McKinsey Strategy Frameworks

McKinsey's three horizons framework helps a company develop future growth while managing today's business. The GE–McKinsey nine-box matrix compares investment priorities across businesses. Use the first to examine the growth pipeline and the second to challenge where resources should go.

Together, they give a strategy team two views of the portfolio. Keep the underlying assumptions visible when moving from those views to a funding decision.

Manage all three horizons today

McKinsey describes three groups of growth opportunities: the core businesses, emerging businesses, and options for future growth. All require attention now. The horizons describe how businesses develop, rather than a calendar that lets teams defer future growth work. See McKinsey's three horizons of growth.

The review questions below are our suggested application of the framework.

Agree different evidence requirements for each group. A core business needs operating and financial results. An emerging business needs evidence that it can grow without breaking its economics. An early experiment needs a question, a limited commitment, and a decision date.

Fund learning before funding scale

The following hypothetical example shows how a corporate development team might apply the horizons. These are illustrative review practices, not McKinsey benchmarks.

Buying a startup does not automatically make an investment a future option. A large purchase price can commit the company to substantial risk before it has evidence of demand. Match the commitment to what has been learned, regardless of the label.

Set explicit conditions for expanding, revising, or stopping each experiment. Keep a record of what the last funding round was meant to establish. Moving an initiative between horizons should reflect evidence about the business.

Compare industry attractiveness and business strength

The GE–McKinsey nine-box matrix evaluates industry attractiveness and a business unit's competitive strength, each at three levels. It supports discussion of investment and growth, selective investment, or harvesting and exit. McKinsey emphasizes that placement begins the analysis and still requires judgment. See the GE–McKinsey nine-box matrix.

Use a consistent set of factors across comparable businesses. The following are illustrative inputs, not an official scoring template.

Define the factors and their weights before scoring businesses. Cite the evidence behind each assessment. Discuss factors that could independently block an investment, even when the total score looks attractive.

Explain what could change the ranking

Consider two hypothetical businesses. Diagnostics operates in an attractive market but has weak customer access. Scheduling operates in a slower market with strong retention and a proven channel.

A single score can hide the choice between building a position and supporting an established one. Show the additional investment each route needs and the consequence if the expected improvement fails. Check whether common ownership produces benefits that either business could obtain more cheaply through a partner.

For an acquisition, distinguish the target's current strength from improvements the buyer hopes to make. An assumed cross-sell benefit belongs in a separate, evidenced scenario. It should not quietly inflate the target's starting position.

Take the portfolio choices into the plan

• Compare this view with BCG's portfolio and strategy frameworks.
• Agree the business's advantage with Playing to Win.
• Document commitments in a corporate strategy workshop.