Wardley Maps and the three horizons

Simon Wardley has found a form and codes with which strategic considerations over time and influencing factors can be well mapped and communicated. In a previous article Wardley Mapping – a great tool for strategy development I reported on this.

The ‘three horizons’ were 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 in development or testing. More or less you already know what the next products will look like. It still lacks a little 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 experiments, of trial and error, and of high uncertainty.

The three horizons are different in nature and require their own 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
Targets	Maximize economic result	‘cross the chasm’ – significant revenues are generated	generate new business
True North	maximize flow	constant improvement	disruptive ideas
Metrics	Revenues vs. planning Market share Profitability	successful sales, Target customers	B2C: Word of mouth works B2B: Branding works
Tools	Lean 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: 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 which horizon you are in.

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 for assigning a product to a stage. 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 Activity	Genesis	Custom	Product(+rental)	Commodity(+utility)
Characteristics
Ubiquity	Rare	Slowly increasing comsumption	Rapidly increasing consumption	Widespread and stabilising
Certainty	Poorly understood	Rapid increases in learning	Rapid increases in use / fir for purpose	Commonly understood (in terms of use)
Publication types	Normally describe the wonder of the thing	Build / construct / awareness and learning	Maintenance / operations / installation / feature	Focused on use
General properties
Market	Undefined market	Forming market	Growing market	Mature market
Knowledge management	Uncertain	Learning on use	Learning on operation	known / accepted
Market perception	Chaotic (nonlinear)	Domain of experts	Increasing expectation of use	Ordered (appearing of being linear) / trivial
User perception	Different / confusing / exciting / unpredictable / surprising	Leading edge / emerging	Common / disappointed if not used or available	Standard / expected
Perception in Industry	Competitive advantage / unperdictable / unknown	Competitive advantag / ROI / case examples	Advantage through implementation / features	Cost of doing business / accepted
Focus ov Value	High future worth	Seeking profit / ROI	High profitability	High volume / reducing margin
Understanding	Poorly understood / unpredictable	Increasing understanding / development of measures	Increasing education / constant reflection of needs / measures	Believed to be well defined / stable / measurable
Comparison	Constantly changing / a differential / unstable	Learning from others / testing the water / some evidential support	Future difference	Essential / operational advantage
Failure	High / tolerated / assumed	Moderate / unsurprising but disappointed	Not tolerated, focus on constant improvement	Operational efficiency and surprised by failure
Market action	Gambling / driven by good	Exploring a “found” value	Market analysis / listening to customers	Metric driven / build what is needed
Efficiency	Reducing the cost of change (experimentation)	Reducing the cost of waste (Learning)	Reducing the cost of waste (Learning)	Reducing the cost of deviation (Volume)
Decision Drivers	Heritage / culture	Analysis & synthesis	Analysis & synthesis	Previous experience