Flevy Management Insights Q&A
How many growth horizons exist in business strategy?


This article provides a detailed response to: How many growth horizons exist in business strategy? For a comprehensive understanding of Growth Strategy, we also include relevant case studies for further reading and links to Growth Strategy best practice resources.

TLDR The Three Horizons Framework in Strategic Planning involves managing short-term core activities, exploring medium-term opportunities, and pursuing long-term transformative growth.

Reading time: 4 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Three Horizons Framework mean?
What does Core Business Activities mean?
What does Emerging Opportunities mean?
What does Culture of Innovation mean?


When discussing how many growth horizons are there in a strategic framework, the consensus among leading consulting firms, such as McKinsey & Company, is that there are three distinct horizons to consider. This model, often referred to as the Three Horizons Framework, provides a structured approach for organizations to assess and plan their growth strategies over the short, medium, and long term. This approach is not just a template; it's a strategic imperative for C-level executives aiming to steer their organizations towards sustainable growth.

The First Horizon focuses on core business activities that drive the majority of an organization's revenue. It's about enhancing and protecting the current operations, market position, and profitability. Strategies in this horizon include improving operational efficiency, customer retention, and market share expansion within existing markets. It's crucial for maintaining cash flow and funding future growth initiatives. However, relying solely on this horizon can lead organizations into a complacency trap, potentially missing out on new growth opportunities.

The Second Horizon is where organizations begin to explore emerging opportunities that could become significant revenue streams in the future. This involves developing new products, entering new markets, or leveraging new technologies. The challenge here lies in balancing investment in these new ventures with the ongoing demands of the core business. This horizon requires a more dynamic approach to strategy, often involving iterative testing and learning, to validate new business models and market propositions.

The Third Horizon is the realm of long-term, transformative growth. It's about envisioning the future of the industry and the organization's role within it. This could involve radical innovation, disrupting existing markets, or creating entirely new markets. Strategies in this horizon are highly speculative and carry more risk, but they offer the potential for significant, game-changing growth. It's about planting the seeds for the future, even when the immediate ROI is not evident.

Implementing the Three Horizons Framework

To effectively implement the Three Horizons Framework, organizations must adopt a balanced portfolio approach to strategic planning. This means allocating resources across all three horizons simultaneously, rather than focusing on one at the expense of the others. It requires a nuanced understanding of the organization's current capabilities, market dynamics, and future trends.

One practical step is to establish cross-functional teams dedicated to each horizon. These teams should operate with different performance metrics and timelines, reflective of the distinct nature of each horizon. For example, Horizon 1 teams might focus on quarterly sales targets, while Horizon 3 teams might measure success in terms of learning milestones achieved or patents filed.

Moreover, it's critical to foster a culture of innovation and flexibility within the organization. This involves encouraging experimentation, tolerating failure as a learning process, and ensuring there's a smooth transfer of knowledge and resources between the horizons. Leaders must champion this cultural shift, providing the vision and support needed to navigate the uncertainties inherent in pursuing long-term growth.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Real-World Examples

Amazon is a prime example of an organization that effectively navigates all three horizons. Its core retail business represents Horizon 1, providing the cash flow to fund ventures in Horizon 2, such as AWS, and Horizon 3 innovations like drone delivery and space exploration through Blue Origin. This diversified approach to growth has made Amazon a dominant force across multiple industries.

Another example is Apple, which has successfully transitioned through the horizons by continuously evolving its core product offerings (Horizon 1), while investing in new technologies and services (Horizon 2), and exploring future opportunities in health, automotive, and augmented reality (Horizon 3). This strategy has enabled Apple to remain at the forefront of technological innovation and maintain its market leadership.

In summary, understanding and implementing the Three Horizons Framework is essential for C-level executives aiming to achieve sustainable growth. It offers a comprehensive, structured approach to strategic planning, balancing the immediate needs of the core business with the exploration of future growth opportunities. By effectively navigating these three horizons, organizations can ensure they are well-positioned to adapt and thrive in an ever-changing business landscape.

Best Practices in Growth Strategy

Here are best practices relevant to Growth Strategy from the Flevy Marketplace. View all our Growth Strategy materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Growth Strategy

Growth Strategy Case Studies

For a practical understanding of Growth Strategy, take a look at these case studies.

Leveraging Growth Strategy to Expand Market for a Multinational Tech Firm

Scenario: The tech firm, a prominent player in the global market, is seeking to further expand its market reach, stepping into new geographies and customer segments.

Read Full Case Study

Strategic Growth Plan for Aerospace Components Manufacturer in High-Tech Sector

Scenario: The organization is a leading manufacturer of aerospace components in the high-tech sector struggling to align its operations with the rapidly evolving demands of the industry.

Read Full Case Study

Telecom Customer Experience Transformation in Digital Era

Scenario: The organization is a mid-sized telecom operator in the North American market facing stagnation in its customer base growth.

Read Full Case Study

Aerospace Market Entry Strategy for Commercial Satellite Firm

Scenario: The organization is a commercial satellite company in the aerospace industry, facing challenges in expanding its market share.

Read Full Case Study

E-commerce Strategy Overhaul for D2C Health Supplements Brand

Scenario: A rapidly growing direct-to-consumer (D2C) health supplements brand has been struggling to align its corporate strategy with its ambitious growth targets.

Read Full Case Study

Strategic Growth Planning for Professional Services Firm in Competitive Market

Scenario: A multinational professional services firm is grappling with market saturation and competitive pressures in the digital age.

Read Full Case Study

Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

In what ways can businesses leverage data analytics and AI to identify new growth opportunities?
Data analytics and AI enable businesses to identify growth opportunities through Market Trend Analysis, Customer Segmentation, Personalization, Operational Efficiency, and Innovation, driving strategic planning and competitive advantage. [Read full explanation]
How can companies measure the ROI of digital transformation initiatives within their corporate strategy?
Measuring the ROI of Digital Transformation requires establishing clear metrics and goals, calculating financial impacts, and leveraging real-world examples for benchmarking, ensuring investments in technology and digital capabilities are justified and areas for further improvement are identified. [Read full explanation]
How can companies ensure their growth strategy remains aligned with changing consumer behaviors and expectations?
Aligning growth strategies with changing consumer behaviors necessitates leveraging Data Analytics, adopting Agile methodologies in Strategic Planning, and embracing Digital Transformation to enhance customer experiences, ensuring competitiveness in a dynamic market. [Read full explanation]
How can businesses effectively measure the ROI of their growth strategies in dynamic markets?
Effective ROI measurement in dynamic markets combines traditional financial metrics with agile methodologies, focusing on long-term value creation and leveraging advanced analytics, Balanced Scorecard, OKRs, and Scenario Planning. [Read full explanation]
How is the increasing importance of ESG (Environmental, Social, and Governance) criteria shaping corporate growth strategies?
The increasing importance of ESG criteria is transforming corporate growth strategies, necessitating integration into Strategic Planning, redefining Operational Excellence, and reshaping Leadership and Culture for sustainable success. [Read full explanation]
In the context of Strategic Partnerships and Alliances, how can companies ensure alignment of goals and values without compromising their competitive edge?
Companies can navigate the challenges of Strategic Partnerships and Alliances through meticulous Strategic Planning, continuous communication, and aligning partnership objectives with core strategies, while protecting competitive edge by managing knowledge sharing and maintaining operational independence. [Read full explanation]

Source: Executive Q&A: Growth Strategy Questions, Flevy Management Insights, 2024


Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.