FRAMEWORKS YOU SHOULD KNOW #3

FYSK#3: McKinseys 3 Horizons Model

Frameworks You Should Know is a series that explores various product management related frameworks. Instead of just telling you the framework (which a Google search can tell you), I’ll be focusing on what makes the framework great and where you should use it.

At the end of the day, your choice of framework to use should depend on your organization and the culture they want to foster. YMMV.

What is the 3 Horizons Framework?

Simply put, it is a way to classify business actions along 3 horizons.

3 Horizons framework

The fundamental principles in play are

1. Improve
2. Transform
3. Innovate

And the 70–20–10 rule, which states:

1. 70% of your efforts should be spent on improving existing business lines
2. 20% in transformation of those business lines to attract existing customer base and
3. 10% in innovating — building new business lines that can attract new customers.

70–20–10 rule in play

One cool aspect of this framework is that you can change the X & Y axis to suit your business needs:

Value delivered in the long term v/s effort required

When should you use 3 Horizons framework?

This framework sits right after your vision is defined.

Trickling down from vision, down to the brass-tacks where you can action the work

Once your product/organization/business unit vision is defined, you can use this framework to classify your approach based on whichever X/Y axis fits your business.

As an example, let’s take a mythical organization (MarketForce) that has a number of product lines (like Salesforce, but not that)