Funding the Third Horizon

Back in September 2021 I co-hosted one of the Philea Community of Practice sessions I run. The focus of the conversation was to explore what it means to fund the ‘third horizon.’ Obviously the perfect guest speaker for this was Graham Leicester. It was a rich discussion so I wanted to share more — and it’s also relevant to some of the current consulting work I’m doing, supporting philanthropists to see the value in investing their money in this ‘riskier,’ more unknown territory.

IFF Three Horizon Model — created by Bill Sharpe

Graham first introduced the Three Horizons model. For horizon 1 he spoke of a dominant pattern of activity, often known as ‘business as usual’.

“It’s the way things are done around here.”

Whatever the sector or context there’s always a ‘business as usual’ dominant pattern. Often if you metaphorically stand in that place and anticipate the future potential you can see how many of the ‘business as usual’ systems are going to fail. They are under increasing pressure, beginning to show signs of strain, and they’re under pressure because the world is changing. It’s not because anyone is doing anything wrong (although some people are!), it’s just that the world is changing, and nothing lasts forever.

If you are seeing things through a 3rd horizon lens you know that these patterns are failing and why. You can also see a future in which a very different pattern of activity emerges. As Graham said, this is the “I Have a Dream. I have a dream that one day the world will be very different and that 3rd horizon pattern is going to grow and become more dominant.” Importantly, you can already see the 3rd horizon patterns in the present too.

In the 2nd horizon — in between the two — there’s a rise and fall of a pattern of innovation. Here, through a 2nd horizon lens, you can sense all kinds of opportunities, not looking to the distant future but knowing in this moment there could be all kinds of novel things that might work, that might shift the system.

Those three lens’ or perspectives are three different patterns of activity and the interaction between those three patterns of activity can all be sensed in the present. How these weave together and play out against each other over time creates the future.

This was Graham’s explanation of the Three Horizon’s and you can read more on the IFF website. Kate Raworth also does a great 6 mins introduction to the Three Horizon’s here.

A few other key points that Graham shared. One is that all three horizons are always present. The 1st horizon doesn’t go away completely. Some aspects of the 1st horizon will still have a role in the future. However, what Graham felt was most critical to emphasise and something I feel that philanthropy needs to hear, is that in most conversations about whether to prop up business as usual and invest in what we know, or to try something different, the 3rd horizon ‘visionary’ voice gets drowned out. Especially in a policy context or a frontline funding context — where people’s focus is often on the immediate issues that need solving.

I thought it was really powerful when Graham described the Three Horizons as “giving vision a voice. It gets an equal place at the table.”

What’s this got to do with funding?

This was a presentation and then discussion with a group of Funding Strategy Directors from across Europe so we shared ideas about how it all relates to funding.

How to bring greater awareness of the future into the present.

Graham talked about “the future is not necessarily somewhere we go, it’s somewhere we live, but we’re not so aware of it.”

In my view, this is vital competence to be developed in funding practice. IFF talks about street level competence and it’s something I looked to grow as a capacity at TNLCF by initiating (though Hannah and Melissa deserve all the credit for persisting with it) the Scanning + Sensing Network, which IFF helped to run. For the sessions IFF used their simple framework of just three questions. For the 1st horizon perspective they ask “what’s troubling at the moment?” That might draw out what people are seeing in the landscape that feels as if it’s failing. For the 2nd horizon they ask “what’s working?” And for the 3rd horizon — “what’s hopeful?” Asking any group those questions will create a map, drawing out their strategic sense of the potential in a landscape.

“It’s a kind of strategic capacity that is revealed in us. We already have it, we are already thinking about three horizons.” — Graham Leicester

Question for funders —

  • How many funders are investing in their staff, grantees and other partners to be able to sense and spot the seeds of the 3rd horizon
  • And what difference might this make to what and how you fund?

Not falling for the sustaining innovation trap

The main part of our discussion was focussed on the 2nd horizon. This is where a pattern of innovation exists. It’s often the home of the entrepreneur or those people who are great at problem solving and coming up with new ideas. However these innovations can go either way. They can help to solve some of the problems of the failing first horizon or they can be transformative.

This distinction between these two kinds of innovation is important — sustaining innovation that repairs, props up, keeps going, makes more efficient, improves business as usual, and transformative innovation that makes more space for a very different system to emerge.

Sustaining innovation or what some might refer to as ‘continuous improvement’ is not the same as transformative innovation. You can’t get to the 3rd horizon by simply improving the first; this is the paradigm shift. And to some extent we need both — some of the 1st horizon does need to exist, to be sustained and continually improved whilst other work is focussed on the system transition.

The challenge for funders is to know the difference.

We discussed whether this was a competency or a practice — being able to determine the difference between the two. Graham described the following -

It’s not a function of the innovation that makes it sustaining or transformative. It’s a function of which pattern you want it to fit into. Take the example of wind power — wind power is an innovation but we can take it in any number of different directions. We can replace our existing centralised power stations connected to the centralised grid with massive wind farms. That doesn’t change the pattern. It takes the technology and fits it into the old pattern. Or we can say this is the chance to have distributed power generators for all and much more sustainable local community living. We’re going to have small scale wind turbines on top of every house that’s built and retrofit whatever’s there. That’s the same technology but fitting into a different pattern and based on different values. So it’s not about technology, it’s not about the ‘innovation’. It’s about where you see it fitting into wider social and cultural patterns and values?”

I loved this example because it helped me understand why I have felt frustrated at times with participatory or ‘shifting power’ approaches — those approaches are incidental if they are still being used in a 2nd horizon pattern.

Questions for funders are —

  • How are you noticing the 3rd horizon? There may be aspects that you do intuitively but if you’re committed to funding more system-shifting, speculative and experimental work, how are you making a distinction between the sustaining and the transformative? What kind of lenses are you using? What is helping you make that distinction?
  • And are you asking grantees and potential grantees — do you have a third horizon view? Have you got a vision of the future that’s substantially different from the present?

Supporting pioneers, showing solidarity, taking ‘risk’

Within these three perspectives, if you’re responsible for the 1st horizon and keeping it going then you will likely have a managerial perspective. You’re held to account for keeping things working, it has to be reliable and efficient. The risk for the manager is failure. Horizon one is also often where the power is (or a certain kind of power), where the money is and where the Honours are handed out.

The 2nd horizon is more of an entrepreneurial perspective — you’re looking for opportunities, it’s about speed, and the right thing at the right time. There’s always something to be done or something to explore. The risk for the entrepreneur is missing the boat, being too late and/ or failing to learn.

The third horizon is the visionary perspective — someone who has got a sense of a very different world. They are committed to standing for something different, showing that it is possible in the present to live this way. And they try to encourage us that maybe we can all live that way. The risk for the visionary is burnout, loss of integrity and loss of heart. It takes a lot to stand against the dominant culture. And that speaks to the typical fate of these initiatives that are trying to show and be the future in the present.

“I think there’s a black hole of support. How do we support transformative initiatives which have shown their transformative potential, after 2 or 3 years, and it’s just that moment that they either die or get reabsorbed by the business-as-usual system. I think there’s a missing bit of infrastructure here to allow them to go on and realise their full potential.” — Graham Leicester

There’s a lot of self preservation and self protection within philanthropy and on some level we are probably all trying to convince ourselves that what we’re doing will be enough. It’s difficult to hold both perspectives that whilst we are doing something, what we are doing may not be enough — that we need to think both of the 2nd and 3rd horizons.

Questions for funders are —

  • Are you looking for burn out in those visionaries you fund? And offering ways to support them?
  • Are you funding better infrastructures and conditions to ensure that those propositioning the 3rd horizon stay standing?
  • Are you doing all you can to remove barriers and show solidarity to those trying to bring the future into the present?
  • Are you open to and curious about holding that tension between the 2nd and 3rd horizons — and looking at what it means to fund both?

Explicitly bringing out the 3rd horizon

“The three horizons patterns are in all of us. I am a 1st horizon manager because I like the trains to run on time. I rely on these big systems continuing to be reliable. I’d like them to be more efficient and I complain when they fail but I want them to exist. So I’ve got a 1st horizon personality. I’ve got a second horizon personality — I’m full of ideas for improving things which are not going to change the world but will make my life easier. And I’ve got a visionary personality. I invest my visionary personality in certain domains. For every person in the room, there are actually three people.” — Graham Leicester

As Graham set out, we all have those different horizon perspectives in each of us, so something that is particularly relevant for funders that want to resource transformative initiatives is how they bring out that 3rd horizon potential. If you want the 3rd horizon to show up in funding proposals then you need to ask a certain type of question in funding application forms. If you want to fund the 3rd horizon, don’t seek out people who are asking how they could improve the existing system, seek out those that are questioning whether the system is the right system in the first place.

Questions for funders are —

  • How is what you’re asking of potential grantees speaking to that 3rd horizon?
  • How are your processes encouraging the third horizon to express itself?
  • Are you willing to let go of being shown something that worked previously? 3rd horizon work can’t be validated by showing something that has worked previously. It’s new. It’s different.
  • And with your existing grantees to what extent are you framing your ongoing relationship with them so that the third horizon can come up in the conversation and stay there long enough to become convincing and practical?

Thank you to Graham Leicester for his excellent session and to Stefanos Oikonomou, my Co-host at the Philea Community of Practice.

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Working with Joseph Rowntree Foundation, EarthPercent, P4NE, Policy Fellow IIPP, Co-founder Point People, Founder Stewarding Loss, International Futures Forum.

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