Description
The McKinsey Three Horizons Model is a strategic framework that helps organizations manage and prioritize their growth initiatives across three time frames
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McKinsey Three Horizons Model
The McKinsey Three Horizons Model is a strategic framework that helps organizations manage and prioritize their growth initiatives across three time frames to ensure both short-term performance and long-term growth.
Three Horizons
- Horizon 1 (H1): Extend and Defend Core Businesses
- Focus: Maintain and defend current core business operations.
- Objectives: Improve efficiency, optimize processes, and enhance existing products or services.
- Time Frame: Short-term (1-2 years).
- Horizon 2 (H2): Build Emerging Businesses
- Focus: Scale emerging business opportunities and new revenue streams.
- Objectives: Develop new products or services, enter new markets, and drive growth in adjacent areas.
- Time Frame: Medium-term (2-5 years).
- Horizon 3 (H3): Create Viable Options for Future Growth
- Focus: Explore and invest in innovative ideas and opportunities that could become future growth drivers.
- Objectives: Experiment with new technologies, business models, and market disruptions.
- Time Frame: Long-term (5+ years).
How to Implement the Model
- Classify Initiatives: Categorize your current projects and future plans into the three horizons to balance short-term and long-term goals.
- Set Priorities: Determine which initiatives need immediate attention (H1), which should be developed further (H2), and which require exploration and experimentation (H3).
- Allocate Resources: Distribute resources, including budget, talent, and time, across the horizons to ensure sustainable growth.
- Monitor and Adjust: Regularly review progress and adjust strategies as necessary to respond to market changes and new opportunities.
Benefits
- Balanced Growth: Ensures a balanced approach to growth, focusing on both immediate performance and future potential.
- Resource Optimization: Helps in efficient resource allocation to maximize returns across different time frames.
- Strategic Agility: Enhances the organization’s ability to adapt to changing market conditions and emerging opportunities.