## Definition of Three Horizons of Growth The Three Horizons of Growth is a [[Product Framework]] used by product managers and business leaders to identify and manage the growth potential of their organizations. It was introduced by McKinsey & Company in the late 1990s and has since become a widely adopted model in the business world. The framework is based on the concept that companies should simultaneously pursue innovation in three distinct "horizons" or timeframes. Each horizon represents a different type of innovation and requires different levels of investment, risk, and focus. ![[Pasted image 20230509170925.png]] Horizon 1 focuses on optimizing existing products and services, improving processes, and enhancing customer experiences. This is the core business of the company and is responsible for generating most of its current revenue and profits. Horizon 2 involves building new businesses that leverage existing capabilities and assets. This horizon is focused on growth and [[Market Expansion]] into adjacent markets and opportunities. The goal is to create new [[Revenue]] streams and increase market share by developing products and services that are complementary to the company's existing offerings. Horizon 3 is the most forward-looking horizon, focusing on emerging technologies and markets that have the potential to disrupt the industry. This horizon requires the most investment and involves the highest level of risk, as it involves pursuing opportunities that are not yet fully defined or proven. The Three Horizons of Growth framework helps companies to allocate resources effectively across the three horizons, balancing the need for short-term results with the need to invest in long-term growth. By understanding the different types of innovation required for each horizon, companies can develop a more strategic approach to innovation and ensure that they are well-positioned to capture new opportunities and stay ahead of the competition.