"All this falls by the wayside when a major disruption strikes the sector, typically led by a venture-backed start-up with everything to gain and nothing to lose. Now the Horizon 1 business is under immediate pressure to reform, not so much from direct competitors (although they are always present) as from the new categorical displacements that threaten its very existence. A company like Kodak finds itself fighting not Fuji so much as digital photography, the Washington Post not so much the New York Times as digital media.
Under such pressure, executive management turns anxiously to Horizon 3 to find next generation technology by which to engage this new business model, be that coming from the labs or from an acquisition, and then mounts an aggressive Horizon 2 effort to bring it to market.
Here, however, its methods fail. Its Horizon 3 products and teams are rarely a match for the scrappy entrepreneurs and their venture-backed start-ups with whom the company now competes, and the inside team gets little help from a Horizon 1 sales force that is still being compensated to sell the legacy offer set. In addition, the Horizon 2 initiatives are consuming cash at a fearsome rate just when Horizon 1 P&L’s are struggling to maintain margins. At some point the CFO calls a time out during which the company sadly discovers its best move is actually to retreat from Horizons 2 and 3 altogether and prop up Horizon 1 margins with some deep cost cutting. In the short term a reckoning has been deferred, but the existential threat has by no means been addressed, and the company’s power has been further eroded. The end result over time is an inexorable marginalizing of the business and its brand, ultimately culminating in a period of consolidating acquisitions among last-generation legacy franchises."
*Source: https://www.linkedin.com/pulse/chapter-two-four-zones-geoffrey-moore