Three Horizons

Balance present realities with future visions to navigate sustainable change

1. Introduction

In today’s fast-paced world, businesses and organizations need tools that can help them balance present realities with long-term visions. The Three Horizons Framework, developed by Bill Sharpe, is designed to help leaders think strategically about the future, highlighting the importance of transitioning from the current way of doing things (Horizon 1 / H1) to a more sustainable future (Horizon 3 / H3) through innovative practices (Horizon 2 / H2). By using this framework, organizations can ensure they are not only meeting current demands but also driving innovation that aligns with sustainability and circular economy goals.

The Three Horizons Framework is a dynamic way to think about how the present reality will evolve, what a desirable future looks like, and what needs to happen in order to get there. This tool is particularly effective for managing change, fostering innovation, and supporting sustainable transitions.

2. When to use this tool

The Three Horizons Framework is useful when organizations need to navigate significant change, whether driven by technological disruption, sustainability goals, or market shifts. It helps leaders move from unsustainable practices to long-term solutions that align with circular economy principles.

  • Strategic planning: Use this framework to assess the current situation (H1), envision a sustainable future (H3), and identify the innovations needed to make the transition (H2). This helps ensure that short-term operational concerns are balanced with long-term strategic goals.
    • Example: A manufacturing company using H1 to identify the environmental shortcomings of its current processes, jumping to H3 to envision a future where all production is waste-free, and then using H2 to test new recycling technologies.
  • Innovation management: When introducing new products or services, this framework helps you focus on the long-term sustainability of your innovations. It provides a clear way to avoid getting stuck with temporary fixes and instead pursue innovations that bring you closer to your vision.
    • Example: A company developing electric vehicles (H2) may start by recognizing the limitations of traditional fossil-fuel cars (H1) and aim for a future of shared, autonomous electric transportation (H3).
  • Sustainable transitions: Organizations aiming to shift from linear, resource-heavy models to circular economy practices can use this framework to plan phased transitions. It helps balance the immediate need for sustainability improvements (H2) while keeping an eye on the broader future vision (H3).
    • Example: A retail brand aiming to eliminate single-use packaging might assess its current wasteful practices (H1), envision a future with closed-loop systems where packaging is entirely reused (H3), and then experiment with sustainable materials (H2).
Three Horizons / Bill Sharp

3. How to use this tool

Step 1: Identify why the current situation needs to change (H1)

Horizon 1 represents your current way of operating, which may still be profitable but is increasingly unsustainable. The first step is to analyze the cracks in the current system and recognize why change is necessary. Some parts of H1 may still be valuable, but the system as a whole is on a decline.

  • Activity: Evaluate your current operations. What practices are no longer fit for purpose? What environmental or social pressures are pushing you toward change? Identify which parts of your existing model need to evolve to stay competitive and sustainable.

Step 2: Envision the ideal future (H3)

Horizon 3 represents the aspirational future where sustainable and innovative practices dominate. This is the future state you want to work toward. It may seem far off, but it’s important to define what the ideal version of your organization or industry looks like.

  • Activity: Imagine a future where your organization has fully transitioned to sustainable practices. What does this look like? How does your business operate in this future? Define the goals you want to reach and what a circular economy would mean for your industry.

Step 3: Develop ideas to bridge the gap (H2)

Horizon 2 represents the innovations that help transition from Horizon 1 to Horizon 3. These can include incremental improvements that patch the current system as well as more transformative innovations that genuinely move you toward your future vision. The goal is to prioritize innovations that support the long-term shift.

  • Activity: Identify emerging trends and innovations that could help you move from H1 to H3. What new technologies, business models, or ideas can help you get closer to your vision? Distinguish between innovations that are just temporary fixes and those that truly transform your business.

4. What outcomes to aim for

  • Short-term efficiency, long-term transformation: By managing Horizon 1 effectively, you can maintain the competitiveness of your current operations while keeping a clear focus on your Horizon 3 sustainability goals. Horizon 2 serves as the bridge, with innovations that drive transformation without sacrificing short-term stability.
  • Sustainable innovation pipeline: Horizon 2 innovations should include a mix of small-scale improvements and larger shifts toward the desired future. By consistently experimenting with new ideas, you build a pipeline of sustainable innovations that will evolve over time.
  • Future-proof your business: By setting your sights on Horizon 3, you are positioning your organization to succeed in a future shaped by sustainability and resource efficiency. The innovations developed in Horizon 2 ensure that you can transition smoothly and avoid being left behind by disruptive changes.

5. How to take this further

  • Expand Horizon 2 innovations: Once you’ve mapped out your horizons, invest more in transformative Horizon 2 innovations that help bring you closer to your Horizon 3 goals. Pilot projects, partnerships with sustainable tech companies, and investments in green infrastructure can accelerate the transition.
  • Respectfully end harmful practices: As you progress from Horizon 1 to Horizon 3, it’s essential to identify practices that are not only outdated but actively harmful to the environment or society. Rather than abrupt terminations, consider how to end these practices in a way that minimizes disruption to employees, customers, and stakeholders.
    🔗 Check out the All's Well That Ends Well tool in the Doula craft.
  • Foster a culture of Futures Thinking: Encourage your teams to think beyond immediate goals and embrace long-term sustainability. Hold regular workshops to explore Horizon 3 scenarios and challenge the status quo in Horizon 1.

6. Resources and references

  • Books: The Three Horizons: The Patterning of Hope by Bill Sharpe; Cradle to Cradle: Remaking the Way We Make Things by William McDonough and Michael Braungart
  • Tools: Scenario planning and foresight tools (e.g., Miro, Lucidchart); Circular economy frameworks from the Ellen MacArthur Foundation
  • Courses: Circular Economy and Sustainability Strategies (Coursera, Ellen MacArthur Foundation); Strategic Innovation Management (Wharton Business School)
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