What needs to be finished first
A formulated company or business-unit strategy with mid- and long-term horizon exists so initiatives can be classified against it.
What needs to be ready before start
Workshop room or board with three horizon lanes (H1, H2, H3); initiative cards (one per running or planned initiative); evaluation grid (revenue, resources, time horizon); strategy document as reference; portfolio overview of current initiatives.
One facilitator (strategy or innovation owner); sponsor with portfolio mandate (CEO, CSO, business-unit lead); representatives from operations (for H1), growth (for H2), innovation/R&D (for H3); finance controller for resource view.
Strategy document or vision; current initiative list with status, revenue, effort; market trends and disruption signals; resource situation (people, budget); historical innovation pipeline.
Half-day workshop (4 h), then quarterly reviews
Three board lanes: H1 (core business, 70% resources), H2 (growth, 20%), H3 (future/disruption, 10%). Prepare initiative cards. Keep evaluation criteria visible.
The one question this method answers
How is the current initiative portfolio distributed across the three horizons, which imbalances become visible, and which reallocation secures both today and tomorrow?
Marker: Phase
| Step | Duration | Action | Hint |
|---|---|---|---|
1Phase 1: Sharpen horizon definitions | 30 min | Define each horizon concretely for the company: H1 (mature cash-flow businesses today, 0-18 months), H2 (growth fields, 18-36 months), H3 (options with maturity >36 months). Define thresholds and metrics per horizon. | Generic McKinsey definitions often do not fit. If H1 only means "core", later classification is impossible. Concrete cash-flow, maturity, or market thresholds are required. |
2Phase 2: Assign initiatives | 45-60 min | Put each running and planned initiative on a card. Assign cards to horizons based on maturity, revenue, and time horizon. Mark contested cases and let the sponsor decide. | The temptation is high to push ambitious initiatives into H1 because that feels safer. If an initiative does not bring money today, it does not belong in H1. |
3Phase 3: Make resource distribution visible | 30-45 min | Sum current resources per horizon (FTE, budget, management time). Compare with target distribution (for example 70/20/10). Name imbalances. | Often the finding is: H1 consumes 95%, H3 has 0%. That is not failure, it is a finding. The question is whether it is intentional or inertia. |
4Phase 4: Transitions and pipeline | 30 min | Identify per horizon which initiatives are moving toward the next horizon (H3 -> H2 -> H1). Visualize the pipeline and name gaps. | If nothing is moving from H3 to H2, the company has no new growth fields in 3 years. That is a strategic warning. |
5Phase 5: Decisions and reallocation | 45-60 min | Make concrete reallocation decisions: which initiative ends (H1 sunset), which is strengthened (H2 scaling), which option is newly introduced (H3 seed). Add owner and quarterly review per decision. | Three Horizons without consequence is a consulting slide. At least three decisions with resource movement. Sponsor signs off. |
What comes out at the end
Portfolio overview with horizon assignment, resource heatmap (target vs. actual per horizon), pipeline diagram with transitions, decision list with owner and review date, plus company-specific horizon definitions.
New snapshot per quarterly review with date. Track decisions as versions. Do not overwrite the previous quarter; document the delta. Make pipeline movements visible as history.
Compact working template for Three Horizons with context, input, output artifacts, and next step.
What is this method used for?
Which question should be answered at the end?
Which data, observations, or materials are available?
Owner, date, success signal.
Concrete filled scenario, fictional example
Concrete filled scenario, fictional example
Company-specific horizon definitions:
Assignment of 38 initiatives:
Target distribution: 65/25/10. Actual: 82/15/3. Imbalance: H2 and H3 under-resourced.
Pipeline movements:
Decisions (sponsor @sabine, CEO):
Recognize symptoms and steer against them
Textbook definitions ("H1 = core") are not enough for initiative assignment.
Define company-specific thresholds (cash flow, margin, maturity). Before phase 2, check whether each initiative can be assigned clearly.
All ambitious initiatives are pushed into H1 because they promise quick revenue.
Use a strict cash-flow definition for H1. If an initiative does not bring today's money, it belongs in H2 or H3, regardless of the promise.
H3 has 0% resources, nobody works on the future, pipeline dries out.
Agree a minimum resource floor for H3 (for example 5%). Protect the floor through quarterly review. If it is violated repeatedly, the owner escalates to sponsor.
A nice heatmap appears; three weeks later the portfolio is unchanged.
Mandatory: at least 3 reallocation decisions with owner and resource movement. Quarterly review checks implementation. Without quarterly review, there is no Three Horizons practice.
Only operations representatives attend, no innovation or R&D voice, H3 is undervalued.
Required roles: H1 voice (Operations), H2 voice (Growth), H3 voice (Innovation/R&D), finance controller. Missing voices block their horizon view.
Workshop focuses only on current assignment; transitions between horizons are not modeled.
Run phase 4 strictly. Pipeline visualization is the second artifact. Gaps in the pipeline are the most valuable findings.
Done signals checkable in under a minute
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