The pace of change and competition in today’s business environment is arguably faster than ever before. This situation has occurred, thanks in large part to the adoption of technology across virtually every aspect of business and culture — especially in light of the pandemic. Here is how your organization can get proactive about market erosion.
Be more flexible, adaptable and remote-friendly.
Businesses increasingly realize they need to be more flexible, remote-friendly, and adaptable. In many cases, technology is powering those changes.
The Problem with so Much Demand
In the short term, the influx of demand for technology is good. But over time, it brings more competition into markets.
As a result of technologies evolving rapidly and ideas spread more quickly than they once did — businesses using the same new technologies to deliver more modern services see increased competition in a short amount of time.
Prices then decrease, and the commodification of more and more products and services occurs.
Add to this the increasingly fickle nature of consumer demand and the ever-present possibility of another disruptive technology changing the entire landscape as we know it, and you have an environment perfectly set up for market erosion.
Is There a Solution?
How can companies prevent this? When even successful services quickly become commoditized or replaced, is it still possible to forecast future trends rapidly enough to avoid market erosion?
Absolutely.
The Three Horizons Model
One of the most effective ways to combat erosion and stay on top of future trends involves changing how you approach growth. The three horizons model is designed to help businesses do just that.
In its most basic form, the “three horizons model” is a strategy designed to help you manage and better understand growth by breaking it up into three distinct categories (called horizons).
The Horizons
1. Core business.
2. Emerging opportunities.
3. Cutting-edge business.
The horizons model enables businesses to maintain their current profitable services and best determine what customers will want next. It shows companies how to focus not only on their present successes but also on adapting to maintain market position.
How the Horizons Create Staying Power
Based on my digital marketing and advertising experience, different services come and go — and have been forced to adapt to those changes. Flash banner ads, campaign microsites, and Facebook apps are just a few of the technologies that seemed to be the next big thing one minute and then quickly faded away the next minute.
It’s telling that not every company that trafficked in these services is still around. In today’s world, businesses that keep track of supply and demand data while watching for the changes to forecast future trends will be the ones that stick around for the long haul.
Maximizing the Three Horizons Model
The three horizons model can help you develop the habits you need to confidently bet on growth and be ready to handle anything thrown your way. Here are four practical ways to maximize results with this growth management plan:
1. Take full advantage of your CRM.
This is one of your best weapons in the fight against market erosion, and it’s one that you’re likely not using to its fullest extent. Use your CRM to define funnel stages and probabilities that make sense for your business. Enter every deal into your CRM in the appropriate stage, being as clear as possible about what’s required for a deal to move from one stage to the next. This will give you the full, clear picture you need to keep everything moving forward.
2. Price and plan deals in your CRM, starting now.
Too many organizations don’t take the time to price and plan early deals because of the work involved. Making the effort up front means you can understand resource demand. Resource demand, in turn, lets you better predict potential project margins and points at which revenue might be recognized.
Understanding resource demand and projecting potential will give you insight into the evolution of your business that’s much more valuable than a simple revenue percentage. You’ll also get a better idea of your differentiated value proposition.
3. Treat the first and second horizon differently.
The three horizons model is designed to help you tackle separate revenue areas concurrently, but that doesn’t mean you should approach each horizon in the same way. This is especially true when it comes to how you handle your bread and butter (horizon one) and your emerging innovations (horizon two).
The first is all about extending the life of your foundational services and making them as profitable as possible; the second is about identifying the work that’s growing and how it’s influencing business.
4. Pay attention to culture.
To successfully forecast future trends and keep each horizon strong, you can’t just focus on your business. You have to pay attention to changes and trends in the world at large. What forces are at play in the broader culture? How might these forces change the demand for your services?
What new demands might be on the horizon? Ask yourself these questions regularly to prevent erosion. In the words of Ferris Bueller, a kid wise beyond his years: “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”
What is the Strategy?
The three horizons model is neither an innovation strategy nor some sort of miracle plan that will insulate you from market changes. It’s simply a model designed to help you manage growth and prevent market erosion — and a model that works.
Ultimately, it’s up to you to put in the work to ensure each product area is where it needs to be. Pay attention to supply and demand data, cultivating each horizon in the unique way it requires. That effort will be rewarded with sustained growth and a real chance at staying on the cutting edge for years to come.
Image Credit: cottonbro; pexels
