Navigating the future: A guide to innovation with the three horizons model

Navigating the future: A guide to innovation with the three horizons model

Dominate the competitive landscape & secure your future growth with the Three Horizons Model!

This powerful framework, developed by McKinsey, equips you to balance defending your core business with exploring disruptive opportunities. Buckle up as we dissect this game-changing tool and empower you to chart a clear path to innovation success.

What are the three horizons?

Imagine your future unfolding across three distinct innovation landscapes:

  • Horizon 1: Sustaining the Core (0-2 years)
    Your bread and butter – focus on refining your existing business model for maximum efficiency and competitiveness. Think product extensions, process optimisations, and digitalisation initiatives.

  • Horizon 2: Expanding the Horizon (2-5 years)
    Explore opportunities adjacent to your core – new markets, customers, or channels. Imagine entering new geographies, developing complementary products, or forging strategic partnerships. This horizon balances risk with potential for significant growth.

  • Horizon 3: Transforming the Future (5+ years)
    Embrace radical disruptions & game-changing innovations. Venture into uncharted territory with entirely new business models and technologies. Think disruptive startups, revolutionary inventions, or emerging markets catering to unseen needs.

Balancing for sustainable growth

Achieving a balanced portfolio across these horizons is key:

  • The traditional approach
    70% to Horizon 1 (core), 20% to Horizon 2 (expansion), and 10% to Horizon 3 (transformation).

  • Remember, the optimal balance is industry-specific!
    A rapidly evolving industry might favour Horizon 3, while a mature one might prioritise Horizon 1. There is no wrong answer.

Putting the model into action

Ready to unlock the power of the Three Horizons Model? Here's your roadmap:

  1. Conduct a thorough analysis
    Assess your current business, future trends, and potential disruptions. Identify opportunities within each horizon.

  2. Develop investment criteria
    Define clear parameters for evaluating projects based on risk, return, and strategic fit.

  3. Align your portfolio
    Build a balanced portfolio of initiatives spread across the three horizons, ensuring sufficient resources for each.

  4. Foster a culture of innovation
    Encourage an open-minded approach to exploring new ideas and empower teams to pursue opportunities across all horizons.

Remember, the Three Horizons Model is a dynamic tool, not a rigid formula. Continuously monitor your progress, adapt your portfolio, and ensure it reflects the ever-changing business landscape.