Innovation Strategy: The Three Horizons of Growth (McKinsey)




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Charles Alter
Consultant, United States

Innovation Strategy: The Three Horizons of Growth (McKinsey)

One of ways of thinking about innovation strategy is to use the 3 Horizons of Growth developed by Steve Coley at McKinsey.
The framework provides a useful mold to formulate an organization's product and service portfolio strategy. It's a diagnostic tool that allows for evaluating the health of a product/service strategy pipeline and for setting up the alignment of short, medium, and long term (innovation) plans of an organization. The model describes 3 innovation horizons in the following manner:
The Three Horizons of Growth model...
  • 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.
Source: The Alchemy of Growth, Mehrdad Baghai, Stephen Coley, and David White.
 

Rating

 
3
Jeff Miles
Business Consultant, Australia
 

Three Horizons Concept

Great thought prompter. I will use this at my next client meeting as an ice breaker and see what the... Sign up

 
3
Edith Ohri, Israel
 

New Ventures have only Horizon 3

Why starting with a core business when in new ventures many times the business is in the future, i.e... Sign up

 
3
Jorge Urrea
Consultant, Mexico
 

3 Horizons of Growth

I agree with Edith Ohri and, as usually, the article only presents the "what" to do and not the "how... Sign up

 
6
Vincenzo Rogione
Management Consultant, Italy
 

Three Horizons: Why?

Though I appreciate Charles' comment, in my opinion the framework appears conceptually obvious and d... Sign up

 
6
Anna hanooman
ICT Consultant, Trinidad and Tobago
 

Extensions for the 3 Horizons of Growth

I agree with Ohri. In my humble opinion, the three horizons listed are not necessarily engines of in... Sign up

 
1
M Y Zainudeen
Management Consultant, Sri Lanka
 

Three Horizons of Growth is in Practice for Ages

Edith is correct, not only this model is in the school books, it has been practiced in the real worl... Sign up

 
5
Charles Alter
Consultant, United States
 

Three Horizons of Growth Relevant for Established Businesses

@Edith Ohri: admittedly, the three horizons are meant for existing, established businesses with a re... Sign up

 
6
simon haafs
Student (MBA), Netherlands
 

How to Implement the 3 Horizons within 1 Company

I underscribe the model. The challenge is to integrate the the three horizons within one company, es... Sign up

 
3
Gary Stead
Director, United Kingdom
 

3 Horizons : Sources for Ideas for Innovation

It seems the real innovation is in horizon 3. The open question is "Where to hunt for the ideas to p... Sign up

 
4
Rajan Johri
India
 

Combine the Three Horizons of Growth with the 5 C's of Marketing Strategy

You can augment the 3 horizons with the 5 C's of Marketing Strategy to be grounded into application ... Sign up

 
2
MdL Mario TERRALAVORO
Interim Manager, Italy
 

Balancing Product's Innovations and Future Products

The 3 Horizons combine looking at future products developments and new trends of the market and new ... Sign up

 
2
KATHRYN STEINER, MBA
Entrepreneur, United States
 

Three Horizons of Growth Understandable and Useful Across Sectors / Industries

@Charles Alter: hello Charles, you have explained these critical elements so that I can apply them t... Sign up

 
4
Feraidoon Bakhtiari
CxO / Board, Iran
 

3 Preparation Stages for Horizons of Growth

I like the idea and I share the concepts with participants in my workshops. But prior to that you ne... Sign up

 
2
Saeed Khodaee
Director, Iran
 

Status Quo to Boost Future Plans

@Edith Ohri: undoubtedly, without maintaining the status quo, it might be jeopardizing to jump to st... Sign up

 
0
SAMUEL NDUATI MBUGUA
Management Consultant, Kenya
 

The Three Horizons and Competitiveness

Whereas the main objective of the three horizons is the development of an innovation strategy, its e... Sign up

 
2
marc romano, United States
 

3 Horizons of Growth is Still Valuable as a Foundation

This basic framework is very sound. It provides a solid platform for expansion and application depen... Sign up

 
0
Leodegardo M. Pruna
Professor, Philippines
 

Three Horizons of Growth

The first horizon to my mind is where an enterprise should maintain both a comparative and competiti... Sign up

 
0
Sorni Tindanzo Namateng
Student (University), Ghana
 

Three Horizons of Growth are Practical

Thank you Charles, today is my first time at 12manage and its obvious I've been missing a lot. This ... Sign up

 
3
Tadeusz Sudol
Strategy Consultant, Poland
 

Where to Hunt for Innovation Ideas?

@Gary Stead: The answer is: everywhere, but the process of innovation development has to be structur... Sign up

 
4
Raghu Bala
Manager, United States
 

The Right Distribution of Resources over the 3 Horizons

Businesses struggle with distributing resources to make strides on all three horizons. Resources tha... Sign up

 
0
Osama Kamal
Management Consultant, Egypt
 

Exploring Uncertainity with the 3 Horizons of Growth

It's like these 3 horizons. I will use the model in my own career. In Egypt businesses nowadays have... Sign up

 
0
SAMARENDRA KUMAR MOHANTY
India
 

Innovation Strategy: the Three Horizons of Growth (McKinsey)

@Edith Ohri: steps 1-2 are required to generate resources and provide backup in case of failure of s... Sign up

 
2
Brijesh Dave
Manager, India
 

Three Horizon Concept for Challenging the Status Quo

Good concept to generate thoughts to challange the status quo, will talk about this my next meeting.... Sign up

 
0
Falk Heinrichsohn
Business Consultant, Portugal
 

Look out of the Window and see 3 Horizons

The three horizon approach may help with the problem of innovation of companies if management is inv... Sign up

 
20
Dr zahra gheidar
Consultant, Iran
 

Time is Important Point

Certainly, these frameworks are usual steps for establishing a company but, we should consider that ... Sign up

 
2
Charles Alter
Consultant, United States
 

Three Horizons of Growth all about Innovation and Marketing

Thank you to everyone who has replied and shared their thoughts on this subject. One parting thought... Sign up

 
4
Aladdien Mohamed
Manager, Saudi Arabia
 

Don't Focus too much on Horizon 1

Actually I have a comment on stage 1. Organizations should not consider its current form as their ma... Sign up

 
4
Jaap de Jonge
Editor, Netherlands
 

Senior Managers Should Focus on Horizons 2 and 3

That's right, the 3 horizons of growth are especially useful for top managers to remind them of the ... Sign up

 
0
Cristina Isenrath
Director, Argentina
 

Where are the Resources..

@Gary Stead: more looking inside ourselves... To find resources we need to have time to think, to ca... Sign up

 
0
GAMANSON
Management Consultant, Sri Lanka
 

Protect your Bread and Butter First

Any business has to ensure first it survives in the short and middle terms and it is the core busine... Sign up

 
0
Martin Kerr
Project Manager, Australia
 

Consistent Context Using Horizons

In our organisation the 3 horizons are standard dialogue. Whilst most people within our organisation... Sign up

 
2
Jaap de Jonge
Editor, Netherlands
 

All 3 Horizons are Important, but...

@Gamanson: all 3 are (equally) important for any business, but but senior / top managers of large or... Sign up

 
3
Sandy Findlay, United Kingdom
 

The 3 Horizons of Growth Help to Decide on Innovation Resources

Excellent model for drawing attention on where resources should be focused. I sometimes struggle wit... Sign up

 
1
Francesco Cuoco, Italy
 

3 Horizons of Growth... Only for Large Companies?

Seems a correct approach for medium- large companies. What about SMEs? Can the same approach give v... Sign up

 
4
Julius Belleza
CEO, United States
 

3 Horizons of Growth Reminds and Helps us Prepares for Change

I agree with Gamanson and Aladdien Mohamed. For business survival, especially in current global econ... Sign up

 
2
Charles Alter
Consultant, United States
 

Three Horizons of Growth at SMEs

@Francesco Cuoco: For SMEs (small - medium size enterprises) the model works, but needs to be scaled... Sign up

 
0
FUNSHO
Accountant, Nigeria
 

Consider the Reasons for Growth in 3 Horizons

Business growth cannot be limited to these 3 horizons. We need to critically consider the widening f... Sign up

 
4
Olawale Christopher Olamiju
Financial Consultant, Nigeria
 

3 Horizons Model - A Good Start for the Strategic Planning Process...

No doubt, this 3 horizons model is not cast in stone and it does not necessarily mean that all busin... Sign up

 
0
Leodegardo M. Pruna
Professor, Philippines
 

Time to Spend on Each Innovation Horizon

@Zahra Gheidar: there is no fixed rule on how much time to spend in each horizon. What is necessary ... Sign up

 
0
ENRIQUE CARLOS POZO, Spain
 

Transversal Innovation

I think the three horizons must be parallels, not serial. The graphic gives an idea of each stage be... Sign up

 
1
KATHRYN STEINER, MBA
Entrepreneur, United States
 

Differentiating Critical Functions and Costs

@Charles Alter: innovation is probably also known as research and development (R&D). This component ... Sign up

 
0
Htin Kyaw Myint
Manager, Myanmar
 

Quite Useful Model for our Organisation

In fact, it is quite a good model for our organization, which is currently declining slowly and coul... Sign up

 
0
KATHRYN STEINER, MBA
Entrepreneur, United States
 

Model for Industries That Have Complex Logistics

This model would be interesting to translates into businesses such as the food service industry, whe... Sign up

 
4
Dr zahra gheidar
Consultant, Iran
 

Length of Horizons is Vital

Certainly measuring a precise, definite time and degree in each horizon is unreasonable, but it is s... Sign up

 
0
John Moses
Manager, Nigeria
 

3 Horizons Model is about Strategy Stages

Looking at the three horizons, it is all about different strategies deployed by organisations at dif... Sign up

 
0
Francesco Cuoco, Italy
 

The 3 Horizons for Growth

I think that the model is quite generic. The real issue from my side is to understand: is the 3 Hori... Sign up

 
2
Charles Alter
Consultant, United States
 

Stabilizing Current Business can be hard in case of Disruptive Innovations

@Francesco Cuoco: I think that's exactly the point of the three horizons model. Companies must first... Sign up

 
0
jasmin, Lebanon
 

This is only a Theoretical Framework

This framework helps you how to think but not how to do it! I still believe SWOT analysis is more us... Sign up

 
2
Francesco Cuoco, Italy
 

Combine 3 Horizons of Growth with SWOT Analysis

@Jasmin: I guess the two methodologies complement each other. Use the 3 horizons as baseline, ident... Sign up

 
0
Ionelia Iftimie
Director, Romania
 

3 Horizons of Growth

I think this proposal would be an interesting start for developing innovation by developing creativi... Sign up

 
0
Margaret
Management Consultant, Australia
 

Broader Horizon Scanning

@Gary Stead: Other (related) Industries, Research and Trends in the Market are all sources of ideas ... Sign up

 
0
Rick Mueller
Professor, United States
 

A Quick Reminder to (and Request Of) Everyone

While this is an intriguing discussion, I see little if any attention being paid to the context. Doe... Sign up

   

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