projects was 80%. According to McKinsey it is still 70%. For all the improvements in technology, collaboration, data and business process design, it is very, very difficult to effect change. Can anyone see the British army, navy and air force playing nicely together after years of inter-service rivalry?
Even for those desperate to change it is not obvious what to focus on when, how to link plans to budgets (which have their own inertia), and how to mobilise internal support. Change is scary. The fact is that beyond the start-up scene, most business practice is geared towards steady, incremental growth. Whatever you achieved this year, do 5% more next. Budgets and renumeration packages mirror this unspoken doctrine.
This can be very frustrating for change agents. When we were running our agency, we specialised in strategically powerful, visionary ideas. They were always well received and created much excitement, but were rarely executed in full. Client hearts were willing but rigid organisational structures prevented bold action for long-term gain. In one workshop the Head of European Innovation for Coca Cola said the immortal words ‘this would transform our business, but we’ll never do it because of our structure’.
Everything changed when we discovered the three horizons model. It is my favourite strategy tool and it could be yours as well. In essence, it slays the ghost of incrementalism. Its creators found that the most profitable companies were not those that focused solely on the core business. Instead, they were pursuing a more ambitious, multi-faceted agenda.
You begin by planning to deliver your core business, optimising it to maximise outcomes. That is horizon 1. But you should also plan to begin a second horizon. This is an extension of your core, using existing capabilities to take advantage of adjacent opportunities and easy wins. If you are selling offline, use your learnings to sell online. If you sell shirts, sell trousers as well. If you sell in France, sell in Germany. That is horizon 2. Already, new possibilities for progressing strategically advantageous possibilities open up. There is also a horizon 3: you should plan to innovate, exploring and experimenting to find the business models of the future.
This means that at any given moment in time, businesses are progressing not one agenda (e.g. 5% growth), but three. Companies that pursue this approach are able to generate significantly more value (which they defined as profit). This is because businesses evolve over a relatively short period of time. Horizon 1 can quickly wither and die. Horizon 2 becomes the new core, and horizon 3 your next adjacent opportunity. So if you are not pursuing all three horizons, you have nowhere to turn if (or when) your core collapses.
This simple model was revelatory, both for us and for clients. It provides a simple visual framework for mapping out the major changes that need to happen in your business. All of sudden conversations switched from ‘that’s impossible’ to ‘we might be able to try X this year’ and ‘we could trial Y.’ Resource allocation flows naturally, roughly following the 70/20/10 rule: 70% on H1, 20% on H2 and 10% on H3. Be prepared for a big push to optimise the core in your first year, so the 30% budget loss is not felt. This is a great discipline in itself, as it forces efficiencies and drives new ideas.
The model was introduced to the world in The Alchemy of Growth in 1999. It is still great for mapping out the strategic changes that you are going to commit to, and making sure that there is something other than business as usual is on the roadmap. When the model was conceived, the assumption was that the horizons would play out over a three to six year cycle. In a digitally accelerated world no one has that luxury. Instead, use the three horizons in your annual planning process and try to achieve outcomes within the year. Some projects will take longer, but for most smaller companies, this will be achievable. It will reduce the need for zigzagging as you are blown off course repeatedly. It can reduce the need to pivot and smooth out business transitions.
This model won’t guarantee your business slays its goliath, but it will make it more future ready and better prepared to put up a good fight.
UP AND THE RIGHT.
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