Thinking About Now, Next, and Beyond

 

As a director, you face a constant challenge: how to safeguard today’s performance while ensuring tomorrow’s relevance. It’s easy to find yourself locked into short-term thinking at the expense of long-term health.

The McKinsey Three Horizons of Growth framework can help you out of this trap. It provides a structured lens for balancing oversight across Now (current operations), Next (emerging opportunities), and Beyond (future innovation).

Adopting the framework requires a mindset shift from considering yourself as a guardian of the present to a steward of the future. Being future-ready is critical for all types of boards these days, whether for-profit or non-profit.

Let’s learn more about how the Three Horizons framework can be a powerful tool for boards.

Seeing the Future Across Three Horizons

Three Horizons is a structured thinking framework – a systematic approach to organizing your thoughts. It divides the way you think about organizational initiatives into three distinct but interconnected timeframes.

• Horizon 1: Extend and defend the core business or mission. This horizon, with its short-term focus of one or two years, is about ensuring operations run smoothly and risks are managed.
• Horizon 2: Build emerging businesses or programs. The focus for Horizon 2 is about what happens over the next two to five years. It’s about testing new ideas and conducting pilots to validate scalability, secure resources, and mitigate risks.
• Horizon 3: Create viable options for the future. This horizon focuses on the longer term –  beyond five years. It’s about ideas that could reshape the organization’s future but are still highly uncertain. The focus is on fostering innovation, ensuring strategic alignment, and monitoring early signals.

Don’t get hung up on time frames like “one or two years” or “beyond five years.” As argued by Steve Blank in the HBR article McKinsey’s Three Horizons Model Defined Innovation for Years. Here’s Why It No Longer Applies, Horizon 3 disruption occurs much faster today than it did a couple of decades ago when the Three Horizons framework first appeared. That fact doesn’t diminish its usefulness as a structured thinking framework.

Also, keep in mind that the horizons aren’t totally separated in time. They overlap as shown in this graphic.

Boards and management pay a lot of attention to Horizon 1. What happens there is urgent, measurable, and familiar. But without investment in Horizons 2 and 3, organizations risk stagnation and eventual decline.

In for-profit companies, Horizons 2 and 3 might involve new markets, products, or technologies. In non-profits, they might be new service models, partnerships, or advocacy approaches.

Why Use Three Horizons?

For boards, the framework is powerful because it ensures governance oversight and foresight spans current performance, mid-term scaling opportunities, and long-term innovation bets.

For directors, using the framework to organize their thinking offers several benefits.

• Strategic balance: Avoid short-termism by paying attention to both immediate needs and future opportunities.
• Resource allocation: A clear structure for deciding where to allocate funds, talent, and time.
• Risk oversight: Differentiate risk profiles – Horizon 3 carries a high level of uncertainty but may be critical for survival.
• Challenging assumptions: A tool to ask better questions about priorities and resilience.

The Board’s Role in Each Horizon

For a board, the Three Horizons framework requires the ability to adapt their focus and questions to each horizon.

Horizon 1 – Core Operations

The risk here is complacency – assuming that what works today will work tomorrow. The role of the board is to ensure that the organization’s core activities deliver value efficiently and sustainably, and that there are adequate resources to get the work done.

Horizon 1 oversight involves:

• Monitoring financial health and operational performance.
• Ensuring compliance with regulations and governance standards.
• Tracking stakeholder satisfaction – whether customers, donors, or beneficiaries.

To fulfill their Horizon 1 role, directors can ask questions about revenue, market position, cost discipline, execution capability, and operational and compliance risk. Here are a few examples of insightful questions to ask in Horizon 1.

• How are we performing against our core business KPIs? What trends are emerging?
• What operational efficiencies can be implemented?
• What risks are most pressing right now – competitive threats, supply chain disruptions, geopolitical uncertainty, regulatory changes? How are we responding?

For a non-profit, sample Horizon 1 questions include:

• How effectively are we delivering our core programs relative to our mission objectives?
• How stable and diversified are our funding sources for core operations?
• What steps are we taking to maintain volunteer engagement?

Horizon 2 – Emerging Opportunities

Horizon 2 oversight requires a willingness to embrace calculated risks and support management in the transition from experimentation to execution. This horizon is about scaling what works – launching pilots to test initiatives and moving the successful ones into mainstream operations.

For the board, Horizon 2 involves:

• Assessing whether new initiatives are ready for scaling.
• Ensuring resources are available for growth without undermining core operations.
• Monitoring how these initiatives are performing against expectations.

In Horizon 2, directors’ questions are about identifying opportunities, maintaining strategic coherence, and ensuring a portfolio that balances risk and opportunity. The board should focus on execution challenges, human capital needs, resource utilization, and potential collaboration. Here are some sample questions:

• Which new products or services show the strongest early traction?
• What partnerships or alliances could accelerate growth?
• What talent or leadership changes are needed to support scaling?

For a non-profit, potential questions include:

• How do new initiatives align with our mission and avoid mission drift?
• How are we building capacity – staff, volunteers, systems – to support scaling?
• How do we measure the social impact of these initiatives, not just outputs?

Horizon 3 – Future Options

Horizon 3 is the realm of blue sky thinking. It demands patience, resilience, and openness to ideas that may not pay off for years. Management is often uncomfortable spending their limited time working on Horizon 3. That being so, boards play a critical role in ensuring the organization doesn’t ignore disruption and neglect the future. Here, directors can:

• Encourage management to explore bold ideas aligned with mission and strategy.
• Approve investment in high-uncertainty initiatives with transformative potential.
• Monitor early signals to determine which ideas merit further development.

In Horizon 3, directors’ questions are about preparing for disruption by being agile, ready, and committed to innovation. The board should focus on supporting an innovation pipeline with ideas from a variety of sources, ensuring there’s a strategic focus on innovation, and addressing governance-level capabilities.

Here are some sample questions:

• What major trends or technologies could disrupt our industry in the next decade?
• How do we ensure the board has the right expertise to consider Horizon 3 initiatives?
• How prepared are we to pivot our business model if a Horizon 3 opportunity proves viable? What might we have to stop doing?

Sample non-profit questions include:

• What societal trends could create new opportunities or threats to our mission?
• What bold ideas could transform the way we deliver on our mission over the next decade?
• What alternative funding models could sustain our mission if current sources decline or disappear?

A Shift in Mindset

The Three Horizons framework offers boards a disciplined way to balance the urgent with the important, the proven with the possible. For individual directors, it’s not just a tool – it’s a mindset shift.

To properly see a far distant horizon requires a high elevation. But being high up results in sparse detail, blurred images, and a high level of uncertainty about what you’re really seeing. As a director, you’ve got to accept that, the further out you’re trying to see, the less you can know. 

Here are some practical tips to help you shift your mindset.

Shift from quarterly results to balanced horizons thinking. You may be accustomed to focusing on short-term performance metrics because they’re a tangible, readily available way to measure success. With Three Horizons, you need to value initiatives that likely won’t yield immediate results but are critical for the future.

Tip: Before the board meeting, review agenda items and classify them mentally into Horizon 1, 2, or 3. If Horizons 2 and 3 items are getting less attention, make a conscious effort to rebalance the conversation.

Shift from risk avoidance to risk balance. Rather than avoiding risk altogether, learn to recognize the different risk profiles that characterize the three horizons.

• Horizon 1: Operational and compliance risk is often higher likelihood but lower impact.
• Horizon 2: Scaling risk is moderately likely with a potentially high impact.
• Horizon 3: Innovation risk has a high level of uncertainty but is potentially transformative.

Tip: When evaluating a Horizon 3 proposal, don’t judge it by Horizon 1 metrics. Instead, ask, “What is the potential strategic payoff? What would we lose if we do nothing?”

Shift from operational oversight to strategic partner. Boards often focus heavily on monitoring operations. That’s appropriate for Horizon 1, but for Horizons 2 and 3 directors need to be strategic partners – offering guidance, asking challenging questions, and supporting management as they try to navigate uncertainty and ambiguity.

Tip: During board meetings, probe long-term implications, not just current performance. Ask, “What could this initiative look like in 5 years?” rather than “How is it performing this quarter?”

Shift from individual expertise to collective intelligence. The Three Horizons framework works best when directors combine their various perspectives to assess opportunities across different timeframes.

Tip: In horizon discussions, listen for viewpoints outside your own expertise. Diversity of thought helps spot blind spots and identify opportunities that a single perspective might miss.

Implementing the Three Horizons Framework

Shifting individual directors’ mindsets is only the beginning. Boards need to embed the framework into their governance processes. Here’s how:

• Map current initiatives by horizon. Create a chart that places all significant projects and programs into Horizons 1, 2, or 3 to help directors see where focus and resources are going.
• Choose horizon-appropriate KPIs. Measure success differently in each horizon. Operational efficiency in Horizon 1, scaling metrics in Horizon 2, and innovation pipeline health in Horizon 3.
• Integrate horizon reviews into agendas. Ensure each horizon gets dedicated discussion time in board meetings, rather than letting Horizon 1 dominate.
• Educate directors on emerging trends. Arrange for regular briefings or external expert sessions to keep directors informed about trends shaping the future.
• Tie resource allocation to strategic balance. Review budgets with an explicit lens on whether resources are appropriately distributed across horizons.

Your takeaways:

• Horizon 1 keeps the lights on and Horizon 3 imagines the future. Horizon 2 is the bridge between them.
• By moving beyond short-term metrics, embracing different risk profiles, partnering with management, and leveraging collective intelligence, the board isn’t just protecting today’s success, it’s actively shaping tomorrow’s opportunities.
• Adopting the Three Horizons framework takes practice. Start by mapping current initiatives into the three horizons and adjusting agendas to give each horizon its due time.
• Make sure your board has the talent it needs to be future-ready.
• Commit to the personal mindset changes that make thinking about now, next, and beyond possible.

Resources:

• What is the 3 horizons model & how can you use it? Arne Van Balen. © 2025 BOI (Board of Innovation).
• Three Horizons of Growth. Mithun A. Sridharan. Think Insights. December 2024.
• Navigating Business Success: A Deep Dive into McKinsey’s 3 Horizons of Growth Framework. Mark Bridges. Medium.com. September 2023.
• McKinsey’s Three Horizons Model Defined Innovation for Years. Here’s Why It No Longer Applies. Steve Blank. Harvard Business Review. February 2019.

Thank you.

Scott

Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online membership with practical tools and valuable insights designed for directors at every stage – from first appointment to seasoned board leader.

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