BPS - Unit 1

A) What is McKinsey's Three Horizons of Growth?
McKinsey’s Three Horizons of Growth are all about keeping you focused on growth and
innovation. This strategy framework requires you to categorize your goals into 3 different
‘horizons’:
Horizon 1: Maintain & Defend Core Business
Activities that are most closely aligned to your current business.

Most of your immediate revenue making activity will sit in horizon 1. For a retailer, this
would include the day-to-day goals associated with selling, marketing and serving your
product/customers. Your goals in horizon 1 will be mostly around improving margins,
bettering existing processes and keeping cash coming in.
Horizon 2: Nurture Emerging Business
Taking what you already have, and extending it into new areas of revenue-driving activity.
There may be an initial cost associated with your horizon 2 activities, but these investments
should return fairly reliably. This is based on them being an extension of your current
proven business model. Examples of this could include launching new product lines or
expanding your business geographically or into new markets.
Horizon 3: Create Genuinely New Business
Introducing entirely new elements to your business that don't exist today.
These ideas may be unproven and potentially unprofitable for a significant period of time.
This would encompass things like research projects, pilot programs or entirely new revenue
lines that require significant upfront investment.
What does McKinsey's Three Horizons of Growth help me to achieve?
Most organizations want growth. Most organizations also acknowledge that innovation is a
critical component of achieving that growth. Yet so many of them treat innovation as one-
off events. Such as a huge project to be delivered, or a set 'innovation program' to be
introduced. One of the most common reasons for this approach is the perceived gap
between the innovation of tomorrow versus the reality of running the business today.
McKinsey's Three Horizons of Growth aims to help you bridge this intellectual gap. It does
this by creating stepping stones between running your business profitably today
and growing it for the future.
This strategy framework helps ensure that you consistently balance your focus between the
needs of today (horizon 1), the future state of your business (horizon 3) and the steps that
you need to take to get there (horizon 2).
The Three Horizons of Growth framework is an extremely versatile strategy framework,

applicable to most organizations.
B) Need for a mission statement

1. IT DETERMINES THE COMPANY’S DIRECTION
Smart business owners use this statement to remind their teams why their company exists
because this is what makes the company successful. The mission statement serves as a
“North Star” that keeps everyone clear on the direction of the organization. And as Andy
Stanley says, “It’s your direction, not your intention, that determines your destination.” This
leads to the second reason.
2. IT FOCUSES THE COMPANY’S FUTURE

Many people refer to this as the “vision” which is different than the mission. The vision is
about a preferred future. Where will you be in 1 year? 3 years? 5 years? The mission tells us
what we’re doing today that will then take us where we want to go in the future.
3. IT PROVIDES A TEMPLATE FOR DECISION-MAKING

A clear mission sets important boundaries which enable business owners to delegate both
responsibility and authority. Mission is to the company what a compass is to an explorer, a
map to a tourist, a rudder to a ship, a template to a machinist. It provides a framework for
thinking throughout the organization. It provides the boundaries and guardrails you need in
order to stay on the path to your preferred future.
4. IT FORMS THE BASIS FOR ALIGNMENT
When a new employee is hired, it’s critical that the new hire know what the company does
and where the company is going. The mission statement forms the basis for alignment not
only with the owner, but the entire team and organization. Your team will all be on the
same page when it comes to what you do and why you do it, which leads to
better effectiveness and efficiency.
5. IT SHAPES STRATEGY
Each business and business owner need a strategy. But strategies must not be created in a
vacuum. Instead of looking at what’s new or what competitors are doing and trying to copy
them, wise business owners create the most effective strategies possible to accomplish the
mission their company is set out to accomplish.
6. IT FACILITATES EVALUATION AND IMPROVEMENT

It has been said that “What you measure will be your mission.” If you have a clear, written
statement of mission you will know exactly what to measure and how to measure it. Clarity
of mission brings clarity on every other level of the organization.
C) Bennis’s Core Problem:
1) Integrity
Integrity means alignment of words and actions with inner values. It means sticking to
these values even when an alternative path may be easier or more advantageous.
A leader with integrity can be trusted and will be admired for sticking to strong values.
They also act as a powerful model for people to copy, thus building an entire
organization with powerful and effective cultural values.
2) Dedication
Dedication means spending whatever time and energy on a task is required to get the
job done, rather than giving it whatever time you have available.
The work of most leadership positions is not something to do 'if time'. It means giving
your whole self to the task, dedicating yourself to success and to leading others with
you.
3) Magnanimity
A magnanimous person gives credit where it is due. It also means being gracious in
defeat and allowing others who are defeated to retain their dignity.
Magnanimity in leadership includes crediting the people with success and accepting
personal responsibility for failures.
4) Humility
Humility is the opposite of arrogance and narcissism. It means recognizing that you are
not inherently superior to others and consequently that they are not inferior to you. It
does not mean diminishing yourself, nor does it mean exalting yourself.
Humble leaders do not debase themselves, neither falsely nor due to low self-esteem.
They simply recognize all people as equal in value and know that their position does
not make them a god.
5) Openness
Openness means being able to listen to ideas that are outside one's current mental
models, being able to suspend judgement until after one has heard someone else's
ideas.
Openness also treats other ideas as potentially better than one's own ideas. In the
uncertain world of new territory, being able to openly consider alternatives is an
important skill.
6) Creativity
Creativity means thinking differently, being able to get outside the box and take a new
and different viewpoint on things. For a leader to be able to see a new future towards
which they will lead their followers, creativity provides the ability to think differently
and see things that others have not seen, and thus giving reason for followers to
follow.
D) Porter’s Value Chain Analysis

The Porter’s Value Chain Analysis focuses on the systems and activities with customers as
the central principle rather than on departments and accounting expense categories. This
system links systems and activities to each other and demonstrates what effect this has on
costs and profit. Consequently, it (Value Chain Analysis) makes clear where the sources of
value and loss amounts can be found in the organization.
The Value Chain activities

Porter’s Value Chain Analysis consists of a number of activities, namely primary
activities and support activities. Primary activities have an immediate effect on the
production, maintenance, sales and support of the products or services to be
supplied. These activities consist of the following elements:
Inbound Logistics
These are all processes that are involved in the receiving, storing, and internal
distribution of the raw materials or basic ingredients of a product or service. The
relationship with the suppliers is essential to the creation of value in this matter.
Production
These are all the activities (for example production floor or production line) that
convert inputs of products or services into semi-finished or finished products.
Operational systems are the guiding principle for the creation of value.
Outbound logistics
These are all activities that are related to delivering the products and services to the
customer. These include, for instance, storage, distribution (systems) and transport.
Marketing and Sales

These are all processes related to putting the products and services in the markets
including managing and generating customer relationships. The guiding principles
are setting oneself apart from the competition and creating advantages for the
customer.
Service
This includes all activities that maintain the value of the products or service to
customers as soon as a relationship has developed based on the procurement of
services and products. The Service Profit Chain Model is an alternative model,
specific designed for service management and organizational growth.
Support activities of the Value Chain Analysis

Support activities within the Porter’s Value Chain Analysis assist the primary
activities and they form the basis of any organization. In the figure dotted lines
represent linkages between a support activity and a primary activity. A support
activity such as human resource management for example is of importance within
the primary activity operation but also supports other activities such as service and
outbound logistics.
Firm infrastructure
This concerns the support activities within the organization that enable the
organization to maintain its daily operations. Line management, administrative
handling, financial management are examples of activities that create value for the
organization.
Human resource management

This includes the support activities in which the development of the workforce within
an organization is the key element. Examples of activities are recruiting staff, training
and coaching of staff and compensating and retaining staff.
Technology development
These activities relate to the development of the products and services of the
organization, both internally and externally. Examples are IT, technological
innovations and improvements and the development of new products based on new
technologies. These activities create value using innovation and optimization.
Procurement
These are all the support activities related to procurement to service the customer
from the organization. Examples of activities are entering into and managing
relationships with suppliers, negotiating to arrive at the best prices, making product
purchase agreements with suppliers and outsourcing agreements. Organizations use
primary and support activities as building blocks to create valuable products,
services and distinctiveness
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A) What is McKinsey's Three Horizons of Growth?

Horizon 1: Maintain & Defend Core Business

Activities that are most closely aligned to your current business.

Horizon 2: Nurture Emerging Business

Horizon 3: Create Genuinely New Business

The Three Horizons of Growth framework is an extremely versatile strategy framework,

B) Need for a mission statement

2. IT FOCUSES THE COMPANY’S FUTURE

3. IT PROVIDES A TEMPLATE FOR DECISION-MAKING

6. IT FACILITATES EVALUATION AND IMPROVEMENT

C) Bennis’s Core Problem:

D) Porter’s Value Chain Analysis

The Value Chain activities

Marketing and Sales

Support activities of the Value Chain Analysis

Human resource management

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