Innovation Rate Framework
The framework positions organizations along a spectrum from Pure Exploitation (0) to Pure Exploration (10).
A comprehensive framework for calibrating organizational 'mutation rates' - how much to invest in exploration (innovation, R&D, experimentation) versus exploitation (operational excellence, cost reduction) based on market dynamics, competitive intensity, and internal capabilities. The framework positions organizations along a spectrum from Pure Exploitation (0) to Pure Exploration (10).
When to Use Innovation Rate Framework
Use when determining R&D investment levels, allocating resources between innovation and operations, responding to market disruption, or diagnosing whether current innovation rates match environmental volatility.
How to Apply
Calculate Current Mutation Rate
Quantify current innovation investment: R&D spending as % of revenue, innovation headcount %, experiment count, portfolio mix (core vs. adjacent vs. transformational). Compare to industry benchmarks.
Questions to Ask
- What % of revenue goes to R&D/innovation?
- What % of headcount works on new products vs. maintaining existing business?
- How many active experiments/projects are in the portfolio?
- What's the current split between core, adjacent, and transformational innovation?
Outputs
- Current mutation rate assessment
- Gap vs. industry benchmarks
Assess Market Volatility
Evaluate environmental dynamics: customer churn, product lifecycle length, competitive disruption frequency, revenue predictability. Higher volatility indicates need for higher mutation rates.
Questions to Ask
- How fast is your market changing? (Slow: 5-10+ years, Moderate: 2-5 years, Fast: <2 years)
- How differentiated are products? (Commoditized vs. unique)
- What are returns to innovation? (Low, moderate, or extreme)
- How intense is competitive pressure? (Low, moderate, or high)
Outputs
- Market volatility score
- Required mutation rate range
Assess Organizational Capability
Evaluate internal capacity to sustain innovation: financial resources, exploration capabilities, ability to kill failures quickly.
Questions to Ask
- Can you afford high failure rates? (Financial resources, investor patience)
- Do you have exploration capabilities? (R&D talent, innovation culture)
- Can you kill failures quickly? (Decision-making speed, low political cost to stopping projects)
Outputs
- Capability assessment
- Maximum sustainable mutation rate
Gap Analysis
Compare current mutation rate to required rate. Identify if over-investing (burning cash in stable markets), under-investing (vulnerable to disruption), or balanced.
Outputs
- Gap diagnosis
- Direction of adjustment needed
Portfolio Rebalancing
Adjust innovation portfolio using 70-20-10 rule. Shift resources between core, adjacent, and transformational based on gap analysis. Implement stage-gate rigor.
Outputs
- Rebalanced portfolio allocation
- Stage-gate criteria
- Kill criteria for projects
Cultural and Process Alignment
Ensure culture and processes support target mutation rate. High-mutation environments need fast-failure celebration; low-mutation environments need operational excellence rewards.
Outputs
- Cultural change initiatives
- Process modifications
- Metrics alignment