The three horizons of growth from McKinsey is a must-keep framework of practice in organizations in today’s economical turmoil. Though people would argue that it’s a common sense, nonetheless, McKinsey asked for structured focus and disciplined investments allocation to current and future investments vehicles. McKinsey 3-Horizons are summarized as follows:
– Horizon-1: the focus is on maintaining, defending and extending the core business, with a performance metric on the Return on Invested Capital (ROIC)
– Horizon-2: the focus on assessing emerging opportunities, mostly on entrepreneurial natuare or has the buzz-thing, test them and go get them. The metric is NPV. In this horizen, organizaitons require “business builders” and go-getters business gurus. Internal organizational capabilities are to be built or acquired.
– Horizon-3: the focus is on the growth opportunities ‘down the road’ like “”small ventures such as research projects, pilot programs, or minority stakes in new businesses”.
No matter when or how companies approach these horizons, the bottom line is sustainability and institutionalization; to be a daily practice for managers and executives.
You can know more about McKinsey The Three Horizons of Growth by visiting this link at McKinsey Quarterly.
Mouaz Aref Al-Zayyat