The 70-20-10 Rule in Innovation

While innovation is cited as a priority by over two in three organizations, fewer than one-third use it successfully enough to generate significant revenue or measurable growth. Undefined and incomplete strategies are often the chief reason behind these shortcomings. If your business needs a more robust approach to innovation, adopting the 70-20-10 rule could play a key role.

What is the 70-20-10 rule in innovation?

The 70-20-10 rule in innovation is actually borrowed from the 70-20-10 rule in learning, which states that: “70% of learning happens through on-the-job experience. 20% of learning happens socially through colleagues and friends. And 10% of learning happens via formal training experiences”.

Google’s then-CEO Eric Schmidt used this ratio in relation to innovation. It is a guideline that suggests employees should spend 70% of their time focused on core business model innovation,  20% on related projects, and 10% dedicated to unrelated and new projects.

Its purpose is to ensure that enough time is committed to keep the company running while still leaving enough time for innovation, which is very important as creativity requires energy, peace of mind, and perspective.


Why the 70-20-10 rule in innovation works

The 70-20-10 rule has been adopted by organizations ranging from Google to Coca-Cola, as well as many smaller businesses around the globe. It is a strategy that works for many reasons, including but not limited to;

  • It gives employees a chance to innovate and work on new ideas and projects without losing sight of the core business model.
  • Innovation often revolves around customer-centric ideas and 70% of time is dedicated to improving the existing product.
  • It is a model that allows intrapreneurs to fail, learn from mistakes, and subsequently land on successful innovations.
  • The 70-20-10 rule ensures that  incremental innovation takes place to deliver continued progress, while still leaving room for disruptive innovation.
  • Having a clear innovation strategy that covers core, adjacent, and transformational elements additionally encourages a company-wide buy-in.

Crucially, when implemented correctly, the rule aligns with the organization’s short-term and long-term innovation needs.


How to successfully introduce the 70-20-10 rule 

The main driving forces of innovation are customer experiences, revenue growth, and product development. Therefore, when crafting strategies like the 70-20-10 rule, it's vital to remember the core drivers of innovation: customer experiences, revenue growth, and product development. By staying mindful of these key elements during implementation, organizations can effectively allocate resources to nurture creativity and achieve tangible progress aligned with their innovation goals.

When considering this particular methodology, the following steps will point your team in the right direction;

  • Analyze your current innovation strategy to identify where resources are currently disrupted and make the changes needed to bring it in line with the 70-20-10 rule.
  • Define clear goals in all three key areas (core, adjacent, and transformational) and begin to view innovation as a portfolio so that resources can be allocated accordingly.
  • Allow employees to work with autonomy and try new ideas like connecting with clients during the process, as long as they stick to the 70-20-10 guideline.
  • Build a culture of risk tolerance and continue to communicate so that all employees understand the organization’s goals and key performance indicators.
  • Analyze and iterate. Innovations often require an iterative approach, and your strategy will too. Use data-driven decisions to keep evolving and scaling as required.

In short, successfully implementing the 70-20-10 rule involves realigning resources, setting clear innovation goals, empowering employees to explore new ideas, fostering risk tolerance, embracing data-driven decision-making, and celebrating successes.

Introducing the 70-20-10 approach to innovation will require a mindset shift from the entire team. Nonetheless, you will struggle to implement the philosophy without the right tools. With a decentralized innovation management program, you can turn it from an idea into a discipline capable of transforming your entire company.

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