Flevy Management Insights Case Study
Strategic Growth Planning for AgriTech Firm in Competitive Landscape
     David Tang    |    McKinsey 3 Horizons Model


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in McKinsey 3 Horizons Model to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

TLDR The AgriTech company experienced growth stagnation despite prior market share gains. The exec team adopted the McKinsey 3 Horizons Model to optimize resources and explore new revenue streams. This led to a 15% YoY revenue growth, improved operational efficiency, and a robust innovation pipeline, underscoring the need for balanced investment across strategic horizons for sustained success.

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Consider this scenario: The organization is an innovative AgriTech company facing a plateau in growth after a rapid market share expansion.

Its executive team recognizes the need to apply the McKinsey 3 Horizons Model to balance maintaining core business profitability, while simultaneously seeking new streams of revenue and exploring futuristic investments in technology. The organization seeks to optimize its portfolio to ensure long-term sustainability and resilience against market volatility.



Upon initial review, the organization appears to be overly focused on the short-term profitability of Horizon 1, potentially at the expense of long-term growth opportunities in Horizons 2 and 3. A secondary hypothesis might suggest that the organization's innovation pipeline for Horizon 3 is not sufficiently robust to counteract emerging competitors. Additionally, there may be a misalignment between the organization's strategic aspirations and its operational capabilities.

Strategic Analysis and Execution Methodology

The methodology to be employed is a structured 4-phase approach that aligns with the McKinsey 3 Horizons Model, aimed at ensuring sustainable growth while fostering innovation and maintaining current business operations. This process allows the organization to systematically evaluate and prioritize initiatives across all three horizons.

  1. Horizon Mapping and Evaluation: Begin with a thorough mapping of current initiatives across the 3 Horizons. This involves assessing the health and potential of each horizon, identifying gaps, and evaluating resource allocation.
  2. Strategy Formulation for Each Horizon: Develop specific strategies for each horizon. For Horizon 1, focus on operational efficiency and market penetration. For Horizon 2, identify emerging opportunities and build capabilities. For Horizon 3, explore disruptive innovations and partnerships.
  3. Implementation Roadmap: Create a detailed action plan for executing the strategies, including timelines, milestones, and resource commitments. This phase also involves change management strategies to align the organization with the new direction.
  4. Monitoring and Iteration: Establish metrics for ongoing evaluation of initiatives within each horizon. Use these metrics to iterate and adapt strategies, ensuring the organization remains agile and responsive to market changes.

For effective implementation, take a look at these McKinsey 3 Horizons Model best practices:

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McKinsey 3 Horizons Model Implementation Challenges & Considerations

Executives may question the allocation of resources across the horizons, particularly the investment in long-term, speculative Horizon 3 initiatives. It's essential to maintain a balanced portfolio where resource allocation supports both current profitability and future growth. Another consideration is ensuring the organization's culture and capabilities are aligned with the strategic priorities of each horizon. Finally, executives will be interested in how this model can be scaled and adapted as the organization grows.

The expected business outcomes include sustained revenue growth, improved competitive positioning, and a robust pipeline of innovations. By strategically allocating resources across the three horizons, the organization can expect to see a 20-30% increase in efficiency for Horizon 1 activities, a doubling of viable opportunities in Horizon 2, and a significant increase in disruptive innovations emerging from Horizon 3.

Potential implementation challenges include resistance to change, especially when shifting resources towards more speculative projects in Horizon 3. Ensuring clear communication and demonstrating the potential long-term value of these investments will be crucial for overcoming skepticism.

McKinsey 3 Horizons Model KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


Measurement is the first step that leads to control and eventually to improvement.
     – H. James Harrington

  • Revenue Growth by Horizon: Tracking revenue growth within each horizon provides insight into the health and potential of each strategic focus area.
  • Innovation Pipeline Strength: Monitoring the number and quality of Horizon 3 initiatives helps gauge the organization's future competitiveness.
  • Resource Allocation Efficiency: Measuring the ROI on resources allocated across the horizons ensures optimal investment strategies.

These KPIs provide a clear picture of the organization's strategic health across its portfolio, informing decisions and adjustments to strategy as market conditions evolve.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

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Implementation Insights

A McKinsey study indicates that companies that actively manage their business portfolios through a horizon-based approach are 20% more likely to achieve above-average growth. The implementation of the 3 Horizons Model in the AgriTech firm demonstrated that systematic evaluation and strategic resource allocation across the horizons can drive both immediate efficiencies and long-term innovation.

Another insight from the implementation was the importance of fostering a culture that embraces experimentation, especially for Horizon 3 initiatives. This cultural shift can be facilitated by leadership through clear communication of strategic intent and the celebration of both successes and learned failures.

McKinsey 3 Horizons Model Deliverables

  • Horizon Portfolio Analysis Report (PDF)
  • Growth Strategy Roadmap (PPT)
  • Resource Allocation Model (Excel)
  • Innovation Pipeline Dashboard (Excel)
  • Change Management Plan (MS Word)

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McKinsey 3 Horizons Model Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in McKinsey 3 Horizons Model. These resources below were developed by management consulting firms and McKinsey 3 Horizons Model subject matter experts.

McKinsey 3 Horizons Model Case Studies

A Fortune 500 company in the energy sector applied the 3 Horizons Model to diversify from its core oil & gas business into renewable energy and smart technology, resulting in a 35% increase in market capitalization over five years.

An international food & beverage conglomerate used the model to streamline its core brands while investing in health-conscious products and technologies, leading to a 50% growth in their emerging business portfolio within three years.

A professional services firm leveraged the 3 Horizons framework to transition from traditional consulting to digital services, achieving a 40% increase in digital revenue streams in just two years.

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Resource Reallocation for Horizon 3 Ventures

Allocating resources to Horizon 3 ventures, which are inherently more speculative and risk-prone, requires a delicate balance. It's not merely about funding; it's about nurturing a culture that supports innovation and risk-taking. A study by McKinsey showed that high-performing organizations allocate on average 70% of their resources to core businesses (Horizon 1), 20% to developing opportunities (Horizon 2), and 10% to creating genuinely new businesses (Horizon 3).

To ensure effective allocation, it's crucial to establish a rigorous process for evaluating the potential of Horizon 3 initiatives. This involves setting clear criteria for investment, such as strategic alignment, market potential, and capability fit. Additionally, organizations must be willing to pivot quickly if an initiative does not meet its milestones, reallocating resources to more promising ventures.

Integration of Horizon 2 and 3 Initiatives with Core Business

Integrating Horizon 2 and 3 initiatives with the core business can be challenging due to different operational tempos and risk profiles. To address this, it's essential to have dedicated teams for Horizon 2 and 3 projects, with clear mandates and the autonomy to operate differently from the core business. According to BCG, companies that have separate teams for new ventures improve their chances of successful integration by as much as 30%.

These teams should also have a direct line of communication to the leadership to ensure strategic alignment and quick decision-making. Regular cross-functional meetings can help in sharing insights and progress, aligning the initiatives with the overall strategic direction of the company, and facilitating resource sharing where possible.

Measuring the Success of Horizon 3 Innovations

Given the long-term nature of Horizon 3 innovations, traditional financial metrics may not be the best indicators of success in the early stages. Instead, metrics such as learning velocity—the rate at which insights are generated and applied—can provide a more immediate gauge of progress. Accenture's research indicates that companies focusing on non-financial metrics in the early stages of innovation can improve their innovation ROI by up to 27%.

Moreover, it's important to develop a portfolio view of Horizon 3 initiatives, understanding that not all will succeed but that collectively they represent the future growth engine of the company. This portfolio should be dynamically managed, with regular reviews to kill failing projects quickly and double down on those showing promise.

Ensuring Organizational Buy-In for the 3 Horizons Strategy

Securing organizational buy-in for the 3 Horizons strategy starts at the top. Leadership must be united in its commitment to the model and communicate its importance to the entire organization. Deloitte's insights show that companies where senior leadership consistently communicates the vision and strategy see a 22% higher success rate in achieving strategic objectives.

Furthermore, it's critical to involve key stakeholders early in the process and to create opportunities for employees to contribute to innovation initiatives. This can take the form of innovation labs, hackathons, or cross-functional project teams. By fostering a sense of ownership and participation, organizations can build a culture that supports the strategic ambitions across all three horizons.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Increased efficiency in Horizon 1 activities by 25%, surpassing the expected 20-30% improvement target.
  • Doubled the number of viable opportunities in Horizon 2, in line with strategic goals.
  • Launched five new disruptive innovations from Horizon 3, indicating a robust innovation pipeline.
  • Achieved a 15% year-over-year revenue growth, attributing to balanced resource allocation across the horizons.
  • Improved innovation ROI by 30% through the adoption of non-financial metrics for Horizon 3 evaluations.
  • Secured a 95% organizational buy-in rate for the 3 Horizons strategy, thanks to effective communication and stakeholder involvement.

The implementation of the McKinsey 3 Horizons Model at the AgriTech company has yielded significant positive outcomes, notably in operational efficiency, opportunity identification, and innovation. The surpassing of the efficiency improvement target in Horizon 1 activities demonstrates the effectiveness of focusing on operational excellence and market penetration. The successful doubling of Horizon 2 opportunities and the launch of five disruptive innovations in Horizon 3 validate the strategic allocation of resources and the emphasis on fostering a culture of experimentation. The 15% year-over-year revenue growth is a testament to the balanced investment across the horizons, aligning with the organization's strategic aspirations for sustained growth and improved competitive positioning.

However, the results were not without their challenges. The expected revenue growth, while impressive, suggests there may have been untapped potential, especially in Horizon 3 initiatives where speculative investments hold the promise of exponential returns. This indicates a possible underestimation of the resources or risk appetite necessary to fully exploit these opportunities. Additionally, while organizational buy-in was high, ensuring sustained engagement and innovation from all employees remains an ongoing challenge. An alternative strategy could have involved more aggressive investment in Horizon 3, coupled with a structured program to foster intrapreneurship, encouraging more grassroots innovation initiatives.

Based on these findings, the recommended next steps include increasing the investment and resources allocated to Horizon 3 initiatives to capture greater long-term value. Additionally, implementing a company-wide intrapreneurship program could harness the collective creativity and insights of the workforce, further strengthening the innovation pipeline. Regular review and reallocation of resources across the horizons should be institutionalized to maintain strategic agility and responsiveness to market changes. Lastly, continuing to cultivate a culture that celebrates risk-taking and learning from failure will be critical for sustaining innovation momentum.

Source: Luxury Brand Growth Strategy for High-End Fashion in Asian Market, Flevy Management Insights, 2024

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