Preeth Pandalay
An executive turned transformation consultant with 25+ years of learning, Preeth trains and coaches... Read more
An executive turned transformation consultant with 25+ years of learning, Preeth trains and coaches... Read more
SAFe®’s investment horizon model helps portfolios visualize their growth strategy over time in a simple manner. This framework proves invaluable to portfolio managers when ensuring their portfolios sustain and grow over the long term. The investment horizons help keep the focus on growth and innovation by balancing the needs of today with the envisioned future state. SAFe®’s Investment horizons categorize goals into four distinct horizons – Horizon 1 (Investing & extracting), Horizon 2 (Emerging), Horizon 3 (Evaluating), and Horizon 0 (Retiring).
Horizon 1 (Investing & Extracting) - This horizon represents the investments needed for today’s most significant assets generating revenue or helping the portfolio succeed. Most organizations’ primary focus is horizon 1, for it deals with current business (existing portfolios and customers) and is operational in nature. Horizon 1 investments are generally driven by customers (feature requests), board or investors (stock valuation), competitors, or cost advantage. SAFe® further divides Horizon 1 into two, namely -
Investing - These investments reflect solutions that require significant ongoing investment probably to support changing markets or technology.
Extracting - These investments represent stable solutions that deliver significant value with lower spending. Investments are made to assure continued value, profit, and cash flow.
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The relevance of Horizon 2 & 3 investments is to bridge the gap between the reality of running the business today and innovating to be relevant tomorrow.
Horizon 3 (Evaluating) - Horizon 3 investments are dedicated to investigating new potential opportunities for profitable growth in the future. This could be creating entirely new elements for your business that don't exist today or even a change to the fundamental business model. Generally, these are exploratory and research activities that are often somewhat isolated from the current operating model.
Horizon 3 usually requires modest investments with an ROI period of 3 to 5 years. The few aspirational ideas and their emerging solutions that provide a sufficiently compelling return on investment typically continue to horizon two while the others are culled.
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It is also a reality that few solutions in Horizon 2 may not deliver the anticipated returns, and the decision to stop will have to be taken. In such cases, some modest investment is likely still necessary to decommission the solution, as the horizon two solutions have usually made their way into the internal and external business ecosystem.
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An executive turned transformation consultant with 25+ years of learning, Preeth trains and coaches organizations to be agile and more importantly to stay agile. Preeth’s pragmatism finds its root in his diverse experience at various leadership positions.
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For a detailed enquiry, please write to us at connect@agilemania.com