Applying the 3 Horizon Framework

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Applying the 3 Horizon Framework

Hugo H Macedo Lisbon, Portugal MBA, Porto Business School McKinsey & Co Procter & Gamble PandaDoc
Thought Leadership

Hugo Macedo shares a concise post on the value of the 3 Horizon framework. 

A CEO asked me a strategy question that stopped me cold.

“If Horizon 3 is for 2028, does that mean we ignore it until 2028?”

We’d been working through the 3 Horizons framework: H1 for near-term wins, H3 for long-shot bets, H2 in between. He got the concept. 

But the timeline confused him, and my explanations were getting messy.

Here’s what clicked:

H3 in 2028 means the impact lands in 2028. Not that the work starts in 2028.

Big initiatives need time to develop, test, and scale. If you want meaningful results in three years, you start building today.

→ But here is what really made the difference.

Think of it like personal finance: 

→ Daily expenses = H1 

→ Summer vacation = H2 

→ Retirement = H3

You don’t save for summer vacations in May.

You don’t start saving for retirement at 60. 

You spend money on short-term needs, then set aside money each month. Some for mid-term goals. Some for long-term security.

Your portfolio of initiatives works the same way.

Every quarter, allocate resources across all three horizons. H1 keeps the lights on. H2 builds next phase of growth. H3 plants seeds for the future.

The CEO’s face changed when the analogy landed. “So our 2026 plan needs all three horizons, not just H1.”

Exactly.

What’s your “retirement fund” look like right now – your H3 investments that will matter in three years?

PS: We used 3 years for H3, but the horizon length can vary by business and industry – some will use 5 to 10 years.

 

Read the post on LinkedIn.