Portofolio Horizon Investment Model (LPM Part 1)

How can you ensure the #continuousgrowth of your company over years or decades? The Portfolio Horizon Investment Model is a #strategicframework that helps companies balance short-term gains with long-term growth and #innovation. By investing in all three horizons, companies can ensure they are maintaining their core business, exploring new growth opportunities, and preparing for the future.

Concept

When first articulated by Baghai, Coley, and White in 2000, in The Alchemy of Growth, the Portfolio Horizons model was a #breakthrough. The Horizon Investment Model is a strategic framework that divides a company's investments into three horizons. Horizon 1 includes investments in the current business model, while Horizon 2 focuses on innovations that will support future growth. Horizon 3 encompasses investments in entirely new and disruptive technologies or business models.

• Horizon 1 investments are focused on #maintainingandimproving the current business model. This may include incremental improvements, cost reductions, or new product developments that build on the company's existing strengths and capabilities.
• Horizon 2 investments are aimed at #creatingnewgrowth opportunities. This could involve developing new products or services that complement the company's existing offerings or expanding into new markets or geographies.
• Horizon 3 investments are focused on #exploringnew and #disruptive technologies or business models. These investments are high-risk, high-reward, and may not provide immediate returns, but can create new markets or transform existing ones.

Leadership and Management Style

Leadership and management style are also important in each horizon. In Horizon 1, the focus is on maintaining and improving the current business model, and the leadership and management style is more directive and focused on #operationalexcellence. In Horizon 2, the focus is on creating new growth opportunities, and the leadership and management style is more #collaborative and #innovative. In Horizon 3, the focus is on exploring new and disruptive technologies or business models, and the leadership and management style is more #visionary and #transformational.

How Does It Relate to Agile Organization?

Agile organizations are characterized by their ability to quickly respond to changing market conditions and customer needs, and to #continuouslyinnovate and #improve. The Three Horizon Investment Model provides a framework for companies to allocate resources and focus on short-term gains, medium-term growth, and long-term innovation. This aligns well with the agile approach of iterating and adapting over time while maintaining a long-term strategic vision.

In addition, the Three Horizon Investment Model and agile organization both emphasize the importance of #collaboration and #communication. Agile teams rely on close collaboration between team members, and the Three Horizon Investment Model encourages cross-functional collaboration and communication to identify emerging trends and opportunities.

Want to Know More

1. Scaled Agile Lean Budgets (Investment Horizon)
2. McKinsey Quarterly:?Enduring Ideas: The three horizons of growth

#digitaltransformation #agileorganization #scaledagileframework #leanportfoliomanagement #agileleadership #agilemanagement #continuousgrowth