Three Horizons

The three horizons framework supports attention to current business performance and future growth at the same time. Steve Coley’s McKinsey account summarizes the framework from The Alchemy of Growth: horizon one concerns established core businesses and improving their performance; horizon two concerns emerging growth opportunities that may need substantial investment; horizon three concerns options for future growth, such as exploratory research, pilots, or small ventures.

Concurrent attention, different uncertainties

The time axis describes how businesses may develop between horizons. It does not mean that leaders should ignore later horizons until the first is finished. Immediate demands from the core can crowd out attention to future possibilities. The framework encourages examining that balance; it does not supply a universal percentage for each horizon.

Applying the idea to technology investment

Run, grow, and transform are a separate way to classify technology spending. They do not map one to one to the growth horizons. Improving an established business can remain in horizon one, while a shared platform can support both current work and emerging opportunities. Describe the business use and uncertainty rather than assigning every infrastructure investment to the third horizon.

A technology portfolio can reserve resources for future options alongside service and control commitments, then review the allocation as evidence changes. Keep required outcomes distinct from discretionary implementation choices. Compare acceptable alternatives within and across spending categories, state the period and cost basis, and count shared costs once. Ninety-Four Projects, Every One Approved illustrates these choices with a manufacturer whose next-year technology plan allocates 55 percent to run, 35 percent to grow, and 10 percent to transform. Those are fictional spending decisions, not recommended horizon weights.

References:

• Steve Coley, Enduring Ideas: The three horizons of growth, McKinsey Quarterly (2009)