Wardley Maps and the Three Horizons

Simon Wardley has found a form and codes that make strategic thinking about time and influencing factors easy to map and communicate. In a previous article Wardley Mapping – a great tool for strategy development I reported on this.

The ‘three horizons’ was a perspective that was immediately obvious to me. In a moment, I’ll go into why they no longer are.

The concept is used to describe three aspects of strategy or governance.

  • Horizon 1: The current business. Every organization knows what its current business is
  • Horizon 2: Products under development or testing. More or less you already know what the next products will look like. It still lacks a bit of flexibility to get and incorporate knowledge about the market or how it works.
  • Horizon 3 describes the circumstances, mechanics and products that are not yet known. This is the field of experimentation, of trial and error, and of high uncertainty.

The three horizons are different in nature and require unique skills and tools to achieve their goals. So it also needs its own metrics, perhaps other tools and leadership methods. In a naturally incomplete table, a first approximation is like this:

 Horizon 1
0-12 months
Horizon 2
12-36 months
Horizon 3
36-72 months
Targetsmaximize economic outcome‘cross the chasm’ – significant revenues are generatedgenerate new business
True Northmaximizeflow constant improvementdisruptive ideas
MetricsRevenues vs. planning
Market share
Profitability
successful sales,
Target customers
B2C: Word of mouth works
B2B: Branding works
ToolsLean
Kanban
Scrum
Scaled Agile Framework
design thinking
lean startup

This table already contains many hints on how to design innovation areas. Also, the model provides a possible answer to the common question: ‘can/should Agile be used for everything?’

One blur is the duration of the horizons – they are metaphorical orders of magnitude rather than actual indications of time.

What concerns me more is that the model shows options for dealing with a given situation – but there is less indication of how to recognize a situation, i.e. how to reliably determine what horizon you are on.

Up to this point, Wardley Maps are already a joy: I can use them to make more resilient diagnoses and derive indications for meaningful actions.

What’s even better is that over the years, he has compiled a whole host of leading indicators that can be used to derive indications of a product’s assignment to a tier. For now, here’s an excerpt from the raw spreadsheet – we’ll take it apart and look at it more closely in the near future:

stage of activityGenesisCustomProduct(+rental)Commodity(+utility)
     
Characteristics
UbiquityRareSlowly increasing comsumptionRapidly increasing consumptionWidespread and stabilising
CertaintyPoorly understoodRapid increases in learningRapid increases in use / fir for purposeCommonly understood (in terms of use)
Publication typesNormally describe the wonder of the thingBuild / construct / awareness and learningMaintenance / operations / installation / featureFocused on use
General properties
MarketUndefined marketForming marketGrowing marketMature market
Knowledge managementUncertainLearning on useLearning on operationknown / accepted
Market perceptionChaotic (nonlinear)Domain of expertsIncreasing expectation of useOrdered (appearing of being linear) / trivial
User perceptionDifferent / confusing / exciting / unpredictable / surprisingLeading edge / emergingCommon / disappointed if not used or availableStandard / expected
perception in industryCompetitive advantage / unperdictable / unknownCompetitive advantag / ROI / case examplesAdvantage through implementation / featuresCost of doing business / accepted
Focus ov ValueHigh future worthSeeking profit / ROIHigh profitabilityHigh volume / reducing margin
UnderstandingPoorly understood / unpredictableIncreasing understanding / development of measuresIncreasing education / constant reflection of needs / measuresBelieved to be well defined / stable / measurable
ComparisonConstantly changing / a differential / unstableLearning from others / testing the water / some evidential supportFuture differenceEssential / operational advantage
FailureHigh / tolerated / assumedModerate / unsurprising but disappointedNot tolerated, focus on constant improvementOperational efficiency and surprised by failure
Market actionGambling / driven by goodExploring a “found” valueMarket analysis / listening to customersMetric driven / build what is needed
EfficiencyReducing the cost of change (experimentation)Reducing the cost of waste (Learning)Reducing the cost of waste (Learning)Reducing the cost of deviation (Volume)
Decision DriversHeritage / cultureAnalysis & synthesisAnalysis & synthesisPrevious experience