3 Horizons of Growth (McKinsey) - Explained
What are the 3 Horizons of Growth?
Written by Jason Gordon
Updated at May 4th, 2022
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What are the McKinsey 3 Horizons of Growth?
The Three Horizons of Growth, was developed by Steve Coley at McKinsey Consulting as a way of thinking about innovation strategy.
The framework is used to evaluate the product/service strategy (and future plans) of a company. It seeks to make certain that the short, medium, and long-term plans for product/service innovation are in alignment.
It allows the organization to develop or formulate a product and service portfolio strategy.
The model describes 3 innovation horizons in the following manner:
Horizon #1:
The Core Business that is most associated with the company in its current state. This typically is an established business that requires most of the attention of the company’s employees and generates the bulk of the sales volume, cash flow and profit. The focus in Horizon #1 is on “Defending and Extending” the core business and on superior execution.
Horizon #2:
Includes all Emerging Opportunities that could be a variety of new business opportunities that the company has developed, licensed or generated from partnerships and strategic alliances. The focus in Horizon #2 is on leveraging “Positional Advantage” and forcing these opportunities to further prove themselves and gain steam, possibly to become part of the core business in the future.
Horizon #3:
Represents Innovative New Ideas for profitable growth in the future. Focus here is on clustering ideas into themes, sorting out the good and great ideas and feeding them so they can emerge from the Horizon #3 incubator to become Emerging Opportunities.