How can the 70-20-10 rule be applied in different industries?

The 70-20-10 rule can be applied in different industries by allocating resources to different areas of innovation. 70% of resources should be dedicated to core technologies or operations that are already established and generate the most revenue. 20% should be allocated to adjacent areas, which are new areas that are related to the core operations. The remaining 10% should be dedicated to transformational innovation, which involves exploring completely new areas that could potentially bring about significant growth in the future. This allocation allows for a balance between maintaining current operations and exploring new opportunities.

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How do you know how much to invest in each category? Use the 70-20-10 rule. A safe allocation dedicates 70% of resources to core technologies, 20% to adjacent, and 10% to transformational innovation to test the waters. Think about Meta and their $10 billion allocation to VR and the metaverse through metaverse labs. With $71 billion in expenses in 2021, that accounts for about a 14% allocation. (Slide 12)

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How can the 70-20-10 rule be adapted for smaller businesses or startups?

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The 70-20-10 rule can be adapted for smaller businesses or startups by scaling the percentages according to the company's resources. For instance, 70% of the resources could be dedicated to core operations or technologies that are crucial for the business's survival and growth. 20% could be allocated to adjacent areas or technologies that are related to the core operations but offer potential for expansion or diversification. The remaining 10% could be invested in transformational or innovative projects that have the potential to significantly impact the business's future, but also carry a higher risk. It's important to note that these percentages are not fixed and can be adjusted based on the business's specific circumstances and risk tolerance.

What are the consequences of under-investing in core technologies?

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Under-investing in core technologies can lead to several consequences. Firstly, it can result in a lack of competitiveness as competitors may invest more and thus have more advanced technologies. Secondly, it can lead to inefficiencies in operations as outdated technologies may not be as efficient as newer ones. Thirdly, it can lead to a lack of innovation as there may not be enough resources to explore new technologies and ideas. Lastly, it can lead to customer dissatisfaction as they may expect the latest technologies from the company.

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