How does the 70-20-10 rule contribute to a company's long-term success?

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.

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 Secondly, it can lead to inefficiencies in operations as outdated technologies may not be as efficient as newer ones.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.

The 70-20-10 rule helps in balancing risk and innovation by allocating resources in a way that maintains a focus on core technologies while still allowing for exploration of new ideas. 70% of resources are dedicated to core technologies, which are typically lower risk and provide steady returns. 20% is allocated to adjacent innovations, which are somewhat riskier but can provide significant benefits if successful. The remaining 10% is dedicated to transformational innovation, which is the riskiest but also has the potential for the highest returns. This allocation allows for a balance between maintaining current operations and exploring new opportunities.