Three Horizons Thinking: The Strategic Framework Shaping the Future of Change

Originally developed by a group of McKinsey consultants to help businesses balance short-term profits with long-term innovation, the model was later reimagined by Bill Sharpe and the International Futures Forum.

In Sharpe’s book Three Horizons: The Patterning of Hope, it was  expanded into an ambitious framework designed to navigate systemic change and foster ‘futures consciousness.’

The model, which Sharpe describes playfully as simply ‘a few squiggly lines on a piece of paper,’ is actually an extremely powerful tool for visioning better futures and inspiring discussions that lead to meaningful action.

The framework was created to act like a map, helping groups and individuals see where they are, where they want to go, and how to get there.

In the Three Horizons model, horizon 1 represents the present and the ‘business as usual’ values and activities that allow the dominant systems to function.

We rely on the dominant systems to be stable and reliable, but as the world changes aspects of the dominant system eventually become ‘unfit for purpose’.

Horizon 3 represents the desired future that can emerge as the successor to business as usual. It’s the vision of where we want to go.

The second horizon is the bridge between horizon 1 and horizon 2. It represents the disruptive innovations and entrepreneurial activity that arise as a result of changing landscapes or our desire for progress.

One of the most powerful features of the Three Horizons model is how it invites us to critically reflect on new technologies and ideas, helping us assess whether breakthrough innovations are truly advancing progress or merely keeping us trapped in outdated patterns.

Innovations that prolong the life of H1 systems are seen as ‘sustaining innovations’ or H2- activities.

Actions that pave the way for radically different H3 systems are referred to as H2+ or ‘transformative innovations’.

For example, the invention of an AI pest killing robot might improve farm yields, but it could be seen as H2 – activity because it prolongs the life of the industrial agriculture model, whereas the rise of agroforestry or permaculture could be seen as truly transformative innovations.

The Three Horizons model isn’t just about moments in time, or pathways to a desired future, it also helps us make sense of our place in the world and facilitates more meaningful and productive conversations.

Sharpe associates horizon 1 thinking with the role of manager, horizon 2 belongs to the entrepreneurs and inventors, and horizon 3 is the realm of the visionary.

According to Sharpe, these different orientations usually result in people talking past each other, stifling meaningful impact or leading to gridlock.

Managers are focused on maintaining the current system and are typically risk averse, which leads to the entrepreneurs and visionaries viewing them as ‘old-world dinosaurs’.

The entrepreneurs want to move fast and create immediate impact, but managers and visionaries can see them as reckless actors or as profiteers.

The visionaries want to bring radically new worlds or ideas into being, but their counterparts dismiss them as fanciful or irrelevant dreamers who have no material value – or they accuse them of letting the perfect be the enemy of the good.

The best way to transcend this conflict is by acknowledging the value that everyone brings to the table when it comes to creating a positive future.

Sharpe calls this the shift from ‘negative mindsets’ to ‘positive perspectives’.

By mapping the three ways of relating to the future from the perspectives of the three horizons we can bring the value of each of them into a conversation in a generative way that fosters a shared understanding and a future consciousness that is more likely to lead to collective impact.

The Three Horizons model can be used by any individual, organisation or collective to dream up, and move towards, a desired future, but as our social and environmental challenges mount, it is quickly becoming a go-to framework for Changemakers who are tackling the urgent task of halting collapse and regenerating the planet.

Kate Raworth is the creator of Doughnut Economics.

In a short video for the Doughnut Economics Action Lab, she outlines how the Three Horizons framework can be used as a tool to accelerate the shift toward a regenerative economy.

Through this lens, horizon 1 represents our current extractive, generative and divisive economy that is breaching planetary boundaries and failing to meet our fundamental social needs.

Horizon 3 represents the future we want: the regenerative, distributive-by-design economy that operates within the planet’s ecological limits and ensures human well-being.

Horizon 2 is the space of transition, where emerging practices like circular economy initiatives, regenerative agriculture, and new ownership models either challenge the status quo or become co-opted by it.

For Kate, each horizon raises its own unique set of questions:

Horizon 1: 

• What is valuable about the old system and what do we want to retain?
• Which parts of the old system should decline and how quickly should they decline?

Horizon 2:

• Which disruptions could advance regenerative practices and what are their roots?
• What can we do to ensure that disruptive actors are innovating to create the new world and not just prolonging the old world?

Horizon 3: 

• What does the future we want look like?
• What values does it represent?
• Whose work are the present possibilities built on and what values do they have?
• What are the competing visions of the future being pursued by others?
• If they share our vision can we collaborate?
• If they have competing visions do they risk derailing ours?

Kate also points out that it is not always the innovations themselves that are inherently sustaining or transformative, it’s often the business models that underpin them.

For example, the breakthrough of digital platform technologies could give us H2 – extractive businesses like Uber or Airbnb – or they could give us H2+ cooperatives like Fairbnb or Mondo.

Regen Melbourne is an Australian-based charity founded around the idea of epic collaboration.

Born in 2021 in the wake of COVID 19 and the Black Summer bushfires, Regen Melbourne was established with the mission of ‘moving Melbourne towards a safe, just and regenerative future.

According to CEO Kaj Löfgren, Regen Melbourne is guided by a collection of core frameworks.

Centred around Raworth’s concept of Doughnut economics and guided by the Collective Impact model and Mariana Mazzucato’s ideas of moonshots and Mission-led Economics, the organisation uses the Three Horizons model as the “rudder” to “ensure that they are maintaining course towards their vision for a regenerative Melbourne.

After collaborating with hundreds of organisations and individuals, Regen Melbourne released a ‘living portrait’ of the city that reflects the shared values and visions of its citizens and showcases the stories, mindsets and tools that can be used to accelerate the shift to a resilient and regenerative future.

They then went on to set three magnetically ambitious ‘Earthshots’ including: Regenerative Streets, Regenerative Food Systems and the transformation of one of the country’s filthiest rivers into a swimmable waterway ‘from source to sea’.

They also established the Regen Melbourne Lab – a cross-institutional research hub aimed at accelerating the transition to a regenerative future by helping the city: ‘measure what matters, adapt to future challenges, and better invest in systems change’.

Bringing horizon 3 into the present, Regen Melbourne recently followed in Patagonia’s footsteps by appointing the founder of the Living Future Institute, Dominique Hes, to ‘represent the voice of nature’ on the charity’s board.

Small Giants Academy is an Australian not-for-profit education and media initiative dedicated to helping us untangle the systemic mess we’ve gotten ourselves into.

Through their courses, labs, incubators, podcasts and forums, the culture-shaping organisation focuses on empowering emerging and established leaders from all walks of life and all sectors with the tools, knowledge and community to respond meaningfully to the metacrisis of the 21st century.

Rather than using the language of ‘managers, entrepreneurs, and visionaries,’ SGA’s Head of Programs, Tamsin Jones, associates the perspectives of the Three Horizons with ‘head, hands and heart.’

For each horizon, Jones offers some complimentary variations to Raworth’s questions: “What nourishes us in the old system, and where are we just holding on to outdated structures? How can we make sure innovations are connecting today to a better tomorrow and not getting caught up in the status quo?

And, when we are reimagining a better future, how can we invite everyone, including those who disagree with our values, to dream with us?”

SGA’s Co-Founder, Director, and Podcast Host, Berry Liberman, creatively reinterprets the Three Horizons as “triage, transition, and transformation”.

The ‘triple T’ interpretation of the framework is essentially an invitation to mindfulness and serves as a loud and cautionary reminder that as we ricochet from crisis to crisis, we can’t forget to create the space for transformative systems change.

For Liberman, even though the work of triage is urgent and vital, we must “resist the trance and trap” of horizon 1 and remember to “honour the space for magic.”

If we want to create true and meaningful systems change, we’re going to have to, “make room for the heart-exploding space of unseen, unknown, possible futures that emerge out of dreaming, play and deep love.”

Three Horizons thinking isn’t just woven into the DNA of the Small Giants Academy, they actively teach and promote it in their courses, podcasts and events.

Through their storytelling courses, leadership programs like the Climate Leadership Accelerator, Into the Arena, Mastery of Systems Leadership and Mastery of Business and Empathy, and their transformative Impact Safaris, Small Giants Academy creates the essential space for collective dreaming, nurtures transformative innovation, and brings pockets of the H3 future into the present.

By nurturing the visionaries of the future while equipping today’s leaders with the tools to bridge the gap, they are shaping a future grounded in resilience, wisdom, and empathy and courage.