Defining Investment Streams

We define an investment stream as a commitment to fund something. We call it a stream because the commitment is open-ended: it continues until it is changed, perhaps even eliminated. This is aligned with our event-oriented approach: we assume that the leaders of an organization are always reevaluating as new events occur, and always adjusting things. This is in contrast to a calendar-based approach, in which commitments are made for a period of time, and then reevaluated in a periodic funding cycle. We find that approach too slow and inflexible for today.

In this approach, an investment portfolio is a collection of investment streams. Each stream corresponds to one or more capabilities that the organization wants to develop, maintain, and improve. At the funding level, we do not differentiate between any of these: decisions about development, maintenance, and improvement are made tactically by those who lead the implementation of the capability.

Define the Candidate Capabilities

These need to be fully defined Lean experiments. See step 3, Refine the Business+Tech Vision

Refine Your Strategy

Consider how the capabilities can be assembled to achieve your overall goal.
Balance risk and opportunity.
Focus on your strengths.
The strategy consists of:
- A strategy goal.
- A set of capabilities that you think will advance you toward that goal.
- A set of strategies for how the capabilities should be developed and executed, including aggregating some capabilities into synergistic investment streams.
- An optimized allocation of funding to the chosen investment streams.
- Strategies for other parts of the organization, designed to support the capabilities.
- Definition of metrics that indicate progress.

When to Reevaluate

When events occur that impact the assumptions of the strategy

How to Oversee the Investment Portfolio

Continuous examination of the metrics

Our Terminology

capability - the ability to do something. An organization capability is the ability to do something that helps to implement a strategy and achieve an organizational goal. A product capability is the ability of users of the product to use it in a way that help them to do something or achieve one of their goals.

investment stream - a commitment to fund one or more organization capabilities.

investment portfolio - a collection of investment streams, comprising the ongoing spend of a source of funds.

Subtopics

Managing Spend Rate, Not Cost

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