How to deal with balancing act between futures and the present through two different frameworks that share the name Three Horizons. Which one you are using changes what the tool is for.
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Most organisations are asked to do two things at once that pull against each other. Keep the current business running well enough that nobody panics, and at the same time prepare for a world that will make some of that business irrelevant. Those two jobs want different time horizons, different kinds of evidence, and quite often different people. Holding both is difficult, and the difficulty is structural, which is worth saying out loud because people caught in it tend to assume they are personally bad at their jobs.
Take Ann. She is a mid-level manager at a large company and she has watched it stagnate for about eight years. There is a mission statement on the wall, which nobody takes seriously, and the younger staff have a running joke about the one-step-forward, two-steps-back thing the company does with anything new. The chief executive retires next year on a decent stock option package. A new chief operating officer arrived recently and is squeezing the current business hard, so roughly half of Ann's team has either left already or has a CV out. Ann can see what the company ought to be doing. She cannot get anyone to look at it.
Ann is made up, though every part of her situation is borrowed from somewhere real. I keep coming back to her because that particular combination, seeing clearly and having no purchase, is where a lot of the people who end up in our workshops are sitting when they arrive.
Seeing it and acting on it are different problems
The usual way of explaining Ann's company is that it failed to notice. Blockbuster and Nokia get wheeled out, and the moral is that some organisations simply do not look up.
Both stories are more interesting than that. Blockbuster saw streaming perfectly well: John Antioco launched Blockbuster Online in 2004 and Total Access in 2006, which let online subscribers swap DVDs in physical stores for free, and by 2006 that business had two million subscribers. In one quarter of 2007 Netflix actually lost 55.000 subscribers while Blockbuster grew. What undid the company was roughly a billion dollars of debt from the 2004 spin-off, an activist campaign against the online investment, a fight over the chief executive's bonus, a successor who reversed the strategy, and then a credit crunch. At Nokia, Timo Vuori and Quy Huy interviewed 76 people from top management down to engineers and concluded that complacency, technical inferiority and lack of foresight were none of them the explanation. The engineers understood the threat. Shared fear between middle and top management, under real pressure to hit quarterly targets, meant the information got filtered on the way up until it arrived sounding fine.
Which is a more useful diagnosis, and a less comfortable one. Organisations mostly do see what is coming. The hard part is acting, because acting usually means threatening something currently profitable, or telling a senior person something they would rather not hear, or committing money on a timescale that outlasts whoever is in the chair. The present has an enormous advantage in any meeting: it has revenue attached, and people whose bonuses depend on it, and a set of numbers everyone already trusts.
So what Ann needs is less a way of spotting the future and more a way of getting it into the same conversation as the present, on terms where it can hold its own.
Two frameworks, one name
Ann's instinct, that the company needs some way of holding the present and the future at the same time, is right. There is a tool for it. There are also two different tools sharing the same name, and I used them interchangeably for a good while before I went and looked at where each one came from.
The first is the McKinsey version, from Mehrdad Baghai, Stephen Coley and David White in The Alchemy of Growth, published in 1999. Its three horizons are growth horizons, staged by how long until a business contributes materially to the bottom line: the core businesses producing today's profit, the emerging ventures expected to produce profit later, and then the small things, research projects and pilots and minority stakes, that might turn into something eventually. It is a portfolio model, and a good one. McKinsey's own later restatement is careful to say that the three have to be managed concurrently.
The second is the foresight version, which Anthony Hodgson and Bill Sharpe developed while working on a UK government foresight project, adapting the McKinsey model as they went. Andrew Curry and Hodgson set it out in the Journal of Futures Studies in 2008, Sharpe published Three Horizons: The Patterning of Hope in 2013 with a second edition in 2020, and the peer-reviewed version is Sharpe, Hodgson, Leicester, Lyon and Fazey in Ecology and Society in 2016.
There, the first horizon is the way things are done now, the business as usual. The third is the emerging pattern that will eventually succeed it. The second is the messy middle, described in that paper as the turbulent domain of transitional activities and innovations that people are trying out in response to the changing landscape between the first and third horizons.
And here is the part that keeps getting lost in translation. Sharpe and his colleagues write that "each way of doing things is present at all times, albeit to a greater or lesser extent." Curry and Hodgson are explicit about the departure from McKinsey: rather than portraying the horizons as successive waves of evolution, they characterised all three as existing in parallel, with different levels of influence at any one time.
So the three horizons are three patterns present in the room today, with different amounts of pull, and the framework asks you to see all three in the current moment.
The time-staging is easy to slide back into, and I do not think that is carelessness so much as the pull of the older and more familiar model. The UK Government Office for Science's facilitation worksheet, which is a good document otherwise, describes the third horizon as looking thirty to fifty years out. When that happens the tool has turned back into a planning-horizon exercise, which is useful in its own right and does something different from what Sharpe and Hodgson designed it for.
That difference matters practically. If the third horizon is a distant date, the job is to forecast, which is hard and mostly unrewarding. If the third horizon is a pattern already present somewhere at the margins, the job is to go and find it, which is a completely different sort of afternoon. Sharpe's phrase for what you are looking for is pockets of the future in the present: concrete places where the new way of doing things is already visible, usually outside the mainstream and usually small.
The distinction inside the second horizon
Sharpe and colleagues split the second horizon in two, and this is the part I reach for most often in actual client work.
Some innovations, which they label H2+, lead on towards the third horizon. Others, H2-, get absorbed back into the first horizon and end up propping it up. Their worked example of the first is linking transport services to new urban planning alongside a shift towards walking and cycling, which over time can move mobility patterns towards something structurally different. Plenty of innovations simply fail. Plenty of the survivors get digested by the existing system, delivering incremental improvement while the underlying pattern carries on more or less untouched.
That gives you a question to put to an innovation portfolio, and it is usually an uncomfortable one. Of everything currently funded under the heading of innovation, which parts move us towards the pattern we think is coming, and which parts make the existing system a bit more efficient at doing what it already does? Most portfolios, when somebody actually asks, turn out to be mostly the second kind. In my experience that finding does more work in a leadership conversation than any amount of arguing about whether the organisation is short-termist.
Where this sits in a wider field
Three Horizons belongs to a broader conversation about how systems change, and it is worth knowing the neighbours, partly because the neighbours have useful tools and partly because it helps to know you are not making it up as you go.
Transition design is the closest of them. It emerged at Carnegie Mellon's School of Design around 2015, set out by Terry Irwin, Gideon Kossoff and Cameron Tonkinwise, and it argues that designers should be working on societal transitions towards more sustainable futures, and not only on products and services. It draws on socio-technical transitions research, on transition management from the Dutch school, and on living systems thinking, and it uses long-horizon visioning in much the same spirit as Three Horizons does. If the H2+ question interests you, transition design is where a lot of the thinking about how to actually get from here to there has been happening, and it is more practical than the name suggests.
There is also the transitions research tradition proper, including Frank Geels' multi-level perspective on niches, regimes and landscapes, which maps onto Three Horizons closely enough that people often use the two together. None of this is settled, and Three Horizons in particular has had surprisingly little published critique, which I would treat as a gap rather than as evidence that it is above criticism.
Back to Ann
Ann has less room than she would like and rather more than she thinks. Four things tend to help, and none of them are dramatic.
Get an outside perspective into the room. What it buys you is a break in the loop where every proposal gets judged against the same assumptions that produced the problem in the first place. An outsider can also say things that an insider cannot afford to say, which is honestly a fair part of what they are for.
Find the people who already agree with you. In most organisations of any size there are four or five people scattered across different functions who see roughly what Ann sees, and each of them believes they are the only one. Finding each other is usually easier than it looks and changes what is possible.
Find a sponsor senior enough to carry it. Somebody with the standing to put a long-horizon question onto an agenda that already exists. This matters more than the quality of the analysis, and it is the step people skip, probably because it feels political rather than substantive.
Bring in an external expert to amplify and provoke. Partly for what they know, and partly for the slightly awkward organisational fact that the same argument lands differently when it arrives from outside.
Becoming futures ready
We work with organisations on building a foresight capability that survives a change of leadership, starting from a strategic exploration of scenarios and then working through culture, leadership, capabilities and processes. We also work as futurists-in-residence, which suits organisations that want sparring, provocation and a bit of futures literacy without building the whole system at once.
If you want somewhere to start on your own, the question I would put to your own portfolio is the H2 one. How much of what you currently call innovation is moving you towards the pattern you think is coming, and how much of it is making the current system slightly better at what it already does? Most leadership teams have never been asked, and the answer tends to open a more interesting conversation than the one about short-termism.
Originally published in 2024. Substantially revised in September 2026.
Sources
Baghai, M., Coley, S. and White, D., The Alchemy of Growth (1999); McKinsey Quarterly, "Enduring ideas: the three horizons of growth" (2009)
Curry, A. and Hodgson, A., "Seeing in Multiple Horizons: Connecting Futures to Strategy", Journal of Futures Studies 13(1) (2008)
Sharpe, B., Three Horizons: The Patterning of Hope, Triarchy Press (2013, second edition 2020)
Sharpe, B., Hodgson, A., Leicester, G., Lyon, A. and Fazey, I., "Three horizons: a pathways practice for transformation", Ecology and Society 21(2): 47 (2016)
UK Government Office for Science, Futures Toolkit, edition 2 (2024), and the Three Horizons facilitation worksheet
Irwin, T., Kossoff, G. and Tonkinwise, C., "Transition Design: A Proposal for a New Area of Design Practice, Study, and Research", Design and Culture (2015)
Vuori, T. and Huy, Q., research on Nokia based on 76 interviews across the company
Antioco, J. in Harvard Business Review on Blockbuster's online strategy; CNBC, "How Netflix almost lost the movie rental wars to Blockbuster" (2020)
A hands-on guide to foresight frameworks, tools and process
There are dozens of foresight tools available. Which one do you reach for, and when?
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