McKinsey's Three Horizons of Growth

  Mckinsey's Three horizons of Growth

This framework developed by Mckinsey suggests that as companies mature,innovation stagnates,and so in order to achieve a consistent level of growth throughout their corporate life,companies must attend to existing businesses while still considering areas they can grow in the future.

Mckinsey developed the three horizons of growth to stand as a structure for companies to assess potential opportunities for growth without neglecting performance in the present.

Horizon one depicts the company's core business,the business it built its name on and can be easily Identified to and it is that which provides the greatest profits and cash flow. The focus of the company here should be to improve performance to maximize the remaining value.

Horizon two contains opportunities that may be capital Intensive but are likey to generate substantial profits in the future.

Horizon three contains ideas for profitable growth down the road for example small ventures such as research projects,or minority stakes in new businesses.

The x-axis represents the time, it should not be interpreted as a prompt for when to pay attention,rather it suggests the cycle by which businesses move over time. The y-axis represents the growth in value that companies may achieve by attending to all three horizons simultaneously.