The McKinsey Three Horizons model has long been a cornerstone of strategic thinking, offering a framework for balancing short-term performance with long-term growth. It divides innovation and business activities into three horizons: Horizon 1 (0-3 years) focuses on core business operations and incremental improvements, Horizon 2 (2-5 years) explores emerging opportunities adjacent to the core business, and Horizon 3 (5-12 years) involves breakthrough innovations and transformative ideas that shape the future. Traditionally, these horizons were seen as sequential and time-bound, but this perspective has been challenged in today’s rapidly evolving business landscape.
Steve Blank, in his Harvard Business Review article, argued that the traditional timeline of the three-horizon framework no longer holds true. The pace of change in business strategy has accelerated dramatically compared to two decades ago. According to Blank, Horizon 3 innovations, typically disruptive and transformative, can emerge as quickly as Horizon 1 initiatives. There are numerous examples of rapid, asymmetric innovations reshaping industries, such as Uber, Airbnb, and SpaceX. These companies achieved lightning-fast commercial success by repurposing existing technologies into groundbreaking business models.
However, this level of agility and adaptability often proves challenging for market incumbents. Legacy systems, entrenched cultures, and procedural inertia can significantly hinder their ability to embrace bold innovation and take high-stakes business risks. Despite these challenges, established organizations have also demonstrated their capacity for rapid innovation. Apple revolutionized the mobile industry with the iPhone, and Amazon transformed cloud computing with AWS, creating entirely new, high-growth business territories.
