How to balance your innovation budget and resources

Dedicating time and resources to innovation for your business is HARD yes – but here’s how we’ll remedy that situation for you

Day-to-day business operations require a lot of your attention and resources. It can be the time needed to onboard your clients, provide support, or debug software. 

All very valid activities to ensure you serve your customers accordingly. 

Typically organizations spend a lot of time and effort solving yesterday’s problems and fixing today’s problems, leaving little to no room for critical longer-term developments.

Although all of these necessary actions are needed to ensure that your customers are satisfied, it also introduces risk as your business focuses entirely on the short-term results and bottom line. 

The risk you create is that of putting long-term healthy growth and revenue at stake. All of the energy and scarce resources are concentrated at your exploitation portfolio and not aimed at your more disruptive exploration portfolio, leading to a position of only being able to react to changing circumstances.

How can you recognize that your organization’s orientation is too much in the short term? 

Below are a few examples of red flag signals to be aware of:

  • Lower product revenues
  • Lack of defined North Star
  • Little to no innovation projects
  • No or limited roadmap communication
  • Declining CSAT scores
  • No clarity about available innovation CAPEX and OPEX
  • Customer projects take precedence
  • Increase in churn


Disruptive innovation, new business models, and improvements are all needed to satisfy the needs and wants of your existing customers and potential clients. 

It is just as important for customers to know about how you can help them and serve them today as to know about your purpose and vision about the future and your roadmap. 

Markets typically are crowded, and lots of alternatives are available to choose from, making it very important to provide perspective and a predictable path to the future to build and maintain long-term healthy partnerships.

Suppose your organization’s policy is more ad-hoc or short-term oriented, or you don’t come around to execute on longer-term developments. In that case, you can adopt a three horizons investment policy and product portfolio development approach. 

The three horizons approach ensures that you allocate enough budget and resources for each type of innovation so that today’s problems get fixed and you develop future income streams in a timely and balanced manner.

I think this is something that we all recognize and sounds logical; however, do not underestimate the impact. (personal thought here on this)

Developing an innovation budgeting policy is one thing, but following through with the implementation and day-2-day execution is harder. Sticking the chosen approach to execute on your long-term roadmap requires perseverance and is all about your corporate mindset and ability to change.

 >> What will you do when this important client project requires significant investments and prioritization? 

>> Are you willing to adjust your targets when your roadmap is re-prioritized for short-term benefits? 

As these decisions are always necessary and complex, you should consider the long-haul implications as part of your decision-making.

The horizons distinguish three types of innovations, each having associated budget allocations. Typically, a distribution can look like this:

  • HORIZON 1: Improve core business – 60% of the budget
  • HORIZON 2: Build incremental new business – 25% of the budget
  • HORIZON 3: Create disruptive new business – 15% of the budget


I am writing a little e-book about the three horizons investment policy and product portfolio development approach (add WHY we’re creating this specifically to our audience) 

Comment ‘Horizon’ below and send me a DM with your best e-mail address to shoot over the e-book! 

Want to read more information like this? Subscribe to our newsletter!

We will send you the latest news and updates straight to your inbox. And we promise not to spam you. ​

Don't miss any updates

Want to know more about this blog topic?

Our business sparring service is a great way to discuss your ideas and challenges to support your decision-making processes.

Related Posts

Maurice Remmé

How To Write KPIs

Key performance indicators or KPIs are one of the most powerful tools in a business’s toolbox. As a measurable metric, KPIs demonstrate how well your business is performing against your strategic objectives. While KPIs are often interchangeably used with ‘metrics,’ they are much more than numbers. By tracking the performance of departments and individuals, you can make critical adjustments as needed in strategy execution to achieve your business objectives. In addition, these indicators help you break down strategic objectives into smaller, quantifiable data points.

Read More »
Maurice Remmé

The difference between sparring and coaching

At DeepThink, we provide business sparring and -coaching services for entrepreneurs, business- and product leaders. Coaching and sparring have gained a growing interest in the market, and both terms used interchangeably on the Internet, but are they the same?

Read More »
Maurice Remmé

Things you need to know about the next-generation cyber-attacks.

Businesses, industries, or even the world is becoming more digital and interconnecting more than ever, including the risks associated with a digital world. Digital services, processes, and systems are all a part of the bigger global cyberspace. Cyberspace is a complex environment where interaction between people, software, things, and services comes together.

Read More »
Maurice Remmé

How to Write a Mission, Vision, and Value Statement

A strategic plan is incomplete and doomed for failure if it isn’t guided by three essential components: mission, vision, and values. In the absence of a well-crafted strategic plan, work occurs aimlessly, and stakeholders remain uninformed and unchallenged. As a result, you may not be able to make the most of your capital and human resources, unable to set the right direction for your company, and struggle to meet your long-term goals.
Your strategic planning process is invisible to others and private only to you. But your mission, vision, and values are on your website, in your marketing materials, and in investor and shareholder reports. They communicate your strengths, ambition, and values.

Read More »