Another important way to look at technology strategy is to look at the timelines on which new product and service commercialization will occur. This is important because shareholders of the Corporation want to see constantly improving revenues and profits. Viewing the innovation strategy from the standpoint of when the projects will go commercial and to what extent they will create revenue and profit streams upon commercialization is key to corporate resource planning (operations, manufacturing, sales, marketing, etc.) In order to balance a portfolio to achieve this objective the company must look at how much it is investing in Horizon One (commercialization in one year or less), Horizon Two (commercialization between one and three years), and Horizon Three (commercialization between three and 10 years). Understanding which projects fall into which buckets and looking at the company’s track record for commercialization of each bucket, the target investment required can be ascertained.
In the “Portfolio Analysis Worksheet” figure all of the projects proposed for Horizon One (core products), Horizon Two (adjacent products), and Horizon Three (transformational products) are listed. Calculations are then made as to the percent of the overall portfolio is dedicated to horizon one, two, and three. Also determined are the percent of the projects within any category that are not aligned or aligned to the strategy. For unmanaged portfolios it is not uncommon to find that horizon 1 is vastly over resourced to the detriment of horizon 2 or horizon 3 work.
From the portfolio analysis worksheet the best projects and propose projects are selected and placed on the “Target Portfolio Worksheet” as shown in the figure. This worksheet is shared with top management and the organization so that everybody understands how the work being undertaken with support innovation thesis over time and that the percent of resources going to each horizon is appropriate. The corporations high-level business strategy team can also confirm that the required number of new products and services will commercialize on time to keep shareholder value increasing at the promised rate.