Figure 1: Celestial Battle, Nicholas Roerich, 1912 Russian State Museum (https://en.wikipedia.org/wiki/Nicholas_Roerich)

After the Gold Rush, What Is Over the Third Horizon?

There is broad recognition that ecological and economic upheaval are driving humanity toward an inflection point. Depending on who you ask, we are variously on the road to destruction, the road to redemption, or the road to regenerative revolution, and points in between.

We are in a continuous transition comprised in differing measures, and progressing in parallel, of yesterday’s sustainability agenda, tomorrow’s stakeholder capitalism, and a future of synergistic human and ecological development. How these horizons of change can contribute to a future in which economy and ecology are developed in synergy is the existential question of the 21st Century.

Essential context today: there is nearly global unanimity on the dire and accelerating consequences of climate change. Natural systems on which humans fundamentally depend, and which have intrinsic and spiritual value, are degrading at a breath-taking rate. For example, 11,000 square kilometers of Brazilian Amazon rain forest were destroyed from August 2019 to July 2020.[1] Look no further than the IPBES report of 2019 to get a sobering, unanimous view of humanity cutting the branch on which it is resting.[2]

Similarly, there is a revolution in production and consumption that is disrupting labor markets and social contracts between people and governments across the world. The World Economic Forum estimates that 85 million jobs will be lost in the next five years, while the “robot revolution” will create 97 million new ones. The report notes that “communities most at risk from disruption will need support from businesses and governments.”[3] Such support, will require an unprecedented effort and changed social policies, if not wholesale changes in the logic that underlies modern economies.

For those committed to a better future in which humanity thrives in the context of synergistic social and environmental relations, understanding the paths and logic in pursuing future-fit opportunities is essential. Developing greater situational awareness can help us to understand the most impactful opportunities and actions we must take as individuals, communities, and nations to cultivate and align our efforts locally and globally.

Our greatest hopes will not be blocked by lack of means, but rather by our ability to correctly perceive our situation and its trajectory, its dangers and potential, and our resolve in marshaling the individual and collective will to rise to the occasion.

Situational awareness is essential in developing and choosing appropriate tools for the job ahead, which is both non-linear and complex. As in earlier epochs, innovators are bringing new tools, understanding, and methodologies to bear in solving challenges and pursuing opportunities. Unlike earlier times, however, the tools we now have at hand are accelerating faster than human intelligence is evolving. As such, we will have greater capacity to address the challenges before us, but we also risk intensifying existing patterns of development. Emerging tools — high tech, old tech, and no tech — will be the subject of a future article, but here it will suffice to say that our greatest hopes will not be blocked by lack of means, but rather by our ability to correctly perceive our situation and its trajectory, its dangers and potential, and our resolve in marshaling the individual and collective will to rise to the occasion.

To describe the various futures available to us, in this article we have used the Three Horizons model, which is familiar to those in business and in the emerging regenerative development movement. Introduced in the seminal 1999 book “The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise,” the Three Horizons model has been widely adapted, including notably in our domain of concern, in the pioneering work of the International Futures Forum.[4][5] It is useful here for illustrating, not the virtues of growth, but as a tool to think about and pursue sometimes radically different approaches to our evolution. The First Horizon represents existing undertakings, the Second Horizon represents emergent ones in which “a concept is taking root”, and the Third Horizon “contains the seeds of tomorrow’s businesses.”

Small steps in thousands of native Third Horizon experiments are happening across the world, and these need to become a movement.

We believe that the Third Horizon (H3) as indicated in the illustration below and identified with principles of bio-mimicry, regeneration, metabolic earth, and ultimately, nature represents a radically different (and already viable) organizing principle that can outperform and out-innovate those offered in H1 and H2. A high priority for those who want to generate systemic change will be to find ways to cultivate today’s native H3 organizations by building ecosystems of practice, propagation of innovation, access to finance, and enabling regulatory and operational environments. Small steps in thousands of native Third Horizon experiments are happening across the world, and these need to become a movement.

This is not to say that we should abandon all H1 and H2 undertakings: they will form an important part of the innovation that will contribute to the emergence of H3 organizations. We argue instead, for cultivating the field for native H3 undertakings with all the intensity possible, even during its early stage of evolution. Doing so will help to accelerate the transition and leapfrog to a new equilibrium that must arrive sooner rather than later if we are to deflect the catastrophic consequences that are already clearly visible.

The H3 road best traveled is one that we can barely see today in which humans live in positive and mutually nourishing synergy with natural systems. This is not a utopian vision, but one which already exists around us in the experiments of innovators across the world dedicated to creating such systems.

Where are we, where do we want to go, and how do we get there? Terra incognita, here we come.

Figure 2: The Three Horizons of the Regenerative Journey (Interactive version here)

Today’s Terra Firma

Today we are gripped in the next generation of innovation for sustainable development. True believers are staking claims everywhere in a rush of Earth-friendly, social-good investments sold under the banner of ESG. These strategies promote good environmental, social, and governance behaviors while screening out bad ones. An ESG bubble is forming as each new claim begets a market that only seems to move up. A recent estimate cites some $30 Trillion invested under the ESG banner in five major markets.[6] There is gold to be found in this new space.

No doubt this rush is better than doing nothing, and it will continue to grow for some time, but is it future fit? Will it take us over the horizon to deliver the systemic change that is needed in the long-run to solve challenges driven by human behavior including environmental degradation, economic upheaval, and practices harmful to society and citizens? As constructed today, these outcomes are difficult to imagine since they essentially depart from the same logic and systems that caused the problems in the first place.

Promoting such a shift requires informed and intelligent investment strategies directed to the right targets that build the health of our social and environmental ecosystems and reinforced by market rules that reward such behavior.

The bigger prize of healthy, synchronous human and natural systems — and ultimately abundance — does not yet seem to have factored into the equations driving ESG. Promoting such a shift requires informed and intelligent investment strategies directed to the right targets that build the health of our social and environmental ecosystems and reinforced by market rules that reward such behavior. So far, there is a massive gap in the kind of investment that would enable us to make such a transition. How can we step outside the continuity of existing systems to promote such changes?

Managing What We Measure

Deeply embedded are the metaphors and markets with which entrepreneurs and financiers are approaching this unfolding tragi-opportunity. The gold rush metaphor is apt at first glance. But, the extractive (and destructive) metaphor of gold mining is not the best one to address the situation in which global citizens now find themselves. An alternate metaphor, suited to the times and more future-fit, may be that of cultivating the place we now inhabit — employing our knowledge of ecosystems and new tools that sustain flourishing life and greater societal well being — with a long view to staying, rather than pulling up stakes and moving on.

Some of our metaphors and ways of doing business are so deeply embedded we can barely see them. For example, we are firmly in the era of “you can’t manage what you cannot measure.” Who would argue against this logic? It is axiomatic, and yet, it risks glossing over a fundamental aspect of life on Earth today: we manifestly cannot manage ourselves and our natural systems in harmony in spite of our best measurements. The world’s great problems are accelerating and our existing institutions of collaboration are degrading just as we need them the most.

Figure 3: The Three Horizons model from 1830s. Different objectives same challenges. Achieving the extraordinary requires doing the unusual. G.S. Peters, Harrisburg, PA, USA.

The simplicity with which we have viewed our world has served us well in times of simple economies and lower human impact, but simple approaches to solving our complex systemic challenges will simply fall short of the mark. We can no more solve our challenges by redirecting investment through ESG screens than we can solve social dysfunction through minimum wages. Both are better than nothing, but ultimately they only tilt the edges of systems and solutions that are highly interdependent.

Techno-optimism pervades our public discourse. For decades we have seemingly grown out of some of our greatest challenges. Technological leaps in energy, computing, and life-sciences makes an abundance scenario a tantalizing possibility. But our technical prowess, as compelling as it is, will not achieve desired social ends and environmental equilibrium either, unless supported and managed in transformed human systems. The evidence is in the continued increasing material intensity of our economies even as our production and consumption are “de-materializing.”[7]

Today’s challenges are particularly vexing because of their existential nature. They obligate us to re-examine our most fundamental assumptions. Our economics have left us with unmanageable externalities. We have come to a much better technical understanding of our world, but in the process have let wither the spiritual and holistic aspects of our existence. This is a drawback because the navigational tools in this emerging domain must also grow out of the individual and social self-awareness that lies beyond consumption and markets without values, toward mutually flourishing social, economic, and ecological systems.

How sad if it turned out that we placed our bets on the certainty of metrics and measurements that were not grounded in the reality of the complex, emergent solutions that must arise to meet the challenges before us.

Complexity is increasingly recognized as a feature of human endeavor and we have devised new ways of understanding it, for example machine learning and computational modelling. Yet, we have barely taken on the concept of complexity in our policy making and business decisions. How sad if it turned out that we placed our bets on the certainty of metrics and measurements that were not grounded in the reality of the complex, emergent solutions that must arise to meet the challenges before us.

So far, our tools are blunt, our lack of situational awareness beguiles us, and we abide by a mindset that is generally two-dimensional and simple. This is not the tool kit that will help us navigate over the horizon.

The Next Horizon

Beyond today’s catch-up game with sustainable development, a breakout group of innovators is trying to accelerate the game with new partnerships and instruments. These Second Horizon innovators are breaking new ground in response to changed social expectations and the availability of new approaches in responding to them.

Emerging, Second Horizon firms are swimming through a sea of partial maps and methods still anchored in measuring and managing.

Many of these Second Horizon innovators are building on the practical and agreed consensus frameworks such as United Nations’ Agenda 2030. They are helping to broaden thinking and awareness while tilting the edges. At the same time, however, many are prolonging the behaviors and systems that have led to current societal and environmental challenges, resulting in the continued degradation of global ecosystems upon which humans depend. For example, it is common belief in many countries that adoption of electric vehicles is a solution to climate change when these vehicles may be just as damaging or more so than existing alternatives.[8] Our immediate objective should be to clear the barriers that are preventing us from leapfrogging over this horizon to business and societal behaviors that reflect, rather than subjugate, the rules of nature.

Emerging, Second Horizon firms are swimming through a sea of partial maps and methods still anchored in measuring and managing. A key challenge for organizations operating in this horizon is agreeing on consistent metrics. They face an array of signposts from sustainability standards and eco-labels to ESG screens. The range of outcomes are often expressed as baskets of metrics (which also are not consistent within or across industries for the most part) and that if in balance will lead positive outcomes. Rarely do these systems count the “bads” along with the “goods.”[9]

A host of privately and collaboratively managed frameworks have been developed to help society to navigate, safely operating within agreed consensus views of the terrain we are on and the way it should be traversed. As such these organizations have better access to sustained financing and investment, and developed capital and consumer markets that can sustain growth. In addition, the enabling regulatory and cultural environment in which these undertakings exist provide more stable and predictable — and hence less risky — operational conditions.

Numerous public-private partnerships have been created to advance responses to some of these challenges and opportunities. The concept of “stakeholder capitalism” launched by the Business Roundtable (a group of major corporations) in 2019 was well received and has been bolstered through a partnership with industry, financial leaders, and the World Economic Forum in 2020 for a new set of metrics to match.[10] B-Corps are another trend that shifts business footing to purpose. As major players get more serious about these issues, they promise to have impact, but also extend existing corporate approaches another decade.[11]

Initiatives such as these live largely within the constructs of our existing economic systems — with their virtues and drawbacks. There is little room to account for systemic health (both positive and negative factors) or the complexity expressed in our economies or ecologies. This matters because we are measuring and managing our economies and Earth systems as we have always done — even though we know that they work differently.

It’s Complex

Increasingly we are getting used to complexity, its implications, and its tools. The recognition of complexity in human development and Earth systems has followed a steady, if low impact, trajectory. Starting in the 1970s with works like the Limits to Growth and international events such as Stockholm Conference which brought these issues to the fore.[12] The most recent expression of this trend is the 2015 United Nations, Agenda 2030 which further illustrates the importance and recognition of systemic health, interdependence, and complexity. The countries of the world through their UN participation characterized Agenda 2030 as reflecting an “integrated approach” that takes into account the “deep interconnections and many cross-cutting elements”.

A similar shift has occurred in business, not by virtue of concern for health or the environment, but rather through a revolution in production and consumption. The emergence of distributed manufacturing, global value chains, and the servicification of goods pushed many businesses into the world of managing great complexity in coordinating inputs, suppliers, production processes, distribution, and marketing. In addition, what was originally thought of as a minor aspect of production and trade has become its most important part: a large and growing proportion of all economic value produced and consumed are attributable to intangible and knowledge-driven aspects of digitization, services, know-how, and intellectual property.

The fluidity of these factors of performance have led to a reassessment about the conditions for competitiveness, particularly among economists (but rarely among politicians). In essence, the new model posits that rather than national champions, it is overall national competitiveness (as indicated by educated work-forces, equitable distribution of incomes, ease of doing business and concentration of knowledge and technology) that contribute most to societal well-being. Most national governments have not yet recognized this shift or been able to respond to it adequately.

This more integrated view of competitiveness has also led to a shift in thinking about the nature of work and competitiveness at a more micro scale. This has been fueled by the displacement of the 20th century economy and whole classes of jobs that go with it, and on re-examination of what makes for engaging and socially productive work in modern economies.

The complexity effects of nature are also making themselves known as humans continue to pummel ecosystems without regard to their long-term consequences.

And what of our natural systems? The complexity effects of nature are also making themselves known as humans continue to pummel ecosystems without regard to their long-term consequences. The warning signs that have been buried or just leaked through our daily news cycles should give everyone on Earth renewed resolve to address the uncharted territory into which these cascading impacts are taking us. One such leakage is the 2015 UN IPBES report which sternly warns leaders that fundamental changes in our economies are needed to avert environmental and human disaster.

Managing Ourselves?

An evolving environment in which complexity plays a role has provided traction — after almost fifty years of advocacy — to a new wave of advocates who have been pushing for more holistic development. The concepts of regenerative development and circular economies are gaining currency. So too are approaches seeking to deepen the capacity of organizations to learn and adapt.

Performing

Emerging out of a “corporate performance” stream anchored in work by thinkers like Milton Friedman, and extending beyond today’s “stakeholder governance” concept, efforts such as the Regenerative Business Practices Assessment, the Seven Laws of Regenerative Business, the Twelve Intelligences, and the Eight Capitals, and more, are vying to build a bridge from today’s metrics to tomorrow’s business characteristics. Too many to review here, these frameworks of behavior and performance for modern organizations run the gamut from purpose, to essence, to right relationship, to relationship with place. There are many of them and they represent good concepts with nearly impossible-to-imagine metrics that might not be reconciled between each other, and within and across organizations. But they clearly capture the essence of systemic thinking and complex dynamics.

Sensing

Emerging out of an “organizational learning” stream, the evolution of thought that is anchored in thinkers such as Senge and Goleman, another trend toward creating organizations with more interactive and responsive forms has advanced. On the corporate side, efforts undertaken by organizations such World Economic Forum and World Business Council for Sustainable Development to promote responsive development and dialogue are gaining in prominence. Parallel and independent efforts to achieve social and corporate alignment are undertaken by innovative incubators such as the Hatch CoLab or the Founder Institute, both focusing significantly on combined business and social impacts.

Further from the mainstream, efforts that emphasize collaboration and coordination through new organizational forms and behavior are emerging as responses to creating more agile and capable organizations. This includes new governance approaches such as Holocracy and Sociocracy, for example.

A growing community of entrepreneurs are designing their businesses as native H3 undertakings

A step further in the dialogue track is elaborated in the three principles for Regenerative Brands proposed by Raphael Bemporad and Briana Quindazzi of BBMG in urging companies to focus on being aware, additive, and alive.[13] The beauty of these principles is that they adopt a complex living systems perspective that seems applicable to today’s businesses but adapted to the needs of future organizational behavior.

Figure 4: A logical map with intellectual anchors in the relational world of Peter Senge and the market world of Milton Friedman. The two streams have influenced each other and should converge.

These Second Horizon transformations, in spite of their imperfections, must be given as much space in the present as possible. Net-positive effects in reducing poverty and slowing ecological destruction are likely to emerge. But they also bear the risk of baking in patterns of the past through their inability to generate the economic and social systemic changes that will lead to the transformed economies that we need.

Terra Incognita

The seemingly utopian, and still fringe ideas, of our up-and-coming modern-day Leonardos, Gallileos, and Harrisons are more speculative and less charted. And they are different in nature. Rather than “maximizing”, Third Horizon innovation is about “optimizing.” Rather than vectors of impact, they are about evolving patterns of synergy. The different logic and skills in these modalities are at least a magnitude of difference apart from those in the Second Horizon.

A growing community of entrepreneurs are designing their businesses as native H3 undertakings (including 7Vortex.com and VirtualGaia.com, a business launched by Hugo and his partners in 2017 and 2020, respectively). Designed for a future with unfamiliar form, shifting contours, and complex relationships, the outlines of this world obligate innovators to move from measuring familiar indicators to identifying healthy synchronous patterns of adaptation in complex, interdependent systems.

As if this were not enough of a challenge, many of the organizations that are trying to design themselves as native Third Horizon undertakings is that they are seeking to incorporate and reflect a holistic, complex theory of change without recognized vocabulary or tools to do so. And, they are attempting this in an investment / impact environment that does not yet recognize their efforts. In this sense, they are navigating terra incognita.

This Third Horizon world is highly relational, and pattern focused.

With a need to understand complex interactions, it is no wonder that the concept of biomimicry has gained ground. Focused on learning from biological systems in the design and adaptation of human systems, H3 entrepreneurs seek to model their actions on patterns of life and their nested progression from smaller structures into organic, natural systems. This Third Horizon world is highly relational and pattern focused. As humans figure out the patterns and design systems to cultivate them, they will become increasingly replicable. Look at the Andhra Pradesh Community Managed Natural Farming initiative, for example, to get an idea of the power of such ideas.[14] Or, look at the innovative approach combining measuring, science, sensing, and cultural context conceived in the Indigenous Health Indicators Tool being undertaken by the indigenous people of the Coast Salish in what is now the US / Canada coastal northwest. It is a lot more than the simple title suggests. These and many others are generating resilience, abundance, and systemic vitality in the face of daunting odds and with the barest of financial support.[15]

The concept of biomimicry is not only attractive for human design because of the tangible connection to our physical existence, but also for its focus on component part design that can be independent and scalable into systems. This thinking is consistent with emerging ideas on social change that is local and adaptive to communities and environmental conditions.

The biomimicry approach comes with potential pitfalls. The harmony of nature, applied to human undertakings, may well run counter to human nature and behavior. Think of the impact of human needs for personal security or the more mundane concerns of having a new gadget. Just as we are not rational actors in the neoliberal world, we are not natural actors in the biomimicry world.

We know that machine learning and AI can have immense potential, but also can go terribly wrong depending on the patterning instructions that sets these tools in motion. The contrast between these human-made patterns and those observed in nature provides a stark contrast that illustrates how far we have to develop to achieve the kind of synergy we find in nature.

But in the 21st Century we have access to new tools that employ old concepts in new ways. Markets do not need to be either free or rigged according to Posner and Weyl in their ground-breaking book Radical Markets. The authors propose market variations that retain key features of existing markets in allocating priority while incorporating concepts of distributive justice. We have not even scratched the surface of market economies that are much fairer and more efficient than their predecessors.

Reason will continue to play a large part in our trajectory, but as performance demands become more complex, our ability to sense and interact will be important. Apart from politics, ethics and philosophy need to regain ground.

Designing for, and finding, patterns of complex development will be working its way into our consciousness. Navigators in this space will displace the metrics developed in the Second Horizon by finding their way with dynamic maps interpreted through new models and tools to match.

Our Brains on Third Horizon

As disruptive and challenging as it may be to our 21st Century systems and sensibilities, getting the right navigational gear that empowers us to understand our own development in relationship to Earth, its systems, and to other beings in a new way may be an essential piece of kit in crossing the sea to the Third Horizon future that we cannot yet see.

One of the challenges of this new territory is the demand that we move out of the most comfortable spaces in modern existence: that of dispassionate rational actor. Reason will continue to play a large part in our trajectory, but as performance demands become more complex, our ability to sense and interact will be important. Apart from politics, ethics and philosophy need to regain ground.

Where and how will our better spirits be able to intervene? Although it seems that our Second Horizon organizations will be able to push us along to the next horizon, their operations are mostly not predisposed to do so. Similarly, with few exceptions, government action will be a lagging indicator.

The promise of this new horizon, however, is not a new set of metrics, but rather a changed logic of human pattern. We are called to redefine our purpose, collectively and individually, not blindly, but with the knowledge of understanding and new tools we have developed. Such a choice requires us to go beyond customer relations to human relations.

In theory the barriers to this path will diminish as our historic scarcity drivers also fall to technology. Food, and even meat, synthesized and produced, may put global hunger goals within reach (these systems need greening too, by the way). Advanced medicine to enable longer, healthier lives is proving itself daily. Zero, or close to it, cost energy is radically transforming the most fundamental calculations of manufacturing and climate emissions. These revolutions are not yet realized but they are on their way and need to be managed with care so that we do not simply repeat the mistakes of the past.

In the evolution to the Third Horizon, the usual change agents on whom society regularly depends will likely remain fully invested in the First and Second Horizons until a compelling alternative becomes visible. Most businesses and governments will remain structured for incremental progress on the existing metrics until a tipping point is reached. But external events related to climate change and economic transformation are likely to hasten this transition.

A future-fit response requires a qualitative shift from power projection and meeting the thresholds of performance vectors to learning, dialogue, questioning, and sensing.

Meanwhile, those displaced in the process — a growing number of individuals — will be looking for something else in the context of communities in need and workplaces where there is less and less use for “labor.” They can create another wedge for the Third Horizon transition. This includes an upswelling of entrepreneurial regenerative activity that is gaining ground comprised of Makers, Gig Workers, Out of Workers, Redundant Workers, Unfulfilled Workers, and of course, optimistic leaders, thinkers, philosophers and some forward-looking investors and communities.

A future-fit response requires a qualitative shift from power projection and meeting the thresholds of performance vectors to learning, dialogue, questioning, and sensing. In his seminal book, Building Regenerative Cultures, Daniel Christian Wahl urges readers to ask questions rather than focus on defining the right answers to building regenerative cultures. This ethic is at the heart of breaking out of the patterns of our current economies. But this imperative must be matched with the new tools available to us. They include new understandings of what makes thriving societies, how to make markets work better, how to read and manage complexity, and how to design for it — all the while recognizing that we remain novices, or perhaps just human.

The investment in the lives, potential, and businesses of Third Horizon natives is a long shot from today’s investment perspective, but an imperative from the perspective of the future of human well-being on Earth. Many undertakings that advance this future exist today. If you set your sights higher you may join them. There you will encounter the Third Horizon.

[1] https://www.bbc.com/news/world-latin-america-55130304

[2] https://ipbes.net/global-assessment

[3] https://www.weforum.org/press/2020/10/recession-and-automation-changes-our-future-of-work-but-there-are-jobs-coming-report-says-52c5162fce

[4] https://www.amazon.com/Alchemy-Growth-Practical-Insights-Enterprise/dp/0738203092

[5] https://www.internationalfuturesforum.com/three-horizons

[6] http://www.gsi-alliance.org/wp-content/uploads/2019/03/GSIR_Review2018.3.28.pdf A

[7] This widely recognized trend in which intangible products and services have become the fastest growing aspect of value addition. For example, see Capitalism Without Capital: The Rise Of The Intangible Economy Jonathan Haskel and Stian Westlake, 2018, Princeton University Press.

[8] Life cycle emissions for electric vehicles may well be higher than for diesel autos. https://autovistagroup.com/news-and-insights/conflicting-reports-carbon-footprint-evs

[9] There are some exceptions such as the accounting offered by GIST https://www.gistimpact.com/ and more are likely to move in this direction.

[10] https://www.weforum.org/reports/measuring-stakeholder-capitalism-towards-common-metrics-and-consistent-reporting-of-sustainable-value-creation

[11] https://bcorporation.net/

[12] https://en.wikipedia.org/wiki/The_Limits_to_Growth; and https://en.wikipedia.org/wiki/United_Nations_Conference_on_the_Human_Environment

[13] https://www.fastcompany.com/90547057/how-to-build-a-regenerative-brand

[14] http://apzbnf.in/ and https://www.facebook.com/APZBNF/

[15] https://toolkit.climate.gov/tool/indigenous-health-indicators-tool

Working with pioneering firms, policymakers, and civil society actors to cultivate social, environmental, and economic synergy toward a 3rd Horizon world.

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