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The three horizons framework was developed by management consulting firm Mc Kinsey & Company.Horizon one represents core businesses that provide the most profit.
This is traditionally a static document describing a company’s problem, opportunity, and solution in the context of a two-to-five-year forecast for costs, income, and revenue.
It is often a lengthy superset with significantly more descriptive text than what is in a streamlined business model.
A business model is often what founders of an emerging company work on first, but it is also useful for established companies moving into a new market.
It is useful to assess the potential of a new product line or strategic venture and how it might fare in an existing market.
For companies launching new products or entering new markets, a business model can help get them off to the right start and make sure that early product and marketing decisions are tied back to the strategy.
For as long as business has existed, companies have been using different tools to set strategy and consider future opportunities.Companies across every industry and at all stages of maturity use business models.Some rely on lengthy processes and build complicated models, and others move quickly and articulate the basics.Over the years, the popularity of some frameworks has fluctuated.The following are a handful of the most common frameworks and approaches used today.A business model is important because it captures where the business is headed and how it will get there.It is the DNA of the company’s strategy and it sets the direction for success.A business model captures the fundamental assumptions and any key learnings about a new venture.For example, it might enumerate the company’s core value proposition, targeting customers, key resources, and assumed revenue streams.There is no one right model, but having the discipline to work through a plan is important because it forces internal alignment and the best application of resources.For established enterprises, a business model is often a living framework that is reviewed and adapted every year based on changes with customers, employees, and the market.