Three Horizons

The 3 Horizons Framework is a strategic planning model developed by McKinsey & Company to help organizations manage innovation and growth across three distinct time horizons. It's a useful tool for product managers to balance their focus on short-term goals, medium-term growth, and long-term innovation.

Horizon 1: Core Business (Maintain and Defend)

Horizon 1 represents your current business. As a product manager, this is where you manage and optimize your current products or services. Your primary focus in this horizon is on maintaining profitability, customer satisfaction, and operational efficiency. The goal of Horizon 1 is to maintain and defend the company's current market share and profitability. Key activities include:

1. Optimization: Continuously improve existing products and services to enhance their value proposition, streamline processes, and reduce costs.
2. Customer Experience: Listen to customer feedback, monitor performance metrics, and address any issues promptly to ensure customer satisfaction and retention.
3. Market Share: Protect and strengthen your market position by responding to competitive pressures and staying agile in a rapidly changing landscape.
4. Incremental Innovation: Identify and implement small improvements, feature updates, or efficiency gains to keep your core products relevant and up-to-date.

Horizon 2: Adjacent Business (Build and Extend)

Horizon 2 involves building and extending upon your existing business by exploring adjacent markets, customer segments, or product categories. As a product manager, your role here is to identify growth opportunities that leverage your core competencies while offering new revenue streams. Key activities include:

1. Market Exploration: Identify adjacent markets or customer segments that have potential for growth and align with your organization's strengths.
2. Product Diversification: Develop new products or services that cater to the needs of these adjacent markets or segments, building on your existing capabilities.
3. Partnerships and Collaborations: Seek strategic partnerships, alliances, or acquisitions that can accelerate your entry into new markets or enhance your offerings.
4. Validation and Learning: Prototype and test new ideas to validate demand and gather insights before full-scale development, minimizing risks.

Horizon 3: Transformational Business (Create and Innovate)

Horizon 3 is dedicated to exploring and creating entirely new and disruptive innovations that will shape the future of your industry. As a product manager, this is where you push the boundaries and envision what your company's products or services could become. Key activities include:

1. Futuristic Thinking: Imagine and ideate on radical innovations that could disrupt your industry, even if they seem distant or risky at first.
2. Experimentation: Cultivate a culture of experimentation and risk-taking to test new ideas, technologies, and business models.
3. Long-term Vision: Develop a compelling vision for how your industry might evolve and how your organization can lead that transformation.
4. Cross-functional Collaboration: Work closely with research and development teams, external partners, and experts to drive breakthrough innovation.

As a product manager, you'll need to allocate your resources and efforts across these three horizons based on your organization's current needs, market dynamics, and strategic objectives. Balancing your focus on managing the present, building the future, and exploring transformational possibilities will help your organization sustain growth and stay competitive in the long run. Remember that the allocation of resources and attention to each horizon may shift over time as your product portfolio evolves and the market landscape changes.

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