Event Horizons

One of my go-to product strategy tools is the three horizons model, which originated at consulting firm McKinsey & Company way back in the 1990s, when I was young and grunge was king. Several of McKinsey’s strategists then unleashed the model on the world in their book Alchemy of Growth. For a classic summary of the framework, listen to this podcast from McKinsey’s “enduring ideas” series.

Nowadays, nerds of my ilk often talk about three horizons when plotting strategy. In fact, just last week I used the three horizons framework extensively in a strategy workshop with a leading edtech firm’s executive leadership team. The model’s appeal is its simplicity–often, strategists and product managers struggle to put functionality in sequence and get stuck in minutiae of features and dependencies; this model allows us to consider problems and opportunities over broader units of time, while simultaneously balancing immediate priorities with plans for transformative, long-term success.

Here are some tips for using the framework for plotting your own strategy.

1. Visualize the horizons using intersecting curves

While the “three arcs” graphic that the McKinsey gang used is popular, I prefer a variant that shows intersecting curves of growth and degradation over time.

This is the classic version of the three horizons diagram….
But I prefer this “intersecting curves” diagram.

This intersecting curve version forces more urgency about discovering and refining Horizon 3 future capabilities now, as it explicitly declares that pockets of the future should be embedded in the work you do in the present. Similarly, this diagram isn’t shy about showing the ugly truth, that your current product’s fit to your market (Horizon 1) is likely to degrade over time.

This graphic makes explicit what a former boss and current friend called the tyranny of expecations: the principle that customers’ expectations are demanding masters, and what once was perfectly satisfying, even delightful, soon becomes expected, even disappointing. A product that fits the market today may not tomorrow. Time ravages all, even our products.

2. When plotting your strategy across horizons, ask yourself: how will my product fit my market and advance my mission?

The triangulation of Product, Market, and Mission is a simple and strong foundation for product strategy. So ask yourself: how will your product fit your market and advance your mission in the near term? What will be different in the future (horizon 2 and 3) that you should anticipate now? What will your customers say about you in horizon 3 that’s different from what they say about you now? What will your competitors look like over each of the horizons?

3. Align your three horizons to your vision, themes, market position, and organizational and process factors

Rather than just describing functionality and features, when you’re working on three horizons, consider your product vision, your shifting market position, your product’s themes, and any organizational and process considerations (“we’ll need to build a data science capability in horizon 2”). I’ve created a poster that I use to plot product strategy over three horizons that accounts for all of these. See the thumbnail below. (If you’re interested in the large-format version of this graphic, let’s talk.)

4. Save Horizon 2 for last

You don’t need to consider the horizons in linear order (1, then 2, then 3). In fact, I find that considering Horizon 2 after you’ve defined Horizon 1 and Horizon 3 is most effective. Why? Because we should know where we are going (Horizon 3) before connecting the present (Horizon 1) to it. To be clear: I’m not suggesing you neglect Horizon 2. In fact, Horizon 2 may be the most critical and challenging of the three horizons–it sustains our business while we pursue a long-term vision. But planning Horizon 2 becomes easier if you’ve first done some work on defining Horizon 3.

5. The future starts now

Remember the intersecting curves diagram? My favorite piece of it are those pockets of the future embedded in the present. Don’t wait until the future to start building the future. Indeed, if I have any criticisms of the three horizons model, it’s that the framework could be misinterpreted to suggest that our work on the later horizons (2 & 3) can come later. In fact, successful firms are pursuing and defining their future now, and with haste. McKinsey suggested that the most senior and talented leaders of the company should be working now on horizons 2 and 3. How much time should you spend on each horizon? In a recent podcast, product guru Bruce McCarthy advises a 70:20:10 ratio of resources working on Horizons 1, 2, and 3, at any one time. I think that’s about right.

Lastly, remember that the horizons, like all of us, are constantly moving through time. You’ll want to revisit the model often (every 6-12 months for an enterprise business; more often for a startup), reset your horizons, refine horizon 1, and re-envision horizons 2 and 3.

A few more resources on the Three Horizons model

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