This is the third in a series of blogs on the Three Horizon Framework and follows my initial article called “Have you considered the Three Horizon Approach” and followed by “The Value of Managing Across The Three Horizons“.
Initially I gave a short introduction to the three horizon approach arguing we should take a more evolutionary perspective across the entire innovation business portfolio by using this model.
Going beyond the introductions and arguments on why this three horizon framework is really valuable for innovation. I plan to explore here some more of the thinking behind the Three Horizon model with some suggested approaches to managing this. To help me within this series I’ve drawn on different thoughts, views and articles by various authors and these are referenced at the end of the related blog “Navigating the Three Horizons Framework- An Emerging Guide”.
I’ve also added some further interpretation to a number of visuals I have found are useful that significantly help understand the value of the Three Horizons in aligning innovation and strategy, so it connects the present with the future in a useful way.
The Innovation Clustering within the different Horizons
The future never stays the same
Much of what we do today is the dominant force behind where we go in the future. What we must be constantly alert too is all the emerging changes that are taking place. We need to pick up on the often ‘weak signals’ that can lead us out of often completely radical change within our industry or the society we serve.
The problem for much of management is that often anything discussing the future enters the ‘zone of uncertainty’ and this ability to often ‘read the tea leaves’ determines the future health of the organization. Ignore these shifts or signals and you are on the path to your own ‘destruction’. Knowing how to frame these contributes significantly to reduce down the ‘zone of uncertainty’ into understanding what is tangible, what still remains open and intangible and what has emerging value to explore in different ways.
We do need to use tangible data where we can but as we move towards a more ‘uncertain’ or “fuzzy future” we need to look at other means to convey opportunity. These could be in presenting different scenario’s of the future and where your products might fit. It might take an even more ‘futuristic’ look through different techniques. The future never stays the same but we need to begin to talk about it and then make plans to work towards ‘rough’ outlines that we can detect through many present but ‘weak signals’.
The ability to scan the horizons
Not only should we search for possibilities that extend and strengthen our existing core offerings but we should search out on a wider basis. We need to often challenge our existing assumptions, gather different views of the world, spot shifts taking place within our markets so we can anticipate and prepare more for inevitable change that simply occurs more and more. There are different steps to this scanning and this visual provides a useful process of moving from scoping to developing a response to the ‘threat’ or shift.
It is also useful to think about the way to fund and resource these different horizons
Managing across the stages with the Three Horizons
This approach fits with existing management thinking but it works really well within the Three Horizon framework as outlined in the visual. The ability to create, to build and extend occurs within the three horizons. It is investing in all three horizons but in appropriate levels of allocation, time, resources and more importantly different skill and capabilities. How much is dependent partly on your conditions but more importantly on how much you attach to wanting to plan and commit for your future health and well being.
A example of allocating appropriate resources
Possible Three Horizon Investment Portfolio Allocation
In this example, as the knowledge of the market grows and the emerging understanding of technology you have different horizons to invest in, to allocate your funds and resources. Firstly those that continue to build on the existing market that is currently known and served (H1). Then those that exist but you have not yet fully understood or entered but seem to be potential places where disruption might happen. Then you need to be represented (H2) and finally, then those new markets, that become new categories, even radical that might change the market dynamics where you must have some ‘readiness and awareness of’(H3). Perhaps you invest your resources on this 70:20:10 basis as an example and is often seen as the ‘rough’ rule of thumb to at least start with.
The need is to define your route so as to navigate the different horizons.
An emerging framework developed for myself to clarify the really important differences and where to place the emphasis is explained next, in a separate and final blog of the three horizon trilogy, before we then wrap this series with some grouping activities and leave you with an open question on how you want to manage across this.
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