The 70-20-10 Rule
Used by Google, 3M, and others to balance exploration and exploitation.
A resource allocation framework for diversifying innovation investments across three risk categories: 70% Core Business (maintain and optimize existing products), 20% Adjacent Innovation (extend technology to new use cases), and 10% Transformational Bets (radical experiments with new technology). Used by Google, 3M, and others to balance exploration and exploitation.
When to Use The 70-20-10 Rule
Use when allocating R&D budget, staffing innovation teams, reviewing project portfolio balance, or transitioning from exploitation-heavy to more balanced innovation strategy.
How to Apply
Classify All Projects
For each active project, answer classification questions: Does it use existing/extended/new technology? Does it serve existing/adjacent/new customers? What's the payback period? Does it improve/extend/create business model?
Questions to Ask
- Technology/Platform: Existing, extension, or new?
- Customer segments: Existing, adjacent, or new?
- Payback period: <2 years, 2-5 years, or 5-10+ years?
- Business model: Improve, extend, or create new?
Outputs
- Project classification (Core/Adjacent/Transformational)
Calculate Current Allocation
Sum resources (budget, headcount) in each category. Calculate percentage split.
Outputs
- Current allocation percentages
- Gap from 70-20-10 target
Plan Rebalancing
If starting from 90-10-0, plan gradual shift: Move 5% per quarter from Core to Adjacent, 2% per quarter from Core to Transformational. Target 12-18 month transition.
Outputs
- Quarterly rebalancing targets
- Timeline to target allocation
Set Category Metrics
Define success metrics by category: Core (60-80% success rate), Adjacent (30-50% success rate), Transformational (5-20% success rate, but 10x+ returns when successful).
Outputs
- Category-specific success metrics
- Expected failure rates by category