Three Horizons Framework
for Activities of call centres (ISIC 8220)
The Three Horizons Framework is highly relevant for the 'Activities of call centres' industry due to the rapid technological advancements (e.g., AI, automation), evolving customer expectations, and intense competitive pressures. The industry faces an urgent need to simultaneously optimize existing,...
Strategic Overview
The 'Activities of call centres' industry is navigating profound transformation, grappling with "Shrinking Demand for Basic Services" (MD01), "Sustained Margin Pressure" (MD03), and the imperative for "High Investment in Transformation" (MD08). The Three Horizons Framework provides a critical structured approach for call centre operators to manage this transition by balancing optimization of current operations with strategic investments in future growth and innovation. It acknowledges that simultaneous focus is required on defending the core, building new capabilities, and exploring disruptive opportunities.
Horizon 1 (H1) focuses on optimizing existing call centre operations, enhancing efficiency, and improving the quality of current service offerings. Horizon 2 (H2) involves scaling emerging opportunities, such as specialized BPO services, advanced analytics, or omnichannel integration. Horizon 3 (H3) is dedicated to exploring radical innovations and entirely new business models, like generative AI-driven customer experience platforms or data monetization strategies. This framework is essential for ensuring long-term relevance and competitiveness, particularly in an industry facing rapid technological shifts (IN02) and significant "Talent Reskilling Imperative" (MD01).
4 strategic insights for this industry
Horizon 1: Optimizing the Core for Survival and Funding
The primary 'job' of Horizon 1 for call centres is to make existing voice, email, and basic chat services as efficient and high-quality as possible. This involves leveraging RPA for repetitive tasks, improving agent training for current services, and streamlining workflows to reduce operational costs and fund H2/H3. Failure here exacerbates 'Sustained Margin Pressure' (MD03) and hinders future investment capacity.
Horizon 2: Building New Value Propositions and Scaling Emerging Solutions
Horizon 2 involves scaling proven innovations that address emerging customer needs or new market segments. This could include developing specialized BPO offerings (e.g., healthcare patient support, fintech compliance), advanced analytics as a service, or integrating sophisticated AI-powered virtual agents for complex inquiries, moving beyond basic chatbots. This is key to differentiating and addressing 'Difficulty in Differentiation' (MD07).
Horizon 3: Exploring Radical Futures and Disruptive Models
Horizon 3 focuses on speculative, long-term opportunities that could fundamentally change the industry. For call centres, this might involve developing fully autonomous AI-driven customer experience platforms, leveraging customer interaction data for new monetization strategies (ethical considerations paramount), or creating decentralized, blockchain-based customer support networks. This addresses 'Market Obsolescence & Substitution Risk' (MD01) but carries 'High Investment in Transformation' (MD08) and high risk.
Balanced Resource Allocation Amidst Financial Constraints
The framework highlights the necessity of allocating resources—financial, human, and technological—across all three horizons. Underfunding H2 and H3 risks future irrelevance, while over-investing in H2/H3 without a robust H1 can destabilize the core business. This is crucial given 'Sustained Margin Pressure' (MD03) and the need for 'Difficulty in Cost Recovery' (MD03).
Prioritized actions for this industry
Establish distinct portfolios and funding mechanisms for each Horizon.
To avoid H1 activities cannibalizing H2/H3 innovation, dedicate separate teams, budgets, and governance structures for each horizon. H1 focuses on operational excellence, H2 on scaling proven concepts, and H3 on exploratory R&D. This helps manage the inherent tension and different risk profiles of each horizon, addressing 'Resource Allocation for R&D and Pilot Programs' (IN03).
Implement RPA and AI for H1 efficiency gains to free up resources for H2/H3.
Automate routine, high-volume, low-value tasks (e.g., password resets, basic FAQs, data entry) using Robotic Process Automation (RPA) and basic AI chatbots. This reduces operating costs, improves consistency, and allows human agents to be reskilled for more complex, empathetic interactions in H2/H3 areas, directly addressing 'Sustained Margin Pressure' (MD03) and 'Talent Reskilling Imperative' (MD01).
Develop and pilot specialized BPO service lines (H2) targeting niche high-value sectors.
Instead of broad, commoditized services, focus on developing expertise in sectors like healthcare (e.g., patient intake, insurance claims), finance (e.g., anti-money laundering compliance, complex loan processing), or tech support for advanced products. These specialized services command higher margins and offer differentiation (MD07), moving beyond 'Shrinking Demand for Basic Services' (MD01).
Actively explore and invest in H3 partnerships for next-generation CX technologies and data monetization.
Engage with AI startups, academic institutions, and big tech companies to explore how generative AI, advanced analytics, and novel interaction paradigms (e.g., metaverse CX) could reshape customer service. Establish R&D labs or venture capital arms to invest in these areas, ensuring the call centre isn't left behind by future disruptions (MD01), despite 'High Capital and Operational Expenditure' (IN02).
From quick wins to long-term transformation
- Conduct an internal audit to categorize existing projects and investments into H1, H2, and H3.
- Implement small-scale RPA pilot for a high-volume, low-complexity H1 process.
- Form a dedicated 'Future Trends' committee (H3) to monitor emerging CX technologies.
- Develop distinct KPIs and reporting structures for each Horizon's portfolio.
- Launch a pilot program for a specialized H2 service offering in a new vertical.
- Re-skill a portion of H1 agents for H2 specialized roles or as AI trainers/supervisors.
- Integrate Horizon planning into the annual strategic planning and budgeting cycle.
- Foster a culture of continuous innovation, where H3 experiments inform H2 and H1 improvements.
- Establish an 'innovation lab' or dedicated H3 incubator with external partnerships.
- Under-resourcing H2 and H3 due to immediate H1 pressures.
- Lack of clear distinction: Mixing H1, H2, and H3 projects within the same team or budget.
- Organizational resistance: Stakeholders prioritizing short-term H1 gains over long-term H2/H3 investments.
- Failing to kill H3 experiments that show no promise, wasting resources.
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| H1: Operational Cost per Interaction | Measures the cost efficiency of current, core service delivery, aiming for reduction. | 5-10% year-over-year reduction in specific H1 service lines. |
| H2: Revenue from New Services/Clients | Tracks the financial growth attributable to scaled-up, innovative service offerings. | 15-20% of total revenue from H2 initiatives within 3-5 years. |
| H2: Customer Adoption Rate of New Channels/Services | Measures how quickly customers embrace newly introduced H2 services or interaction channels. | 25% adoption rate within 12 months for new channel. |
| H3: Number of Piloted Innovations / Strategic Partnerships | Counts the number of experimental initiatives or collaborations with future-oriented technologies. | 3-5 active H3 pilots/partnerships annually. |
| H1: Customer Satisfaction (CSAT) for Core Services | Measures customer satisfaction with existing, optimized services to ensure quality is maintained. | Maintain or increase CSAT by 2-3 points. |
Other strategy analyses for Activities of call centres
Also see: Three Horizons Framework Framework