The “horizons of growth” model has been an effective growth strategy that IBM has used for a long period. The mode involved the segmentation of the company business entity into three different horizons: H1, H2, and H3. Each of the three business horizon represented a different stage of development. The success and growth of IBM can be attributed to this growth model. Its different business portfolios were growing at different rates and it was therefore necessary to accord different degrees of attention to each of one of them. The model was at fist problematic to managers because they did not possess adequate knowledge to enable them to apply it to different business venture the company was engaging in. The model was particularly effective because of several factors. For example, it enabled managers to improve productivity by cutting operation costs and hence improve the company’s performance. Secondly, the model enabled the company to evaluate its performance and identify its weaknesses.
For example, H3 businesses were poorly developed. This realization was important in helping the management to develop strategies that would propel the growth of the businesses to greater heights. The model was effective and brought growth to IBM. However, it failed in certain aspects. It presented organizational collisions because each of the horizons had a unique management system. This means that IBM had three different management systems that were supposed to work in harmony and comply with the overall organizational structure. This presented great problems to managers in their efforts to reconcile the systems to the organizational structure. In addition, it lacked proper guidelines to promote a business form one status to another.
The EBO management system evolved from humble beginnings to become a mainstream organizational system at IBM. Initially, the system presented great problems to managers. They experienced difficulties in executing the horizon growth model, which was a vital component of the EBO management system. The senior management of IBM collaborated with its managers to classify its businesses into the three horizons, which heralded the EBO system. Emerging business opportunities (EBO’s) were classified as H1, H2, and H3. The CEO later reiterated that the company’s main goal was revenue growth, which would be achieved by implementing the EBO management system to all businesses. His great interest in EBO management system improved the degree of embracement by managers and employees.
The key elements of the current EBO management system include quality leadership, tracking and monitoring, strategy development, and adequate resources. The current system has quality leadership because of competitive recruitment and selection of leaders based on their qualifications. In addition, selected leaders were evaluated regularly to determine their performance and contribution towards the EBO system. The current system has a better system of strategy development that the previous system. A leader conducts thorough research concerning a certain market and all its components such as target customers. Another aspect of the current system is availability of resources to fund emerging businesses. The current system offer managers opportunities to source funds to finance their divisions. Initially, managers had to find their own ways to finance businesses that were under their division.
This reduced growth and led to underdevelopment of most businesses. The current system fosters discipline and accountability because of tracking and monitoring of business strategies and financial operations. The system is highly effective because of the new components. For example, tracking and monitoring financial operations and leaders’ performance ensure that leaders put all their efforts in ensuring that the businesses meet the goals of the organization in term of revenue and growth. In addition, it presents strategies to fuse the businesses with the organization thus reducing costs and increasing growth. It could be developing assessment programs to evaluate the performance and level of success of these components.
There several ways that Harreld should deal with businesses reaching H2 status. First, he should establish clear guidelines as to how they should be handled in order for them to grow. These guidelines should include appropriate location and management system for the business. In addition, he should include guidelines on when the business should be moved to the next level. Secondly, he should allow the businesses to operate on their own by freeing them from control of the EBO management system. This will allow them to develop new ideas and strategies that will foster growth and development of new opportunities. Keeping them under the EBO management system limits them because of the stringent guidelines of the system. Thirdly, he should facilitate the transition of the businesses in order to avoid stagnation and develop ways to discover new opportunities. Harreld should increase the number of EBOs by hiring more staff to develop corporate strategies that will facilitate the development of EBOs. The main strategy is to increase the output of corporate strategy staff. This can be achieved through offering them incentives and rewards. In addition, Harreld should allow businesses to operate independently without the control of the EBO management system. This is important because under the EBO system, the businesses cannot diversify their operations. Diversity could lead to discovery of new opportunities.