In the rapidly changing business ecosystem, organizations, now more than ever, are integrating sustainability into their strategic visions for long-term success. Among the tools helping businesses forecast and shape their futures is the “Three Horizons” concept. This model, coupled with GPM Global’s P5 Standard, offers a potent framework for selecting projects and aligning them with overarching sustainability goals. This article delves into the Three Horizons concept from a sustainable project management perspective and elaborates on the significance of benchmarking projects against these horizons.
Navigating the Three Horizons for Project Managers
The Three Horizons model was developed by Bill Sharpe, Graham Leicester, and Tony Hodgson to aid in strategic thinking about systemic change for a sustainable future.
Horizon 1 (H1) – “Today’s Projects”: These are the projects that mirror our present methodologies and represent the prevailing way we manage and execute projects. They’ve been successful and reliable, but signs suggest they won’t remain optimal indefinitely. As we progress, certain components of these projects might be retained, but the overall approach may require significant modification.
Horizon 2 (H2) – “Transitional Projects”: These projects symbolize our transition phase. They incorporate innovative strategies aimed at bridging the present (H1) with our future aspirations (H3). Among them, some (H2+) genuinely push the envelope, driving us closer to our H3 goals. Yet, others (H2-) may just offer temporary solutions or risk becoming subsumed by traditional H1 practices. For project managers, discerning between truly transformative H2+ projects and mere patchwork H2- projects is crucial.
Horizon 3 (H3) – “Future-focused Projects”: These projects aligned with our ultimate vision of project management. While only a few might currently be running with this forward-thinking approach, the aim is for these projects to set the standard for all future endeavors. However, it’s vital to understand that in due course, these innovative projects may form the basis of a new H1, underscoring the ever-evolving nature of project management practices.
Example: The Evolution of Phones
H1 is the old phones that dominated until the mid-90’s. H2 is the disruptor that led to the brick phones that allowed us to be mobile. Eventually, H3 brought us to where we are today.
Here is a great video that explains it further:
The Sustainability Lens on Three Horizons
- Horizon 1 focuses on refining current processes to increase efficiency, reduce waste, and cultivate a sustainable present.
- Horizon 2 centers on transitioning from traditional models to sustainable alternatives, adapting to emerging sustainable technologies, and exploring renewable avenues.
- Horizon 3 envisions transformative projects, potentially pioneering revolutionary green technologies or new eco-friendly business models.
GPM’s P5 Standard in Action
Our P5 Standard centers on five pillars: People, Planet, Prosperity, Process, and Product. This approach ensures projects aren’t solely about function but also contribute positively to the broader community and environment.
Using the P5 standard in the context of the Three Horizons:
- H1 projects might focus on ‘Process’, optimizing sustainability in current operations while also respecting ‘People’ and the ‘Planet’.
- H2 projects emphasize ‘Prosperity’, ensuring the transition phase is economically advantageous while adhering to sustainability principles.
- H3 projects should exemplify the P5 framework, taking a visionary approach that holistically addresses all its pillars.
Examples in the corporate world.
Example 1: An Oil and Gas Company Transitioning to Renewable Energy
- Horizon 1: The company enhances its oil and gas extraction to minimize environmental impacts, investing in carbon capture and implementing safer drilling methods, addressing both ‘Planet’ and ‘Process’.
- Horizon 2: Anticipating a shift to renewables, the company integrates solar and wind farms, providing dual-energy solutions, thereby embracing ‘Prosperity’ and ‘Planet’.
- Horizon 3: The company engages in innovative research, like wave energy and advanced energy storage, and collaborates with green tech startups, wholly embodying the P5 standard’s ideals.
Example 2: A City’s Urban Planning Committee
- Horizon 1: The committee improves public transport to counter pollution and car usage, addressing ‘Planet’ and ‘People’.
- Horizon 2: Anticipating urban growth, the committee develops green spaces, cycling lanes, and vertical farming, focusing on ‘Planet’, ‘People’, and ‘Prosperity’.
- Horizon 3: With a long-term view, the committee starts projects on advanced solar and wind tech, taking a holistic P5 approach.
With these examples, the integration of the Three Horizons model and the P5 Standard becomes palpable, guiding organizations towards a future that is not just profitable but sustainable and transformative.
Harnessing the Three Horizons for Strategic Project Investment
(Enhancing Project Selection Criteria)
Sustainability is more than just a buzzword; it’s the future of successful business. Organizations are increasingly realizing that evaluating projects purely based on immediate profit and loss is a short-sighted approach. The Three Horizons model offers a broader perspective, emphasizing both immediate gains and long-term value. Here’s how organizations can leverage this model for strategic project selection:
- Horizon 1 (H1) – “Business As Usual”
- Nature: Projects that maintain the current operational status, typically focusing on immediate profits and market demands.
- Investment Insight: While they provide steady returns and keep the lights on, investing solely in H1 projects might mean missing out on transformative opportunities. Use these projects as a foundation, but don’t let them monopolize resources.
- Horizon 2 (H2) – “Sustainability Disruptors”
- Nature: Transitional projects that challenge the current business model. They might be riskier but offer a sneak peek into the future of sustainability.
- Investment Insight: These projects signify growth and adaptation. Investing in H2 ensures that an organization isn’t left behind as industries evolve. They balance out the safety of H1 projects by providing medium-term benefits with the potential to revolutionize business operations.
- Horizon 3 (H3) – “The Visionary Future”
- Nature: These projects represent the organization’s long-term vision, encapsulating a future where sustainability is intertwined with profitability.
- Investment Insight: H3 projects might not promise immediate returns, but they embody the organization’s commitment to a sustainable future. Investing here is a statement, indicating foresight and dedication to a larger purpose.
Strategic Selection for Holistic Value: Organizations can use the Three Horizons as a litmus test when deciding where to allocate funds. By examining potential projects through this lens, they can ensure a diversified investment strategy:
- Immediate Value: Generated primarily by H1 projects, offering stability.
- Mid-term Potential: Introduced by H2 projects, ensuring adaptability and resilience.
- Long-term Vision: Embodied by H3 projects, steering the organization towards its ultimate sustainable goals.
By integrating the Three Horizons model into investment decisions, organizations can transition from a narrow profit-centric approach to one that values overall impact and long-term sustainability. This ensures not only business continuity but also a meaningful contribution to a global sustainable and projectized future.
Where are your projects? Would you consider them to be H1, H2, or H3?