Transitions

& Horizon Scanning

 Overview
This guide is designed to help systems changers better understand the key
aspects of transitions and how to model a transition process using the Three
Horizons Framework. The Three Horizon model provides structure to aid our
thinking about how transition processes evolve by looking at the driving forces
of innovation, the decline of incumbent systems, and the emergence of new
patterns of organization. The guide should be of relevance to anyone looking
to better understand and shape a transition process.
 Contents

Transitions Horizon Scanning Trend Analysis Exploring

Understanding transitions, Learn the Three Horizons Track the evolution of the Engage in futuring by
nonlinear change, and Framework for modeling different trends and driving exploring different
bifurcations transitions forces possibilities
Transitions
 Overview
The three Horizons model we explore in this guide is designed to
help us think about transitions. This is important to systems
changers because the only time we get to do large-scale system
change is when a system is in transition. When a complex
organization is in its normal state one's capacity to alter the whole
organization will be close to zero. As long as an organization is in or
near its normal state of operation it will strongly resist systemic
change. If there is no sign of crisis in the system there is virtually
no potential to alter it on a systemic level.

Our only chance for effecting systemic change in a large-scale

complex system is when the current paradigm is no longer
working. Not only this but the system will have already had to have
faced a number of critical issues that the old model has being
proven manifestly incapable of solving before the mainstream of
the organization will be ready for any form of major
transformation.
 "The easiest conditions under which to convince any organization to change is when
it's in the state of crisis when it's stability or survival is threatened. If it's desperate
enough it's willing to change in ways that it would never otherwise consider and
therefore one of the important techniques that are available is to show any
organization, no matter how successful it is, that in its current future there is a crisis
impending. The way that's done is you assume that the organization will continue to
do what it's doing now indefinitely into the future and you assume the organization's
environment will change but only in ways that it expects. Now if you project the future
and the organization under those two conditions, you have a non-adaptive
organization and a changing environment and therefore ultimately through non-
adaptation destroy itself… the projection reveals the Achilles heel of the organization.”
- Russell Ackoff
 Example
As illustration we can take the environmental movement. Just forty or fifty years ago, a lot of effort was
put into changing our economic system by environmentalist but very little happened. It is only now that
an environmental crisis is apparent and the limitations of current solutions in the face of that are
apparent that there is the possibility for systems change. However, the time to solve the environmental
crisis was thirty or forty years ago, now it is too late to solve those issues within the existing model. This
highlights how a transition implies that we are not going back to the old model.

The reason that the term systems innovation and systems change have risen to prominence today is
due to fundamental transformations taking place in the global economy. These transformations are the
drivers of change and it is really only by harnessing them that we can really hope to change anything on
a fundamental level. As we will see this insight is capture in the Three Horizons model
 The Nature of Transitions
With complex systems we never really get to redesign some new system, system change is
really about enabling transitions within an organization. A transition is a process or a period
of change from one condition to another. Transitions are pervasive in nature, many different
types of systems undergo rapid change before emerging in a new form or state of semi
stability on the other side. Children become adults, seeds become plants, a town becomes a
metropolis, but the classic example of a transition is the metamorphosis of a caterpillar into
a butterfly.
 Structural Changes
Transitions are change in the whole systems structure, not
simply changes in any of its parts as would be the case
during normal incremental periods of change. Transitions
are different from normal linear processes of change
where there is only a change in the individual parts, with
phase transitions, new macro-level structures emerge. For
example, as ice goes through a phase transition to
become water the overall structure of the substance
changes without any of the individual atoms or molecules
being changed. During a transition, the parts may stay
largely unchanged but the context around them changes
fundamentally.
 Paradigm Shift
A change in the overall system pattern we may term a
paradigm shift. Typically two overall patterns are mutually
exclusive, when we flip a coin we either get a head or a tail
not somewhere in between. Two people can exchange a song
if they both use analog or both use digital but the two overall
patterns are mutually exclusive, they both have to use the
same pattern to enable the exchange.

This is why paradigm shifts happen very rarely and happen

fast because there are huge dislocations and inefficiencies
created by having two fundamentally different patterns in
the system and because there are huge advantages gained by
everyone using the same basic pattern. The system will thus
strongly resist staying in the transition process and once it
finds the new pattern move rapidly into it fueled by network
effects.
 Qualitative Change
Transitions are change in the whole systems structure,
not simply changes in any of its parts as would be the
case during normal stable linear periods of change. Major
systems change comes about as a function of a qualitative
change in the system, not a quantitative change.
Qualitative change is a systems-level transformation
because it is not about the system doing what it does
better, fast or more efficiently, it is about the system
doing something different. It is a change in the context
within which the system exists; a change in the
understanding of the end objective of the system and the
function it performs and as a consequence the enabling
structures and organizations required to fulfill these new
functions.
 Unsustainable
If a system is not in crisis then it is not going through a systemic
transformation. A crisis is one dimension to a systemic
transformation. A systemic transformation implies that the
system cannot go on doing what it did in the past, this is
exhibited by some form of unsustainable phenomenon. In a
transition the system cannot go on operating as it did in the past
and likewise it cannot stay where it is because it is consuming
too many resources, it has to and will change; the only question
is will it degrade to a lower level or integrate to a higher level.

Understanding the transition process and possible pathways

forward should be the main focus as thinking about going back,
staying where you are, or envisioning a future that looks similar
to the present is no longer relevant. By definition, a transition
implies that the system will change and the future state will not
be similar to the past.
 "All systems have lives, no system is eternal and that goes for the universe
as an entire system to the smallest sub atom. All systems have lives and the
reason they all have lives is because they all have internal contradictions,
and over time they move far from equilibrium and when they move far
enough from equilibrium they begin to oscillate enormously and they have,
what the scientists of complexity call, this chaotic situation, a bifurcation
and at that point the system can not survive but where it will go is uncertain
because there are two alternative possibilities, that is a general premise.”
- Immanuel Wallerstein
 Bifurcations
A bifurcation is when something splits into two different parts.
In this case, it is a divide between the old structures that begin
to disintegrate and the new structures as previously latent
patterns in the system emerge in response to the changing
context. During a transition the system starts to separate out
into two distinct regimes; business as usual, that is starting to
collapse and a second new pattern that starts to emerge.

During a transition the centralized structures that supported

the system in the previous regime become no longer
functional, they can no longer be depended upon to deliver the
required solutions to problems that extend beyond their level
of structural complexity; in the face of such problems, they
appear at best paralyzed. In order for the system to maintain its
level of functionality or evolve into a new form, new functional
structures have to emerge out of the distributed parts.
Horizons
Scanning
 What is Horizon Scanning?
Horizon scanning is used by organisations in complex dynamic environments as
a way to reason about the future. It is a method for identifying early signs of
potentially significant developments through a systematic examination of
opportunities. It explores novel and unexpected issues, including matters at the
margins of current thinking that challenge past assumptions. It seeks to
understand what is likely to continue and what could plausibly change. Horizon
Scanning is viewed as a search for “signals” and is generally found at the
beginning of any forward-looking activity.
 “Horizon Scanning is the systematic outlook to detect early signs of potentially
important developments. These can be weak (or early) signals, trends, wild cards or
other developments, persistent problems, risks and threats, including matters at the
margins of current thinking that challenge past assumptions. Horizon Scanning can
be completely explorative and open or be a limited search for information in a
specific field based on the objectives of the respective projects or tasks. It seeks to
determine what is constant, what may change, and what is constantly changing in
the time horizon under analysis. A set of criteria is used in the searching and/or
filtering process. The time horizon can be short-, medium- or long-term"
(Cuhls et al., 2015)
 Why Horizon Scanning?
As individuals and organizations to take actions we are required to think about the
future and what may occur. Thus effective foresight has always been important in
human life, but now our world is changing faster than ever before. Our social
institutions, technologies, jobs, and natural environment are all shifting radically,
making it very difficult to look ahead and prepare for future challenges and
opportunities. The result is that we often become somewhat fatalistic, thinking
that we cannot know or do anything about our future. The core purpose of
Foresight and Horizon Scanning activities is to better anticipate future
opportunities or threats and to identify issues in the present that are of major
importance for possible futures.
 Three Horizons
The Three Horizons Framework is a tool for thinking about transformation and
how to bring it about. It is designed to aid thinking about current expectations,
rising developments, possible and desired futures. Although displayed as a
chart The Three Horizons model is not a prediction it is more a schema, a tool
to support and structure our thinking about the future and how different trends
may evolve over time. We are asking where is business as usual taking us,
where do we want to go, what are the trends taking us forwards and, how are
or can those driving forces be harness to take us in either direction.

With transitions in complex systems, the future is not something to be

predicted but instead, it emerges. Thus we should give up trying to predict a
specific outcome, instead try to see pockets of the future in the present and
how certain trends are taking us forward. The Three Horizons Framework by Bill
Sharpe is one model that helps us in reasoning about the future in this fashion.
 Framing Dialogue Seeing Patterns
Works as a scaffolding for Works to make explicit the
dialogue among actors with processes of power and
different mindsets patterns of renewal

Why Three
Guidance Transformation
Horizons Model? Helps distinguish between
Enables the exploration of
how to possibly guide a incremental and transformative
transition change

Schema Present Potential

It provides a simple schema Creates awareness of the
for reasoning about complex future potential in the present
change processes moment
 Agency
Futures is the study of change and possibility. It looks at
what can be considered constant and what variables could
influence how the future could develop. Some of these
variables may be within our scope to change, others are
beyond our control. Futuring can help us idenXfy what
aspects of the future we might be able to influence and
what may hinder their alteraXon.

In this respect, Bill Sharpe idenXfies two key factors in

thinking about the future and horizon scanning. These
include the ability to act - what we call agency - and the
degree of uncertainty about the future. Both are variables,
as it is about our capacity to act and how much
uncertainty are we prepared to deal with in this situaXon.
Agency
Road Maps
E.g. Roadmap for peace
All agree on what to do
Removal of uncertainty
Pushing uncertainty out of sight
Moving along a path together
Forecast Planning
E.g. Economic forecast
Future similar to the past
Can use probabilities
Quantitive models
Pathways
E.g. Transformations
Unknown territory
Path unfolds as you take it
Own sense of purpose
We shape the future
Reflexive future
Scenario Planning
E.g. Shell Scenarios
Stories of the future
What might happen
Uncertainty
 Patterns
Transitions are changes in patterns and the foundations of
the Three Horizons model is patterns. The model is
attempting to identify how patterns of organization change
over time. This framework includes three lines, with each
line representing a system or pattern in the way things are
done, e.g. a mode of economic production, how an
organization operates, a given set of values a society. As
Bill Sharpe says “Caterpillars can't get to be a butterfly by
getting fatter, at a certain point it has to dissolve its
structure, create a new pattern amongst the imaginal cells
and from that the butterfly can emerge, so the analogy is
similar for institutions"
 Key Considerations
Time and change of pattern form the two axes to the Three Horizons model

Time Pattern
How far out into the What is the dominant
future are we looking pattern of organization
 Axes
The Y-axis represents what is the dominant pattern of organization, a
measure of the scope and scale of that pattern, while the X-axis tracks time.

Pattern

Time
 Time Horizons

Present Transition Future

Pattern

Time
 Horizons
This framework posits that in the context of transformation there are always at
least three qualities of the future visible in the present. Three horizons are involved
in the dynamic that offer insights into possible alternative futures.

Aspirational Business as Usual Disruptive Innovations

The desired future The dominant system at Current innovations that are
present driving change
 Dominant Pattern H1

H1
 H1 - Business as Usual
The line h1 represents business as usual, the
dominant way of doing things today; this is the
way that our lives are lived at present, it is what
we know to be the exisXng pa]ern of
organizaXon. An example of the H1 pa]ern would
be the plasXcs economy, the usage of plasXc is a
dominant one virtually anywhere we might go.
Society relies on stable pa]erns for the everyday
business of life, and most change is incremental
within these familiar pa]erns and serves to
simply reproduce and reinforce them.
 Dominant Pattern
The trajectory is managerial in nature, as it represents a
system in use, and managers who have to keep it
running, it is the way that things get done today.
Typically it involves pracXcing incremental innovaXon
using familiar approaches to help improve the exisXng
system.

However, this pa]ern was created and adapted to a

world of yesterday and the current context is changing
which implies that it is not fit for the future and it
contains the seeds of its own demise, thus over Xme we
predict that it will decline. The starXng point of a
three horizon conversaXon is the recogniXon that the
first horizon pa]ern is losing its fit with emerging
condiXons
 H3 Alternatives
There are always people who are trying something different other
than the dominant paradigm and they start to form a new pa]ern
that is represented by a line h3. This line represents the pockets of
the future led by people who see the need to do something
different. They are the visionaries and by doing something
different create pockets of the future in the present.

These are new actors, with new assumpXons and new values;
usually done by visionary individuals gathering small groups of
people around them to stand for something different and try and
bring it into reality. These alternaXves can be seen as the future
we want and the seeds of that future are present and visible
today. We want to see them grow unXl they become the
predominant way of doing things, essenXally replacing and
improving upon the old h1.
H3 - Alternatives

H3
 Pockets of the Future
By doing something different people can create pockets
of the future in the present. A "pocket of the future"
may be thought of as a visible acXvity, idea, pracXce, or
thing that is uncommon and marginal in the present
moment but has the potenXal to become more
prevalent and impac`ul in the future.

Pockets of the future are important weak signals that

have the potenXal to profoundly influence the
organizaXon’s core challenge. The reason these are
important and termed pockets of the future and not just
random anomalies is because they are in some way
aligned with major trends and the future emergent
landscape; we see their supporXng context growing and
thus their future potenXal.
 Visionary
As these new pa]erns do not yet exist at scale
the mode of bringing H3 into being is that of the
visionary mindset. All that really exists in this
trajectory is the belief of the holders, we can
choose to believe in them or not. The evidence of
this trajectory is simply the commitment of the
holders as if they stay believing in it it may come
true and that is all there really is.
 H2 - Innovation
Between these two lines is a line h2 an emerging pa]ern that
represents the current innovaXons, it is the arena of
disrupXve innovaXon. These disrupXons can take many forms,
a new technology, a natural disaster or climate change, a
social movement, a new concept like sustainability, or cultural
innovaXon like rock music in the mid-20th century.
DisrupXons are likely to create innovaXons, new ways of doing
or being as different actors step in and innovate in the
dynamic space of change between h1 and h3. The important
quesXon for us is how disrupXve innovaXons will affect the
transformaXon between the two.
 H2 - Disruptive Innovations

H2
 Mindsets
This model is not only a way of thinking about the future but also helps us to recognize our
mindsets about the future and how those different mindsets conflict or can be made to
work synergisXcally.

Time is an important aspect of this model. The model is about not just recognizing these as
a short middle and long term future, but as three qualiXes of the future in the present
moment, three different ways of behaving towards the future that we all have available. In
different parts of our lives, we mobilize one or other of them and we can recognize other
people behaving according to one or other.

For example, the entrepreneurial outlook is an opportunisXc stance, in this sense Xme feels
like opportunity cost. While in the managerial world of H1 Xme is like a resource, or in the
world of H3 where Xme is more about desXny.
Trend
Analysis
 Change
Rarely in reality is change all one thing it is more ofen a messy combinaXon of many. The value of
this model is that it can serve as a mode of inquiry to help us to reason about different dynamics of
change how different scenarios interact. Some of the forces of innovaXon in the second horizon
actually if they succeeded would help to maintain the status quo whereas some of them if they
succeed it will help to bridge to that third horizon vision.
 H2 Minus
H2 minus is one scenario where new innovaXons are used to
keep going and make more efficient or faster the exisXng
pa]ern without quesXoning it. For example, we see plenty of
this with digital technologies that have the potenXal to
fundamentally disrupt exisXng economic models but ofen get
co-opted by exisXng commercial influences. Take for example
the sharing economy concept in the early 2000s, over Xme
commercial interest caught on to the concept and worked to
commercialize it with today's pla`orms like Alibaba or Airbnb.
As such H2 minus is a scenario where the current driving
forces of innovaXon play out to express the interests of the
incumbent actors.
 H2 Plus
H2 plus are new innovaXons that go towards building
the infrastructure for the emergence of new kinds of
organizaXons represented by h3. This is a disrupXve
innovaXon that has been harnessed to bring through
the emerging future and so it helps to hasten the
decline of h1. Wikipedia might be an example of this
where technology has been used to demonstrate a
different mode of producXon, i.e. peer-producXon.
Thus H2 plus innovaXons work to take us towards our
desired future.
 H3
Waves
The model helps us to reason about
many more such scenarios. For
example where the the first captures
the invenXons of a second and the
third grows slowly over Xme and
then zooms past it.
 Questions
Thus in any context of transformaXon, there are three
overriding quesXons that we should be asking
ourselves; what is being born and how can we help it to
arrive well? What is dying and how can we help it to let
go and leave well? What is being disrupXve and how
can it be harnessed to create the H2 plus scenario
rather than leing it be captured to result in the H2
minus scenario?
Exploration
 Exploring
In their paper on the subject Bill Sharpe and co. illustrate five key steps involved in
applying the Three Horizons model in pracXce

2. Exploring 3. Exploring inspirational

1. Examining future aspirations practice in the present
present concerns

5. Essential features 4. Innovations

to maintain in play
 1. Business As Usual
A three horizon conversaXon may start with examining
contemporary issues. This involves bringing the issue of
concern into view and describing how the current way of
doing things is seen to be losing its fit with emerging
condiXons. With a group of people, we can draw a chart up
on the wall and ask, what is business as usual? How did we
get to that? How fast is the current pa]ern declining and
what aspects of it might we want to see retained?
 2. Possibilities
Exploring future aspiraXons involves looking at the third
horizon, where aspiraXons, visions, and possibiliXes for the
reality that will unfold over Xme are discussed as an
alternaXve to the current way of doing things. We can now
look at h3 and ask what is the future we want to bring
realize? What does it look like or feel like to live in that
world?
 3. How to get there?
In the pracXce of Three Horizons, a key step is exploring
inspiraXonal pracXces in the present. These are examples of
the third horizon visible now - pockets of the future in the
present. The aim is to consider how this new pa]ern can
emerge through the transiXonal second horizon. We can ask
what in the present leads to that future, and where are the
seedlings, what history values and culture are embedded
within them? We should be able to give specific examples of
this as they should already exist. We can ask how may they
be scaled to become more prevalent and give examples of
people who are already working on that.
 4. Harnessing Disruption
This step explores the second horizon to idenXfy innovaXons
that can be seen to be emerging as a response to the failings
of the first horizon and the possibiliXes of the third. We can
also look at the disrupXve trends, what are they? We can
start to analyze them to understand them be]er, they should
be mulXfaceted, poliXcal, environmental, economic,
technological. What would it look like for that trend to extend
into the business as usual world? What can be done to try
and harness it? We can look at examples of both, cases
where it is being used to build the new and where the trend
was usurped by the dominant paradigm.
 5. Maintenance
EvoluXon within complex adapXve systems never
involves completely removing the past regime, but
instead building upon and remaking it in many
different ways. Thus the final step draws a]enXon to
those aspects of the old system that will persist into
the future within the context of the new dominant
system. These are ofen examined as the key or
desirable elements that need to be retained.
Conclusion
 Reference
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