Can three boxes transform your organization? Vijay Govindarajan, a professor at Dartmouth University’s Tuck School of Business, and business leader Brian Goldner think they will, allowing you a strategic and practical way to get your bearings and communicate where your organization is heading. The “three-box” planning method, developed by Prof. Govindarajan and used by Mr. Goldner at Hasbro, Inc., where he is CEO, is explained on HBR.org :
The three boxes
The starting point is to look at the projects you plan to implement in the next 12 months. Sort them, according to purpose and time frame, into three figurative boxes that will serve as a form of organizational to-do lists.
One set of projects goes into Box 1: These are the ones that are improving the performance of your core business. Another set is placed in Box 3 – the ones that are truly innovative and fundamentally change your business.
Box 2 covers the efforts geared to overcome the dominant logic in your organization, the things that hold you back in your various attempts to effect change. For example, a project in Box 2 might be a plan to recruit more people from the outside, since they tend to challenge the status quo.
Striking the right balance
Organizations tend to favour Box 1 over the other boxes, because we tend to be focused on the present. But you need a balanced approach, with projects in all three boxes – and you need to protect the efforts in the last two boxes from the tyranny of the urgent, ensuring that the projects they contain aren’t easily tossed aside. If you plan to assign 20 per cent of your resources to Box 3, maintain that when the impulse is to focus elsewhere.
The difficulty of Box 2
Box 2 is the most challenging and, in a company that has been around a long time, requires introspection, Mr. Goldner says. This examination might be personal, such as considering the ways that you, as a leader, think about the world. It might focus on existing relationships that get in the way of progress. It might be about a previous business that was successful or not, and what memories linger. “You need to remember that others went through those past experiences with you and may need to do their own forgetting or remembering,” Mr. Goldner says. “For example, how do you sell a board of directors on a strategy that sort of smells like a strategy that may not have worked before?”
Success in Box 3
Box 3 – innovative thinking – gets much advice these days from various strategists. These authors suggest you need a dedicated team to pursue Box 3 ideas. That team can’t be isolated from your core business, but must be linked to it because there will be certain assets and capabilities you want to leverage in your innovation efforts. Try experiments to test your assumptions and hypotheses about the future.
The CEO’s role
The chief executive officer needs to set aside time in management meetings not only for operational reviews but also to discuss progress in Box 3 projects. Mr. Goldner reviews his calendar every week to see if he is allocating enough time to boxes 2 and 3. He considers the three boxes like a Russian nesting doll, each influenced by the size and shape of the other.
If you plan to adopt this approach at your company Mr. Goldner stresses you don’t have to figure it out alone: “Find a core group of people that you can trust to be honest about what you know and what you don’t know, and what you need and don’t need.”
Harvey Schachter is a Battersea, Ont.-based writer who writes Monday Morning Manager for The Globe and Mail's T.G.I.M. page, management book reviews on Wednesdays and an online work-life balance column on Fridays.