Module 9•Unit 2 of 5•11 min

Balancing the Portfolio

Knowing the three horizons is easy; keeping them in balance is hard. The natural gravity of any organisation pulls resources toward Horizon 1 - it is urgent, profitable, and measurable - while Horizons 2 and 3 are uncertain and easy to defer. Balancing the portfolio means deliberately protecting the future from the tyranny of the present.

How the horizons map to what we've learned

Horizon	Degree (Mod 4)	Value group (Mod 8)	Guide (70-20-10)
H1	Incremental	Capture / Extraction	~70%
H2	Breakthrough	Capture → Creation	~20%
H3	Transformative	Creation	~10%

The frameworks in this course all reinforce each other. The three horizons, the degrees of innovation, the value groups, and the 70-20-10 portfolio guide are different lenses on the same truth: a resilient business balances near-term capture with long-term creation, on purpose.

The only reliable way to keep H2 and H3 alive is to ring-fence their funding and people so they cannot be raided every time H1 has a bad quarter. If the future competes for resources head-to-head with the urgent present, the present always wins - and the future never arrives.

You decide

H1 has a tough quarter and finance wants to pull budget from your small H3 experiments to shore up the core. What do you argue?

Discuss

Is your organisation's H3 protected, or is it the first thing cut when the core has a bad quarter? What would ring-fencing it take?

Try this at work this week

Estimate your current H1/H2/H3 investment split. If it's close to 100/0/0, propose ring-fencing even a small H3 budget - protected from H1's quarterly swings - as your single highest-leverage portfolio move.

Sources

Baghai, Coley & White, The Alchemy of Growth, 1999.
Nagji, B. & Tuff, G., "Managing Your Innovation Portfolio", HBR, 2012.
Global Innovation Institute (GInI), Foundations of Innovation body of knowledge.

The Three Horizons

Top-Down & Bottom-Up