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 Secondly, it can lead to inefficiencies in operations as outdated technologies may not be as efficient as newer ones.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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Why do so many perfectly managed companies fail? Inspired by the seminal work of author Clayton Christensen, this deck provides the solutions to the “...
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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)