Differences

This shows you the differences between two versions of the page.

--- what_insights_do_we_get_from_tracking_investment_horizon [2025/04/16 06:00] – Fixed hans
+++ what_insights_do_we_get_from_tracking_investment_horizon [2025/04/16 07:22] (current) – Added efficiency goal for Horizon 1 hans
@@ Line 37: / Line 37: @@
 This Horizon1 are investments are expected to contribute material returns in the same fiscal year in which they are brought to market, thereby generating today’s cash flow. Horizon 2 investments are expected to pay back significantly, but not in the year of their market launch. Horizon 3 investments are investments in future businesses that will pay off in the out years beyond the current planning horizon. Horizon 0, not represented above, are the investments required decommission a solution or technology.
-The implication is that success metrics for any one horizon are inappropriate for the other two. The metrics for Horizon 3 correlate instead with achieving “early market success” or “product market fit”. The goal for Horizon 2 is to “cross the chasm” between a few flagship customers and being a going concern. The goal for Horizon 1 is to run a profitable and sustainable business.
+The implication is that success metrics for any one horizon are inappropriate for the other two. The metrics for Horizon 3 correlate instead with achieving “early market success” or “product market fit”. The goal for Horizon 2 is to “cross the chasm” between a few flagship customers and being a going concern.  The goal for Horizon 1 is to run a profitable and sustainable business and tends to be focused on making the operation more efficient (product better, faster, and cheaper) as well as extensions to the current market.
-In addition, the kind of work to be done will be different based on what horizon we are operating in. For example, as we search for product market fit for Horizon 3 work we can expect the work to centered on experimentation, ensuring that we are generating fast and cheap feedback loops to determine the overall direction we should go. The work is more about “learning” than it is about delivering customer value. This process could last a long time, hence the need for “cheap” experiments to generate the right kind of feedback. Contrast this with Horizon 3 work, where we have product market fit good systems in place to deliver value, and so the work is more about incremental delivery of value. But the potential returns are also significantly different - Horizon 1 work offers the potential for significant growth into new markets, whereas Horizon 3 work will result in smaller returns for example perhaps even focussed on retaining existing customers rather than generating new revenue.
+In addition, the kind of work to be done will be different based on what horizon we are operating in. For example, as we search for product market fit for Horizon 3 work we can expect the work to centered on experimentation, ensuring that we are generating fast and cheap feedback loops to determine the overall direction we should go. The work is more about “learning” than it is about delivering customer value. This process could last a long time, hence the need for “cheap” experiments to generate the right kind of feedback. Contrast this with Horizon 1 work, where we have product market fit good systems in place to deliver value, and so the work is more about incremental delivery of value. But the potential returns are also significantly different - Horizon 3 work offers the potential for significant growth into new markets, whereas Horizon 1 work will result in smaller returns for example perhaps even focussed on retaining existing customers rather than generating new revenue.
 We will need to both establish targets for the Investment Horizon, both at the Portfolio and Program level (sometime at the Team level as well), and then report on how we are doing with respect to these targets. From a tooling perspective, this is done by tagging Initiatives, Epics, Features, etc. with the Investment Horizon. Typically a dashboard report would show percentage investment in each Investment Horizon at the Portfolio, Program, and Team levels, trended over time, to ensure we have visibility into this level of decision making.