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 | |
| Targets | maximize economic outcome | ‘cross the chasm’ – significant revenues are generated | generate new business |
| True North | maximizeflow | 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 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 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 |
