Three Horizons of Innovation

The Three Horizons framework primarily addresses the strategic friction of balancing short-term operational needs with long-term innovation and future opportunities. It helps organizations clarify their direction and priorities by providing a framework to manage different time horizons.

The Three Horizons of Innovation framework is a strategic tool used by businesses to ensure continuous growth by managing innovations across three different horizons: maintaining and improving core business (Horizon 1), developing emerging opportunities (Horizon 2), and creating completely new business models or technologies (Horizon 3). This approach helps companies allocate resources effectively, prioritize projects, and prepare for future challenges while sustaining current operations.

Score your

Measure my

Strategic

Friction

Steps / Detailed Description

Identify and continue optimizing core business operations that ensure current profitability (Horizon 1).
Focus on emerging technologies and markets that promise future growth but require substantial investment (Horizon 2).
Invest in radical innovation to create new markets or disrupt existing ones (Horizon 3).
Allocate resources and assign leadership according to the specific needs and timelines of each horizon.
Regularly review and adjust strategies for each horizon based on market feedback and technological advancements.

Best Practices

Clearly define the goals and expectations for each horizon.
Ensure strong leadership and dedicated teams for each horizon.
Regularly review and recalibrate the strategy as necessary.

Pros

Encourages long-term thinking while maintaining short-term performance
Helps in balancing resource allocation between current and future projects
Fosters innovation by systematically exploring new opportunities

Cons

Can be complex to implement and manage across different business units
Risk of neglecting Horizon 1 in the pursuit of more exciting future opportunities
Requires significant investment in terms of time and capital