
The Three Box Solution, written by Vijay Govindarajan, is a groundbreaking book that offers a strategic framework for companies to balance and manage their often competing realities of the past, present and future. The book adapts an ancient Hindu philosophy and presents it in a business context, offering a simple vocabulary and a set of tools that can be cascaded throughout the organization.
The Three Boxes
The concept of the Three Boxes Solution is deceptively simple and consists of three boxes representing the past, present and future:
Box 1 represents managing the present (Sustain). It is about managing current operations, products and services, meeting the company's performance requirements with its core business, which generates most of the current profits. The focus here is on efficiency, execution and maximizing the value of existing products and services.
Lesson learned: Do not neglect the core business. It provides the resources needed to invest in future projects.
Box 2 is about selectively forgetting the past (simplify). It is about leaving behind practices, products or business models that are no longer relevant or profitable and outdated assumptions that may have led to success in the past, but hinder future growth.Ā
This Box encourages critical evaluation and elimination of baggage that no longer serves the business.
Lesson learned: Be willing to question old models to take advantage of new opportunities.
Box 3 is about creating the future (Innovate). It is about experimentation, exploration and fostering new ideas and creating entirely new products or services with business models that will drive the company's future growth and success. It fosters a culture of calculated risk and embraces disruptive technologies and business models.
Lesson learned: Innovation does not happen by accident. It requires a willingness to take risks, experiment and adopt disruptive thinking. Dedicated space must be created to explore the future and develop innovative solutions.
Lessons from the three-box solution
Embrace the cycle
The Three Box Solution is deeply rooted in Hindu cosmology, which postulates three gods: Vishnu, the preserver (Box 1), Shiva, the destroyer (Box 2), and Brahma, the creator (Box 3). This rhythmic and cyclical activity of creation, preservation and destruction is rethought for business.
Balance is the key
No one box is more important than the others. A successful company must balance the activities of all three boxes to sustain and innovate.
The future is unknown, but not impossible to plan for.
Because the future is essentially unknown, leaders must do three things to create something new. They must:
Meet the performance requirements of the current business while radically reinventing it.
Envision a change in the current model before a crisis forces them to abandon it.
Plan for the opportunity to create a successful future.
Communication is crucial
The Three Boxes Solution serves as a communication tool within the organization, creating a common language to prioritize their projects.
Final lessons and conclusions
Ambidexterity: Successful companies must be ambidextrous, able to manage their current core business while creating the future.
Resource allocation: Companies must allocate resources strategically in all three boxes, balancing short-term performance with long-term growth.
Forgetting the past: Letting go of outdated practices and business models is crucial for innovation and growth.
Embrace disruption: Companies must actively seek out and embrace disruptive opportunities rather than clinging to the status quo.
Experimentation and failure: Creating the future involves a willingness to experiment, take risks and learn from failures.
Leadership and culture: Fostering a culture of innovation and risk-taking is essential, and leaders must champion and support the three-box approach.
Govindarajan stresses the importance of keeping these boxes separate. Core business (Box 1) should not stifle innovation (Box 3), and assumptions from the past (Box 2) should not cloud the path to the future.
The Three Box Solution offers a practical and proven method for allocating resources and organizing strategy for leaders who want to step out of their comfort zone and steer their companies toward a more innovative and sustainable future, with an emphasis on developing future innovation. Companies can learn to balance the present, shed the past and create a prosperous future.
Bibliography
Govindarajan V. (2016). The Three-Box Solution: A Strategy for Leading Innovation. Publisher Harvard Business Review Press.
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