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The Innovation Horizons Model, also called the three horizons model, is a framework that organizations can use to identify areas for innovation and improvement without losing sight of current performance. This model is useful for driving innovation while preventing thee type of organizational stagnation seen in many mature companies. The Innovation Horizons Model operates on the premise that organizations need to innovate and change in order to remain competitive and adapt to the ever-evolving market.
Description of the Innovation Horizons Model
The Innovation Horizons Model serves as an organizing method to develop a future-oriented strategic plans that recognize that “phases” or “horizons” can be used as stepping stones to the longer term, disruptive vision and opportunity. The framework consists of Horizon 1, Horizon 2, and Horizon 3, with each having their own characteristics and strategies for development.
Teams that use the Horizons Model for business innovation and strategic planning can follow several steps that map to each of the horizons:
Horizon 1: Identify the current business model, products and services that represent the core business. Determine how to improve these areas incrementally through innovation and other business strategies. Horizon 1 innovations are typically incremental improvements to current products, services, and business models, but that lay the foundation for future growth opportunities.
Horizon 2: Horizon Two is also known as the Transition or Bridging stage, which focuses on resolving the discrepancies between the current (Horizon 1) and ideal state (Horizon 3). During this stage, the business must evaluate which potential innovations and business models will perpetuate the status quo and which will bring the organization closer to the idealized state. The goal is to invest in areas important for the future while letting go of outdated processes, procedures, products, and services that are rooted in the past.
Horizon 3: Horizon Three includes the idealized or disruptive innovations and opportunities that the organization desires for the long-term. This horizon includes future-focused products, services, or business models that may not yet be feasible, but represent a desirable future-state for the business.
To create a horizon strategy, it is typically best to define Horizon 1 first since it’s the closest to today’s reality and provides a snapshot of the current state as it might evolve in the near-term. Following this, your team can define your future vision and goals and identify how these differ from the organization’s current functions. Many strategists believe that the three horizon stages do not occur in succession but that success and business growth results when all three have been applied and executed simultaneously.
Praxie's Online Innovation Horizon Model Tools & Templates
The Innovation Horizons Model uses a template that organizes the company’s goals into the three horizons that typically apply the 70, 20, 10 rule. This rule states that 70% of your organization’s resources and innovation efforts should go toward identifying current successful business operations (Horizon 1 goals). The majority of your attention should be applied to this stage because the organization must capitalize on its present strengths to optimize today’s business. 20% of your focus should be dedicated to Horizon 2. Specifically, your team should aim to create an action plan that bridges Horizon 1 and 3.
More effort is dedicated to this stage because the action plan might result in several unsuccessful attempts and more energy would be required to come up with additional ideas. Finally, the remaining 10% of your focus should be placed on Horizon 3. In particular, your team should spend time researching and assessing innovative ideas that represent the long-term future of the business. Get started with our Innovation Horizons Model template.
How to use it:
- Outline a phased approach for each dimension of the model.
- Consider starting in Horizon 3 and working backward.
- Create an action plan focused on creating and implementing your Horizon model and process.
Unlike most traditional Innovation Horizon Model techniques, Praxie’s online Innovation Horizon Model collaboration tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.