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McKinsey Three Horizons Model

L1StrategyGrowth and portfoliodecisionStages 3 to 6

Reference model

The Three Horizons of growthA chart of value over time with three overlapping curves. Horizon 1, extend and defend core businesses, is today’s profit and fades over time. Horizon 2, build emerging businesses, rises as the core fades. Horizon 3, create viable options, starts furthest out and rises last.TIMEVALUE (PROFIT)123Horizon 1Extend and defend core businessesToday’s profit · about 0–2 yearsHorizon 2Build emerging businessesTomorrow’s growth · about 2–5 yearsHorizon 3Create viable optionsThe seeds · about 5 years and beyond

Three overlapping growth curves over time: today’s core fades, the emerging businesses rise as it does, and the options start further out.

About this model

A business that wants to keep growing has to manage three time horizons at once: defend and extend the core it earns from today, build the emerging businesses that will be tomorrow’s growth, and plant the options that may become the core after that.

Mehrdad Baghai, Stephen Coley & David White (McKinsey & Company) — The Alchemy of Growth · 1999

How to read it

  • Horizon 1 is the core you earn from now (usually the next two years), Horizon 2 the emerging businesses that will become significant over about two to five years, Horizon 3 the options that may pay off in five years or more.
  • List the initiatives in each horizon with what they cost and when they should start to earn. An initiative that is too far from earning for Horizon 2, or too near for Horizon 3, is in the wrong place.
  • The warning sign is a business that puts almost all its investment into Horizon 1: it earns well today and has nothing to grow from when the core fades.

What this does

Balances three time horizons at once — the core you defend today (H1), the adjacent bets scaling now (H2), and the transformational bets that might become tomorrow's core (H3).

When to use it

Growth/Scale through Renewal, whenever the current business risks stalling and new bets need a deliberate resourcing split, not an accidental one.

What happens next

Feeds portfolio decisions in the BCG/9-Box matrices and the Financial Model's R&D budget line.

Golden thread

Builds on ←

  • pivotpersist

Feeds into →

  • bcg
  • financial

Framework library: Strategy and environment (layer L1), lifecycle stages 3 to 6.

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Hand-built by Eccellere and reviewed by Eccellere on 02/11/2026. Guidance, not advice: apply your own judgement.