Three Horizons of Growth
Three Horizons splits growth into three time frames at once, the core business making money now, the emerging bets gaining traction, and the future options barely proven, so you invest across all three instead of only the one that's easiest to measure.
Three overlapping curves rise and fall at different speeds, showing today's business, tomorrow's bets and the long-shot options side by side.
Reach for this when…
- All the investment goes to what's already working and nothing new is being seeded.
- A promising early bet keeps losing budget to the core business every quarter.
- Leadership can't agree whether to fund the sure thing or the risky one.
How to run it
- List what's generating revenue today: Horizon 1.
- List what's gaining traction but not yet profitable: Horizon 2.
- List the unproven bets worth a small stake: Horizon 3.
- Set a different success measure and time frame for each horizon.
- Protect Horizon 2 and 3 funding from being raided when Horizon 1 has a bad quarter.
A worked example
Situation. Maria Santos runs an agricultural export business in Cebu, Philippines built almost entirely on bulk coconut oil contracts, with two small side projects, a specialty organic line and an early-stage biofuel trial, both surviving on scraps of budget.
Applied. She mapped all three against the horizons, gave the organic line, Horizon 2, a protected two-year budget kept separate from coconut oil, and ring-fenced a small, fixed stake for the biofuel trial, Horizon 3, that couldn't be reallocated mid-year even in a bad coconut season.
Result. The organic line became a real second income stream within two years. The biofuel trial, still unproven, survived a brutal coconut oil price crash that would have killed it under the old shared budget.
The catch
The model is easy to endorse and hard to fund: Horizon 1 always has the most defenders in the room and the clearest numbers, so Horizons 2 and 3 get starved first whenever budgets tighten. It also doesn't tell you which Horizon 3 bet is worth the stake, only that some money should be there.
If Horizon 3 funding is the first thing cut in a bad quarter, you don't actually have three horizons, you have one.
Origin: Baghai, Coley & White (McKinsey)