Horizon Resource Allocation
"In year one, the percentage of resources we spent on that first horizon and the second horizon was about a 70/30 split and we put 0% of our resources on horizon three... In year two, it shifted. We went to a 50/50 split... And then, as we're entering to year three now, we've significantly scaled back the investment in horizon one, that's about 30% and then we've got 60% in horizon two and call it 10 in horizon three." - Annie Pearl
What It Is
Horizon Resource Allocation is a strategic framework for dividing product team resources across three time horizons, with explicit percentages that shift as the company progresses toward its vision. Unlike static resource allocation, this framework recognizes that the balance must evolve over time.
The three horizons represent:
- Horizon 1: Core business optimization and current product excellence
- Horizon 2: Strategic expansion into adjacent areas or new capabilities
- Horizon 3: Future bets and exploratory work
The key insight is that you don't allocate evenly across horizons. You start by heavily investing in your current core (H1), then gradually shift resources toward future growth (H2, then H3) as your foundation solidifies.
How It Works
The Shifting Allocation Model:
| Year | Horizon 1 | Horizon 2 | Horizon 3 |
|---|---|---|---|
| Year 1 | 70% | 30% | 0% |
| Year 2 | 50% | 50% | 0% |
| Year 3 | 30% | 60% | 10% |
Year 1: Foundation (70/30/0)
- Majority focus on winning at your current game
- Some investment in next strategic expansion
- No investment in far-future exploration (too early)
Year 2: Transition (50/50/0)
- Equal investment between core and expansion
- Core should be running more efficiently
- Still not ready for H3 exploration
Year 3: Expansion (30/60/10)
- Core is mature and requires less investment
- Heavy focus on strategic growth areas
- Beginning to explore future opportunities
How to Apply It
- Define your horizons clearly - What's your H1 (current), H2 (expansion), H3 (future)?
- Establish your current allocation - Where are resources going today?
- Set target allocations by year - Where should they go in 1, 2, 3 years?
- Review quarterly - Is the shift happening as planned?
- Don't invest in H3 too early - Wait until H1 and H2 are on solid footing
Example - Calendly:
- H1: Best horizontal scheduling automation platform
- H2: Deep support for teams, departments, and verticals
- H3: Full meeting lifecycle (prepare, follow-up)
When to Use It
- During annual strategic planning
- When deciding how to allocate engineering and product resources
- When explaining strategy to the board or company
- When you feel pressure to work on "the future" before the present is secure
Red flags this framework addresses:
- Spreading resources too thin across too many initiatives
- Investing in future bets before the core is solid
- Getting stuck in H1 and never progressing
- Confusion about why some work is prioritized over other work
Source
- Guest: Annie Pearl
- Episode: "Behind the scenes of Calendly's rapid growth"
- Key Discussion: (00:34:00) - Explaining Calendly's horizon allocation strategy
- YouTube: Watch on YouTube
Related Frameworks
- Three Horizons of Growth (McKinsey) - Original horizon framework
- Adjacent Possible Navigation - Similar concept of incremental strategic progress