In this episode of Sequence Over Strategy, Michelle digs into how to cut the noise, stop overcorrecting, and use the Three Horizons Model to prioritize your ideas.
Ever feel like you’re stuck trying to balance what’s working in your business right now with the big, bold ideas you can’t stop thinking about? Or maybe you wonder how to tell which ideas deserve your attention today versus the ones that should wait for the future?
In this episode of Sequence Over Strategy, Michelle digs into how to cut the noise, stop overcorrecting, and use the Three Horizons Model to prioritize your ideas. You’ll see how to protect what’s working now, spot easy opportunities you might be missing, and keep an eye on future growth without losing focus.
Resources
Check out the full episode at TheMichelleWarner.com
Michelle Warner on the Web | Networking That Pays | Free Workshop
Sequence Over Startegy Curated Playlists
''The Alchemy of Growth'' Book
Hi, I'm Michelle Warner and I'm a business designer and strategist, and in the 15 plus years that I have done this work, I've noticed the same trend everywhere. Business owners are falling into the trap of centering strategies first, when they need to be centering sequence, because the reality is the steps you take in your business and the order in which you take them is more important than how well you implement any single strategy. So on this show, my goal is to fix that by helping you find and trust your own sequence of actions rather than blindly following someone else's strategy.
Welcome to Sequence Over Strategy. Now last episode was the season two premiere, and I told you in that episode about the themes for this season, for season two of the show, and that theme is it matters more. Why?
Why It Matters More
Well, because we've reached an interesting juncture in small business, and particularly in the micro businesses that I work with, where we tend to do a lot of our marketing, if not deliver everything online. The market's saturated, my friends, whether you are a consultant who's trying to connect with Fortune 500 businesses and doing B2B work, or if you are a B2E, business to entrepreneur business, or if you're a B2C business, market's getting saturated for us small businesses, and people are nervous about the economy. And so what that means for you is that you have to be a little bit better at what you do because you can't get away with as much.
When the markets are wide open and people are feeling great about spending money, well, your job's a lot easier. I'm not going to pretend otherwise. I mean, it's obvious.
People are excited to spend money. Your job selling things is not as hard. But what's not always obvious is how to be better when the opposite is true like it is today, when people are a little bit nervous, when markets are saturated.
Removing the Noise
I don't want to use the word panic, but sometimes we kind of panic as small business owners because you think, oh my gosh, how can I be better? What do I do in these moments? We tend to want to make big overcorrections or make big changes.
But a lot of times it's not about the dramatics. It's about getting better at all the little everyday things, right? It's something we call in business school, we call it noise, where you just have extra stuff hanging around.
You're doing things that's inefficient. You have too much noise in your business models, what we would say. And when you are faced with a market that's a little iffy, the game is not doing a complete 180 and changing everything.
I mean, occasionally you might have to do that if you're in a specific circumstance. But most of the time it is about removing the noise. How do we remove the noise?
How do we remove the inefficiency? We remove it by getting a little bit better at all the things that we're doing. And when I say getting a little bit better, I mean, well, removing the inefficiencies, right?
The Three Horizons Model
And when I look at this, and when I look at the conversations we're going to have about this over season two, I think about these in three main categories. Number one, business model iteration. Just how are you managing your business model?
And by business model, I just mean that combination of how your marketing interacts with your product mix, interacts with your customers, that combination of things. How are you managing that so that there is as little noise as possible so that your priorities are as good as they can be, right? Then there's your marketing alignment.
How are you managing that relationship versus traffic question? And then finally, there are your unfair advantages. What are those little things that you might have specific to your business or something that is just working in your favor that frankly you can take advantage of?
Because in markets that are tighter, you should be aware of little advantages that you have and you should be exploiting those to the best of your ability. So over the course of this season, I'm going to be answering these sequence over strategy questions related to those three areas. And today we're going to start with a common question I get all the time around that first category, business model iteration.
And that is, Michelle, I have all of these ideas. What do I do with them? I have product ideas.
I have ideas about what to do about my current products. I have new ideas. I have new markets I want to spread to.
What do I do with all these things? I want to do them all right now. They all sound like good ideas.
Or maybe, again, if you're feeling that pinch a little bit, you may be in that mood to kind of overcorrect things like I was saying. You may be like, oh, things feel a little bit tight, so why don't I throw everything away and go try this other idea that I had? And so I want to talk through some ways to organize all these wonderful ideas that you have so that you are de-risking your business model.
What do I mean by de-risking your business model? I mean sometimes when we have too many ideas, whether you're just a multi-passionate creator who has always had a ton of ideas or whether you're someone who's, again, feeling the pinch and you're trying to come up with some solutions, when we have all these ideas, the game is to get them in some sort of order so that you're tackling them in the best ROI case possible. What do I mean by that?
The best ROI, return on investment, you're tackling them in an order that is going to give you returns from the most effective returns to the least effective returns, right? Rather than just kind of throwing spaghetti against the wall and hoping that you choose something that makes sense. So when you have all these ideas, again, from wherever they come from, whether it's your natural inclination or whether it's coming from, hey, I got to make something happen.
I got to figure something out. Let's talk through how we can start to get these in order. My favorite tool to do this is called the Three Horizons Model.
Now, you may or may not have heard about this. I think it's pretty business school geeky. So you probably haven't heard of it, which is totally cool.
But the Three Horizons Model comes from a book called The Alchemy of Growth, which was written by three McKinsey consultants. So you can check that out. You can look for all the source material after I walk you through this.
It's a really great book, fantastic framework. And what it was developed as is really a model for innovation. So we're going to tweak its use a little bit.
But it really is. It's a priority model. And the idea is to help companies keep the lights on with the main thing, right?
Keep the main thing, the main thing, while also looking ahead to what's next. Because we want to avoid the fates of like a blockbuster or a Kodak who just totally missed the ball on what's next, right? And instead, maybe we want to be a Netflix who seemingly changed from delivering DVDs to your door.
By the way, I think my parents still get their DVD delivery service. I don't know if that still exists. I know that within like the last year or so, they were still getting DVDs delivered to their door.
But I digress. That just makes me laugh. But a Netflix was able to change over time, right?
It saw the vision that Blockbuster never saw and was the DVD delivery service. But when that got a little bit weird, it became a streaming service. That's what we're talking about.
Like, how do you integrate those ideas over time as the market changes or as the market asks for different things? And that's how I like to think about the Three Horizons model. It helps us on this micro level as micro businesses to understand priorities and development.
What should we be focused on now? Out of all the things that we can be doing, how do we focus? How do we organize so that we are maximizing what's available today?
But also not so focused on what's available today that we are putting ourselves at risk of not seeing what's happening in the world. Because what usually happens kind of is everybody again has this pile of ideas and they want to work on them all at one time. Or you want to jump ahead to something that's really exciting and maybe that's a pivot that's way too big and way too risky.
Or you're just generally confused about how to prioritize those things, right? And again, this is when you start throwing spaghetti. So the Three Horizons can really help us talk this down to size to get your ideas into a sequence.
Oop, there's that word again. Into a sequence that doesn't put you at too much risk, but also allows your new ideas to come to light. Because like I said, they usually need to come to light.
New ideas are not bad things. There are only bad things when they allow us to distract us and we try to do 14 things at once. So let me get you introduced to this model.
The Three Horizons, it literally means that. It means, you know, if you're visualizing this, it's three groups of priorities. Visually, you can think about them as kind of rings around a planet where the first horizon is closest in, second is in the middle, third horizon is furthest out.
If you do look at the source material, you'll see that they have it kind of on an XY graph and the graph is based on time and value. And so the first horizon is the core business. So if you're thinking about this one as kind of rings around a planet, it's the closest one in, or if you're thinking about it on that time value, it's the one that's also closest in, right?
It's closest to kind of that bottom section of an XY graph, that bottom corner, because it is the core business. And it's happening now. So on a time horizon graph, guess what?
It's an immediate time period. Horizon two are your emerging opportunities. So this is kind of your second ring or your second wave in an XY graph.
And then horizon three are your future growth ideas. So these are our three categories. The core business is horizon one, horizon two are your emerging opportunities, and horizon three are your future growth ideas.
Obvious, right? But again, sometimes when we get a little panicky or have some cool ideas, we don't think about them this way, and things go sideways. So your goal is to understand a couple of things.
Number one, how should you allocate your ideas? How do you literally categorize them into these three horizons? I will explain that in a minute.
And then how do you categorize your time, right? How do you allocate the time and resources your company has so that they are across these horizons in an appropriate way that you are not leaving a bunch of money on the table with your current core business, but you're also protecting yourself by looking ahead. So let's get into these things and how we manage these things.
And I'm going to go kind of horizon one, two, and three, and we're going to talk about them in a little bit of detail. And then later on, I'm just going to apply some common scenarios so you can see how you might categorize these and play with these. So as I've said, horizon one is the core business, right?
Then this means that what's true of our core business, and by core business, of course, I mean like what is making you money today. It means that needs to be protected. We need to care for the core business, unless you are in some situation that I've called, if you've heard me talk about it otherwise, where there's like a forced market shift where overnight your core business no longer exists.
If your core business still exists, which is true for 99% of you, you need to protect that because that is what is bringing you in money. Now it's what is going to fund all of the changes, right? That may or may not be coming.
But also horizon one needs to take as little, I'll call it time and brain space as possible from you, meaning the CEO, because you are focused on maximizing the value of what's already on offer. And if it's already on offer, I kind of need your brain involved as little as possible in this, right? This is like if you have a team or if you categorize your work in different ways, and I have some clients who do this and I love it, meaning if you don't have a team or if you're still a small business, you can look at your work and say, OK, when am I playing an admin role?
When am I playing an implementer role and when am I playing a CEO role? So whichever way you do that, your horizon one activities should either be being implemented by a team or they should be implemented by you while you are playing an admin or implementer role. This should not be taking up your time when you're in any kind of strategic CEO role.
And why I say that is because when it's the core business, we want this thing on lock, right? We don't want to be messing around with the core business and we'll get to where you mess around like those come in the other horizons. So you don't want to always be kind of tinkering with the core business.
The core business should be something, again, like if you have a team, there are SOPs written for it. You know what it is. And if you're not at that point yet, then your only priority is to find a core business that can function in horizon one.
We talk about this a little bit in the stages of small business growth, right? If you don't yet have something that's locked in, then your goal is to create your horizon one that can run without a ton of effort on your part. And again, when I mean effort, I mean right now, intellectual effort, strategic effort, CEO effort, whatever we want to call it when we're talking about that effort that goes into figuring out big problems, big challenges, big opportunities with a product.
Maybe you're still in an implementer role. I'm still in an implementer role in a lot of pieces of my business, but that doesn't mean that I'm having to reinvent the wheel with them every single time, right? So I have pieces of my business that take portions of my time that are in horizon one, but I know exactly what I'm doing.
And so I don't have to think about them as much, right? Maybe I have to get on a monthly Q&A call for networking that pays. I don't have to think strategically about that.
I just show up as an implementer and I answer everyone's questions and it's wonderful and I love that call every month. But there's not a lot of intellectual load that goes into figuring out how to implement. Like that thing is just on lock and it just happens.
And so that's what we're talking about. Horizon one is we want a core business that is just happening. That's the goal, right?
And horizon one, where it is, it's that innermost horizon. And so when we're on that time value graph, this is the stuff that is giving you returns in the shortest amount of time. But it's also the least value long-term, right?
And you can imagine that like whatever is burning your business right now, whatever is bringing in your revenue right now, yeah, that's of course bringing in revenue right now. You don't have to wait for it, but that probably means in 10 years it may not be bringing you in revenue, right? Maybe it is, maybe it isn't, but there've probably been some changes.
So horizon one is the core business as of today. And we want this to be as little of your high-level thinking as possible. We want it as much lock and key as it can be to just run.
Horizon two are your emerging opportunities. What do emerging opportunities mean? Now this is where we get something screwed up because I'm going to tell you right now, horizon two is most people's missed opportunity.
Most people are going to spend all their time between horizon one and horizon three, and it's going to confuse the issue. Whereas horizon two is an extremely valuable step that we're usually not thinking about. Horizon two, again, are your emerging opportunities.
And these are the opportunities that are showing up that align with or extend your current business. I'm going to repeat that. They align with or extend your current business.
So these are obviously the next priority, but what's important here is that you are looking at your current business and you are saying, how can I extend this? How can I make this run better? That's your horizon two.
And this is where your brain can show up strategically because again, if we put it in an XY graph, we can imagine that horizon one, you know, is kind of in that bottom corner and it is giving you short-term revenue and it doesn't take a ton of time to realize that. Fantastic. Horizon two starts emerging a little further, right?
It's going to take you a little bit longer to get that revenue, but it's going to be a little bit more value over time because you are extending something. And the reason we usually skip this is sometimes these are like the really boring ideas or they're ideas that we just forget about. And yet the data tells us how freaking valuable they are.
So a horizon two in a very micro business, a horizon two idea would be, how do I extend the customer journey of my best core customers? Right? Like we forget sometimes that the easiest sale you can make is to your current customers.
I forget this way too often. And so a horizon two question or horizon two project is going to put that to the forefront and say, okay, I have my core business. What is obvious?
What's the low hanging fruit hanging off that core business that I can add in? And if you have a bunch of ideas, those are your ideas that immediately slot in after your core business. How can I extend that core business?
That's horizon two. And then horizon three are your completely new opportunities. This is where you're exploring.
And again, if you think in the X, Y graph, these are the things that take a long amount of time to realize, but they have long-term value because you are asking yourself that question of what do I need to have in place in 10 years? And so this is the stuff that is setting you up to not be the next Kodak, to not be the next blockbuster. You're thinking about these ideas that have highest potential value, but they're the longest timeframe out, right?
And here we're talking about new markets, new businesses. So very often, here's a mistake people make. Very often people will come to me and they will say, here's a classic example of mismanaging their horizons.
They will say, hey, I have this great core business. It is killing it, blah, blah, blah, but I want to grow a little bit. So I'm thinking of penetrating this completely new market.
And it's a market that they have no crossover with at the time. And I will say, okay, interesting idea. Do you have any idea how to reach those people or how to penetrate that market?
And usually they will say no. And we'll get talking and we will start to realize that there are all these different ways for them to extend their current market before they go try to penetrate a new market. It's like they've skipped horizon two completely, right?
Because they just have this horizon one thing that's humming along and it's working, but they're getting a little nervous because maybe the market's getting a little nervous or whatever is happening. And so they start looking around and wondering, how can I grow? And our brains, a credit to our brains, our brains think big and have big ideas.
So they kind of leapfrog all the obvious stuff in horizon two and start thinking about, I'm going to have a brand new product or I'm going to have a brand new market, or I'm going to have a brand new this, brand new that. And that's fine. We do want to think about that.
There's a reason horizon three exists, but you don't want to be leapfrogging between horizon one and horizon three all the time. You want to make sure you are remembering horizon two, because if you're forgetting horizon two, number one, you're just leaving obvious money on the table. Number two, you are risking your business because you were doing this kind of big ping-pong between horizon one, horizon three, horizon one, and like you miss things when you do that.
It kind of sets you up to screw things up. So when you're thinking, when you have these ideas and you can go back and you can say, okay, horizon one core business, right? I need to protect this.
I need this to be doing its thing, but also I need it to be doing its thing without reinventing it all the time. Right? So if I were to do the mistakes I see is that people in horizon one waste too much time remaking their horizon one products all the time.
Applying the Framework
Now if there's something wrong with your product, or if it literally needs an update because it hasn't been updated in five years, or I'm being dramatic there, you probably have to update it more often. Like regular updates to keep the product relevant are one thing, but tinkering around in perfection and just always messing around with your horizon one thing, that's going to get you in trouble. Right?
But also looking at that horizon one thing and then looking at your ideas that may be all over the board and better qualified as horizon three ideas and never asking yourself, hey, this horizon one thing is working. How could I extend it? That's a mistake that people make.
That is a missed opportunity that you make when you're not thinking in terms of all those three horizons. So again, when you have all these ideas, whether you're a multi-passionate person, I use this with all my multi-passionate creatives. We get off the three horizons and we just start plotting ideas in there.
And all of a sudden, number one, they can kind of see where their ideas fit, which tends to be a huge relief. And number two, we can come up with a plan to care for all of them just in their correct time rather than feeling like I have all these things that need to be created. And then the same way for people who are just thinking about the natural progression of their business and just thinking about how can I do things a little bit better right now, right?
I've probably been leaving money on the table, but I can't do that anymore. Well, that's a prime opportunity to get out the horizons and start asking yourself questions of what are my ideas? What horizon do they fit in?
When should I be doing them? Or on the flip side, why don't I have any horizon two ideas, right? That's also a really interesting question to ask yourself because a lot of people won't have any horizon two ideas.
And oh boy, like if horizon two is empty, what's up with that? I should probably be thinking because it is very rare that you're not going to have something to fill in one of those horizons. So that's how we want to think about navigating these things.
And that's something I will invite you to do. And again, I'm going to give you some examples in a second. This is something I'm going to invite you to do is start thinking through, number one, if you have a bunch of ideas, can you now look at them and put them into these different horizons and by doing so prioritize yourself?
Or can you take everything that exists right now, put it into the horizons, and see if you have any gaps and give yourself a little bit of a challenge to think about what some horizon two ideas might be if you are in fact somebody who is missing those. And then in terms of navigating these things and actually turning them into day-to-day priorities, the way I think about this, there's a lot of different opinions on this, but the way I like to think about it is that about 70% of your resources should go into horizon one. But again, remember, if you have a team or if you have other resources other than yourself, those are the resources you want to put into horizon one, right?
Because horizon one should not involve a lot of high-level CEO thinking anymore. It has graduated. It is the core business.
It should run on its own as much as humanly possible. But 70% of the resources go to that. 20% of your resources will go to horizon two.
And that's, again, looking for opportunities in horizon two, getting them developed, getting them started. And then the goal always is if it works, graduate it to horizon one, right? So if you have an idea in horizon two to extend the business, that idea doesn't stay there forever.
It only stays there as long as it takes to get it up and running and to bump it into part of the core business. That's part of our goal here, right? There's attrition.
Some things in the core business will come out. So we want these horizons are always flowing. We want ideas from horizon two to be graduating into horizon one.
So we spend 20% of our time. And again, this is now going to start taking some of your time because this is a little higher level thinking. So you spend more time in that horizon two thinking and doing, right?
So that you can get it graduated into horizon one. And then horizon three gets 10% of your time. So we want to be keeping our eye on the ball for the future.
If you have an innovation team, you know, if you're a bigger organization, this is where some of that stuff would be happening. But when you look at a big enterprise, if you look at, I'll just make this up. You look at Coca-Cola, you look at their innovation team, right?
Probably within all of Coca-Cola, like their innovation team might take 10% of the time. And so you as a micro small business want to be thinking about big innovation ideas 10% of the time. And again, that's the goal of taking a horizon three things and then finding the ones with the most opportunity.
And maybe they start moving into a horizon two activity. And so that is the three horizons framework. Again, I'm a huge fan of it.
There are a million other ways you can adapt it to business that I could talk about all day long. But this is the most important one. And especially again, when we're talking within our themes of the season and understanding opportunity and doing things a little better because things matter more.
I really wanted to remind you that horizon two exists, right? And so if you're sitting on all those ideas or if you're sitting on no ideas, let's think about what horizon two looks like. Or let's think about are you tinkering around in horizon one too often?
Are you spending too much time there and not giving yourself time to think about horizons two and three? All right, let's talk about a few examples on what this might look like. Are you a course or a group program person, right?
If you are somebody who is offering group programs, courses, any kind of productized group environment of any kind, what does this typically look like? Well, your horizon one is whatever you're selling right now, right? So if you have a group program, it's whatever the current curriculum is.
And yeah, maybe you have to show up and deliver it. But let's not be reinventing that curriculum every single time. If you have to update it, totally appropriate.
But you don't want to be thinking before every cohort, how can I totally scrap this curriculum and try it all again? Instead, you want to be thinking about what are some of my horizon two opportunities if I have a course or a group cohort? Is there an alumni offer that would be appropriate when people are done?
Is there some sort of collaboration where I can send these folks to someone else when they're done based on what they need, right? How can we extend that thing? Does the program need to be extended for a month and therefore does it cost more?
That would be a legitimate thing to be asking. That's what you want to be thinking about if you're a course or group program person. And then your horizon three very much might be about, hey, what are other markets that I can penetrate?
So again, let's make this up. Let's say you teach a course on public speaking and you've always taught that to entrepreneurs. Well, maybe you start thinking about a different group and experimenting with other groups that you might be able to penetrate in order to build a new business or build a new version of this thing.
That would be an example there. Or if you are somebody who has a lot of new ideas and you are not sure how to categorize them or how to prioritize them, again, my multi-passionates, we can reverse engineer your thinking and kind of get these things into horizons so that you don't have just a bunch of disparate stuff going on. So if you have a ton of ideas, what I want you to think about first is, hey, what actually is the core?
What is the core thing that I'm doing? What can I tag as the core business? And then of all my ideas, which ones could I tag as horizon two?
Which ones are extensions of that core idea? And then horizon three, which ones are ideas just totally out of the blue that are completely different? And that will start to give you an opportunity to, number one, really identify what your core is, kind of commit to that.
Get that down so that you have something that can just run on its own and then start thinking about, okay, now that I have that, what are some of the fun ideas that just extend that? And then what can I go play with beyond that? And that works really well for some of my multi-passionates because it allows you to have a lot of ideas, but it also gives you a little bit of leeway and a little bit of structure to be thinking about what comes first.
So that's going to be my invitation to you is to take this idea again of these three horizons and start jotting your ideas into them or start jotting your current products into them, what you're working on. And let's make sure that if you have a core product that you're working on something that extends that thing and you're not just working on things that are totally new, you know, horizon three stuff. And I would love to hear what you do with that, what ahas you might have from that and how this might help you again, get some of that noise out of your model, right?
Do things a little bit better, not be as scattered. And, you know, I raised my hand there too. I love to be scattered, but not be as scattered in a world where we need to be a little bit more buttoned down because this stuff just matters more.
Closing Thoughts
So my friends, if you were having trouble again, prioritizing your ideas, give these things a shot and reach out, let me know how it goes. I would absolutely love to hear it because as always, thank you for being here today. I absolutely love doing this show.
Love giving you some help. And it just brings me so much joy when someone reaches out and lets me know that the show has helped them. So if it's helped you, number one, I would love to hear from you.
And number two, I'd be so grateful if you would share it with someone else. And that always helps everybody find this. You know, I build this show as a resource library for you.
And so if you are willing to share something that helps, that just helps this information get out to more people. And then remember, you are always welcome to head to themichellewarner.com. Jump on my newsletter from there or even drop me an email or message letting me know what is going on with you.
I would always love to hear it. If you have a question and you're wondering, hey, how do I get a little bit better at this? What does it look like if this thing matters more in my business?
Drop me an email on my website. Would love to hear it and would love to tackle it for you in a future episode of this show. We will talk to you soon.