The 70-20-10 Rule in Innovation

What is the 70-20-10 Rule?

The 70-20-10 rule is a framework that was originally developed in the realm of learning and development. According to the rule 70% of learning happens through on-the-job experience, 20% of learning happens through social interactions, and 10% of learning happens via formal educational experiences. 

The framework has since been adopted in a variety of contexts and for different use-cases, including in the field of corporate innovation.

How Does the Rule Relate to Innovation?

More than a decade ago, Google’s then-CEO Eric Schmidt introduced this ratio in relation to innovation. He used the rule as a guideline to suggest to employees how to allocate resources and time on projects. The rule, as relating to innovation, suggests that:

• 70% of time should be focused on core business model innovation i.e. making incremental improvements to existing products.
• 20% of time should be focused on related projects, i.e. adjacent innovation; and
• 10% should be dedicated to unrelated and new projects, i.e. transformational and disruptive initiatives

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.

Does the 70-20-10 Rule in Innovation Work?

The 70-20-10 rule has since been adopted by many different organizations ranging from Google to Coca-Cola, as well as many smaller businesses around the globe. It is a strategy that produces results 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 in the 70-20-10 rule, is dedicated to improving the existing product or service.
• It is a model that allows innovators 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 in a way that fits the needs of a particular company, the rule aligns with the organization’s short-term and long-term innovation needs.

How to Successfully Introduce the 70-20-10 Rule 

When crafting strategies like the 70-20-10 rule, it's vital to remember the core drivers of innovation for an organization: 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 can help to point you in the right direction;

• Analyze your current innovation strategy to identify where resources are currently not used efficiently. Make the necessary changes by adopting the 70-20-10 rule as is suitable for the needs of your organization.
• 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 require an iterative approach, and your strategy will too. Use data-driven decisions to keep evolving and scaling as required.
  
  

The 70-20-10 rule can be a powerful tool in corporate innovation practices. In order to successfully implement the 70-20-10 rule, organizations need to realign resources, set clear innovation goals, empower employees to explore new ideas, foster risk tolerance, embrace data-driven decision-making, and ultimately celebrate successes.