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Definition of the Framework

The 3 Horizons Framework, developed by McKinsey & Company, is a strategic tool that promotes future-oriented thinking and enables individuals to examine the impacts of short, medium, and long-term changes.

This framework serves the purpose of offering a structured approach for companies to consider their growth strategy comprehensively. It enables organizations to effectively allocate resources to their current operations while also exploring new opportunities and markets for future growth.

Businesses of all sizes and across various industries widely employ the 3 Horizons of Growth framework to facilitate strategic decision-making and prioritize initiatives.

The framework consists of three distinct horizons:

1. Horizon 1: This horizon encompasses a company's core business, focusing on optimizing existing operations to enhance profitability and maintain a competitive edge in the market.
2. Horizon 2: Horizon 2 directs attention to emerging opportunities that possess the potential to become significant growth drivers in the future. Companies are encouraged to allocate resources for experimentation and the development of new products, services, and business models that can effectively capture these opportunities.
3. Horizon 3: Horizon 3 revolves around creating future options by exploring disruptive technologies and new business models that could potentially transform the industry. Companies are advised to invest in research and development (R&D) and explore partnerships and collaborations to identify novel sources of growth.

When is this framework most useful?

Would you like to guide discussions and decisions about your organization’s future growth opportunities?

The framework for promoting growth in organizations is an essential tool that can help businesses gain a comprehensive understanding of their current position, short-term objectives, and long-term goals. By focusing on three key areas, namely the present (Horizon 1), the near future (Horizon 2), and the distant future (Horizon 3), organizations can gain a clear understanding of their position and take the necessary steps to ensure growth. With a clear understanding of the three horizons, organizations can identify niche opportunities and expand their vision in the most effective way possible. The framework enables companies to identify the measures that can have the greatest impact on growth and move in the right direction. By taking into account all three horizons, organizations can ensure that they are making the most of their resources and maximizing their potential for growth.

Are you considering entering new markets or diversifying into new product categories?

The framework is an essential tool for businesses that want to stay ahead of the curve and remain competitive in an ever-evolving market. It provides a platform for discussions on new trends, technologies, and changes in the market, which are all critical factors in the success of any business. By encouraging businesses to seek out fresh business models, products, and target markets, the framework helps them to identify new opportunities for growth and expansion. It also helps businesses to become more aware of their current strengths and skills. By doing so, they can leverage these strengths and skills to create new variations of existing products or enter new markets. This is particularly important in today's fast-paced business environment, where companies must be agile and adaptable to succeed. Furthermore, the framework enables businesses to assess potential risks and opportunities for expansion. By analyzing market trends and customer demands, companies can identify potential risks and take proactive measures to mitigate them. At the same time, they can also identify opportunities for growth and expansion, which can help them to stay ahead of their competitors.

How to use the Framework?

To effectively apply the framework, the Wooclap template is a great tool. The first step is to ensure that each horizon is kept separate as they represent different phases a company may go through. It's crucial not to miss any horizons as they require different sets of questions. It's essential to focus on what's important in each phase rather than looking too far into the future. By analyzing the questions for each horizon creatively, new growth opportunities can be discovered. This approach provides an overview of what's feasible. After addressing each horizon individually, it's important to debrief and have a clear understanding of the lessons learned.