Walter Stevens
From: Three Horizons [info@threehorizons.net]
Sent: 27 May 2009 01:22 PM
To: Three Horizons
Subject: 3H Newsletter May '09
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Three Horizons Revisited Using the Three Horizons Model
Three Horizons is a reasonably simple idea with Horizon 1 (“H1”) being the We like the Three Horizons model because it reflec
current business, H2 being a related business and H3 being a completely new the competition is not static, and staying in one pl
business. It was initially promoted by McKinsey research that indicated that the saw” must be counterbalanced by trying new b
companies that focus simultaneously on all three horizons generally It is essentially a portfolio management tool that em
outperform those that attempt to deal with these challenges sequentially. actively manage their portfolio of businesses with
The idea of Three Horizons can be useful as it offers a simple way into a acquisitions and divestments. We view it as a tl th
conversation about: approach such as Appreciative Enquiry, in order to
• the dominant system of management within a firm (H1, H2 or H3) and the where they are and how they are operating. Howe
challenges to its sustainability into the future, i.e. the case for change “systemizing” and deconstructing, the Three Horizo
(horizon 1); integrated into planning tools as another appro
fundamentally at odds with the spirit of Three Horizo
• the desirable future state, the ideal system we desire and of which we can
identify elements in the present that give us encouragement (H3); Many firms have embraced the 3H concept but
planning tool. The danger of this approach it that i
• the nature of the tensions and dilemmas between vision and reality, and potentially disruptive nature of the events in H3. In
the distinction between innovations that serve to prolong the status quo is that using the model this way eliminates any cons
and those that serve to bring the third horizon vision closer to reality (H2); approach implies that firms move from H1 to H3
• A mature perspective that accepts the need both to address the which takes us back to the form of “Long-Ter
challenges in H1 and foster the seeds of the H3. This is not an either/or, spectacularly in the US in the 1960’s. Long-term
good/bad discussion. We need to ‘keep the lights on’ today, and think uncertainty. Who could have predicted world events
about how to keep them on a generation from now in very different borrow a phrase, prediction is very difficult, espe
circumstances. It is also important t be aware of the state of the industry, future. A 3H model that describes in detail what hor
and what state dominates. flawed. Uncertainty is real and the further we g
uncertain the world becomes. Uncertainty can come
The notion of the “Three Horizons” of business was first articulated to help of innovations and also beyond the firm from new
executives deconstruct their challenges into time dimensions or growth environments. Taking a conventional analysis an
phases. Each phase emphasizes the attributes of a certain management tools like Discounted Funds Analysis will limit
archetype. expected return on any cash outlay is too low, using
H1 is often about challenges may be around a company’s reason for existence
– can it generate sufficient cash in the short term, and can it convince clients –
Wolfram Alpha – It could change your lif
early adopters – of the viability of its offerings? Thereafter, it can typically be
about optimising your present operations – doing what is currently done in
An example of an H3 event that could transform ho
better ways. The management archetype most prominent in companies
rolled out with minimal fanfare by computer scientis
focusing on H1 performance is that of an ‘operator’ or classic “manager”.
and his team have built what he calls a “computa
He/she will exhibit great technical skills, industry knowledge and they will be
the Web. Unbelievably, it means that you can as
motivated by the drive for greater efficiency.
computes answers for you.
H2 challenges centre around stabilization and execution – can the company
But isn’t that what search engines and knowled
continue to build on what has been achieved under horizon one in terms of
Google simply return documents that (might) conta
products, clients and infrastructure? The focus is on new opportunities that will
a giant database of knowledge. Wolfram Alpha m
extend the H1 operation, but in ways that involve bringing new ideas to
Web” by actually computing the answers to a wid
fruition. Obviously, since it involves more uncertainty and risk-taking, the
questions that have factual answers such as “Wh
efficiency-driven emphasis of H1 is not appropriate. H3 concerns issues of
“How many protons are in a lithium atom?” or “W
strategy and sustainability – can the business continually re-new itself and
Port Elizabeth?”
maintain its competitive position? H3 is where futures must be imagined,
researched and developed. Seedlings must be planted today that can be
These are “real” answers. Wolfram Alpha actu
exploited in H2 for the future.
computes answers to certain kinds of questions.
computing, and cracks problems that have remain
promising days of Artificial Intelligence research in t
Meet the Team
How Does it Work?
Celeste has worked for Three
Horizons as a consultant since Wolfram Alpha is a system for computing the
completing her BSc Hons in accomplish this it uses built-in models of fields of kn
Quantitative Risk Management in and algorithms, that represent real-world knowled
2007. She is currently completing example, it contains formal models of much of
her MSc in Risk Management. amounts of data about various physical laws and
about the physical world. Based on this you can as
can compute the answers for you. Even if it has no
to answer each question you might ask it.
But science is just one of the domains it knows a
technology, geography, weather, cooking, busines
Upcoming Events more. It also has a natural language interface f
interface allows you to ask questions in plain langua
•
st
Gross Domestic Product (GDP) 1 Quarter 2009 – 26 May 09 of abbreviated notation, and then provides detailed
• Consumer Price Index (CPI) April 2009 – 27 May 09
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• Producer Price Index (PPI) April 2009 – 28 May 09 Briefly put, it uses a similar concept to that of cellula
• Moneyweb Investment Seminar – 9 Jul 09, JSE Auditorium, Sandton blocks of rules and data, to build elaborate structure
Watch this DEMO - 13 minutes that will chang
business.
Worth The Read
• The Supervisory Assessment Program - read
• How Wall Street Lied to Its Computers - read
• Financial Wisdom From a New Graduate - read
• What is Facebook Actually Worth - read
• Mboweni Bashes Banks - read
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information in this document and accepts no liability for any errors, misprints or omission
herein (whether negligent or otherwise). Three Horizons shall not be liable for any loss or Fax: 0866 547 848
damage whatsoever arising as a result of any person acting or refraining from acting in Website: www.threehorizon
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