How does the 70-20-10 rule address the innovator's dilemma?

The 70-20-10 rule addresses the innovator's dilemma by providing a strategic allocation of resources that balances the need for maintaining core technologies, expanding into adjacent areas, and exploring transformational innovation. This approach allows companies to continue to support their existing business while also investing in future growth and disruptive technologies. It mitigates the risk of over-investing in either current operations or unproven innovations.

Asked on the following presentation:

Innovative Solutions

Why do so many perfectly managed companies fail? Inspired by the seminal work of author Clayton Christensen, this deck provides the solutions to the “...

Get 5 out of 24 slides

Microsoft PowerPoint

Apple Keynote

Google Slides

Not for commercial use

Or, start for free ⬇️

Download and customize this and hundreds of business presentation templates for free

presentation Preview

Question was asked on:

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)

Questions and answers

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

View answer

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?

View answer

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.

View all questions

Ask another question