McKinsey's 3 Horizons Framework: Free PowerPoint Template
How to think about growth and innovation? Focus on the Now, New and Next. Free slide deck in PowerPoint and Google Slides format.
What do you think about the growth and innovation of your organization?
Focus on the Now, New, and Next in your strategic planning. This is a free slide deck in PowerPoint and Google Slides presentation format.
Introduction
Are you considering where your business can grow in the next few years? You may have heard of McKinsey’s three-horizon strategy framework, or you may not.
In any case, it’s one of the most effective ways for almost any company to think about growth. A three-horizon framework is a strategy tool with roots in organizational psychology and decision science that helps leaders understand which opportunities will have the most significant impact on innovation in their company and how to get there.
It’s a relatively simple model with enormous implications for how we think about growth at our companies and find new opportunities for expanding our businesses.
- This blog post covers everything you need to know about the three-horizons framework and why it matters for planning your organization’s future growth.
- At the end of the post, you can download the three-horizons model presentation (in PowerPoint or Google Slides) as a free and fully editable template.
The 3 horizons model
everything you need to know about the model
What is the three-horizons growth framework?
This strategy framework's basic idea is that companies have three growth horizons—a short-term horizon, a near-term horizon, and a long-term horizon. Baghai, Coley, and White first articulated the model in The Alchemy of Growth in 2000.
Each horizon represents an opportunity to expand the business by increasing revenue and profit or bringing in new customers.
The idea is that companies that can focus on all three horizons at once are more likely to succeed than those that focus their energy on just one.
The challenge is that it’s easy for companies to lose focus on one or two of these horizons as they get caught up in the day-to-day.
Why should you care about the 3H growth framework?
It is essential to have a growth strategy for your business in place. But how do you get started?
The 3H growth framework can be a helpful guide to get the whole company or your team thinking about the different opportunities for growth and innovation. To get maximum impact from the 3H framework, leaders must prioritize sharing this thinking with their teams across their business.
Horizon 1: Where to focus to achieve immediate impact (1-3 years)
The first growth horizon is focused on near-term impact and the core business. This is where you’ll find the lowest-hanging fruit that will generate revenue quickly and boost your company’s bottom line.
For example, you can increase sales with your current products or target new customers in your existing markets. You can also boost growth by reducing costs and increasing efficiency. As you consider this growth horizon, it’s important to understand where you’re starting from. Take a good look at your business's current metrics, whether revenue, profitability, or another metric, and identify the low-hanging fruit that will give you an immediate boost.
Once you do, you can focus your team’s energy on tackling the low-hanging fruit and start seeing results quickly.
Horizon 2: Where to invest for near-term growth (2-5 years)
The second horizon of growth is where you can start to invest in longer-term growth initiatives. This could mean investing in new products and services, expanding into new markets, or investing in new business models. Some of these initiatives may take a bit longer to show up in your company’s metrics but will be crucial for growth in the long run.
As you start thinking about this growth horizon, consider where your business is currently. You may be at a point where it makes sense to start looking outside your current markets to find new customers. It may also be an excellent time to focus on a particular product line that has seen growth but is still below expectations.
Horizon 3: Where to focus for long-term growth and future opportunities (5+ years)
This is where the majority of your growth efforts should be focused.
To succeed in this horizon, you’ll need to think about how customers use your company’s products and services, what customers’ broader needs are, and where new technologies will have the most significant impact.
You’ll want to invest in initiatives that will impact your business long-term, like finding new ways to connect with customers or expanding into new markets. Technologies that are likely tohave a significantg impact in the coming years, like AI, blockchain, and robotics, can also be a good area of focus for this growth horizon.
What is the key to success at each stage? Focus on the Now, New, and Next
Horizon 1: Superior and Excellent Execution for immediate impact, profitability, and value creation (NOW)
Horizon 2: Positional Advantage to ensure near-term growth and value creation (NEW)
Horizon 3: Insight & Foresight to ensure long-term growth and value creation (NEXT)
McKinsey Three Horizons Model - Now, New, and Next
The Criticism of the Three Horizons Model
According to Steve Blank's HBR article 2019, the world nowadays is more dynamic, and the 3-time horizons are no longer constrained by time. In particular, Horizon 3 innovations can disrupt the status quo much faster than initially anticipated, especially when the time horizons are no longer constrained by time.
Today, with all the technological advancements, disruptive Horizon 3 innovations can be delivered as fast as projects for Horizon 1 in the existing product line.
Key takeaway
McKinsey's Three Horizons growth framework is an effective innovation strategy tool that helps companies consider growth opportunities and where to focus to make the most significant impact.
The first growth horizon is focused on achieving immediate impact, the second on near-term growth, and the third on long-term growth.
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Free Slide Deck / Template
Presentation in PowerPoint and Google Slides format (for subscribers)
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