One of the most effective and common methods among strategic forecasters is the three-horizon method. It relates what is happening today to the desired and possible future in the short, medium and long term.
The goal is to create an “alternative future,” reflecting a much broader view of what is possible, rather than just a preferred one. Let’s examine this method in more detail using examples from the book “Trend Research.
Exploring trends
Let’s say you’re the manager of an automobile company, a grocery retailer, or a real estate developer. You ask how the trends along each horizon line will affect your business model (positively or negatively), open up new opportunities, or lead to radical change tomorrow. Here’s what each horizon line should show and tell you.
Scanning the three horizons allows you to develop a more nuanced understanding of the possible, likely and preferred future that a trend can create.
First Horizon
This is a basic forecast that gives a very balanced view of how existing trends are now affecting your brand, business or organization. These are the fading but yet existing trends that you are reacting to in the moment (or not reacting!); they are shaping your business now.
If you’re working on a forecast – for a food manufacturer or retailer, for example – to understand how food is packaged for the 21st century consumer, you must consider trends such as
:
- anti-intuitive cooking,
- Motherhood Bites (restaurants and delivery services aimed at parents with young children),
- Aloha Raw (Hawaiian raw fish dishes),
- local food choices and safe eating.
Brands Everytable (top left), KINN (top right), Food Market (bottom left) and Freitag (bottom right) have led a movement and trend called “social branding,” which is characterized by a particular ethical, social and environmental focus.
Second Horizon
This is a forecast of how incipient short- and medium-term trends will affect your brand, business or organization over time. If you approach it creatively and consider different opportunities, you’ll identify innovations. But it’s also a conflict and disruption zone, as the forces of change threaten your current strategy.
For an automotive brand, current short- and medium-term inbound trends are
:
- The transition from hybrid to electric drive,
- the emergence of driverless cars,
- the banning of diesel fuel in cities,
- the popularity of leasing, carsharing and renting among millennial and Generation Z consumers,
- the anti-car movement in cities,
- preference for smaller cars,
- use of 3D technology to “print” parts,
- the withdrawal of car dealers from the market, etc.
On this horizon line, new opportunities arise and potential expands when trends such as SCI Rides (the image and design of cars become more emotional and human-centric) or even Rideshare retailing (brands such as Cargo sell a range of in-vehicle products through apps) emerge.
“Authentic,” “artisanal” are words with nostalgic overtones. But designers like Futura or Pablo Alfieri are redefining these terms based on a trend that combines modern lines and new materials with typographic embellishments.
The third horizon
This is your long-term view of trends, technologies and innovations emerging at the earliest stages of the innovation curve. This is where a comprehensive examination of breakthrough technologies or nascent trends and forces is required.
Here the signals of change are very faint and may exist in the form of an academic article, a visionary talk at a TED, a talk at a scientific conference, an informal talk about design at the International Auto Show in Milan or a booth at the Mobile World Congress mobile industry show in Barcelona.
These trends often seem fantastic, but it’s important to think carefully about how these forces can affect your brand and what positive and negative shifts and opportunities will result. Long-term trends can be social, demographic, technological, environmental, or political.
If, for example, you’re asked to look at the long-term impact of trends in the home, you might find that everything from test-tube meat and cellular technology in agriculture to ergonomic touchscreens and even environmentally friendly skin care products is important.
To identify trends, we must look for common themes or philosophies, especially in aesthetically dissimilar objects. Tesla, Brandless cleaning products, BioCol Labs’ dietary supplement packaging, and the My EP&L App from the Kering and Parsons School of Design. These are companies from different industries, but each believes in fair trade, sustainability, creativity and environmentally friendly operations. Could these be signs of a trend that will be called Radical Transparency?
How to Apply the Method
Along each of the horizon lines (labeled descending, ascending, and looming) you will stick stickers analyzing all of the trends you previously attributed to a particular horizon. As each cluster grows, you will begin to notice dense nodes of trends (positive and negative) in the declining, rising, and incipient spaces. Each cluster relates to the underlying characteristic of the corresponding horizon line, given that by impact one line can be considered reflective of the present situation, the second of the short-to-medium term, and the third of the medium-to-long term.
Your task at this point is to figure out how to get from the first horizon (where you are so far) to the third.
You draw on your subconscious (understood on an intuitive level) and conscious (obtained from experts, desk research, or external data study) knowledge and strive to map all the evidence and consequences of change on each time line in order to gain opportunity
:
- better understand the driving forces of change you face in the external environment, both positive and negative;
- understand how these forces affect the internal workings of your brand or company;
- identify the threats they pose;
- identify the opportunities they create;
- learn how these shifts can be translated into new directions for product creation, or opportunity vectors;
- understand how medium- and long-term trends will affect your current business model, short- and medium-term business plans;
- understand how to adjust them to protect your business from changes that could have an obvious negative impact in the next three to five years.
As an example, when Airbnb revolutionized the hospitality industry; when Tesla became a commercial and ideological threat to the internal combustion engine; when the Internet revolutionized the way people communicate and use digital tools; or when mega systems like Google, Amazon, eBay and Facebook emerged, forcing the world to radically redefine retail, advertising, logistics, media, marketing, transparency, etc.
As analysts say, the only thing in the 21st century that can be called certain is uncertainty. And that’s why vigilance is needed, and scanning the horizon both wide and deep is mandatory.
It’s important to remember that you’re not trying to identify a specific option that’s right for your company. The path and effort put into creating these predictions is in many ways just as important as the predictions themselves. By the time each prediction is completed, everyone involved will have formed a clearer idea of what their future or its options might look like and, most importantly, how to act to make the best one come true.
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