By joel heath, founder of FluidStance
From time to time, I am given the opportunity to speak with entrepreneurs on the role of innovation in our companies. The more I give this talk, the more I realize the formula I have adopted for innovation at work is applicable to our personal lives.
My personal innovation formula is inspired by an article that I read when I was President of Teva. The authors, Bansi Nagji and Geoff Tuff, (Managing Your Innovation Portfolio, May 2012 Harvard Business Review) found that the most successful companies in the world roughly allocate 70% of their resources in the company’s core business, 20% in innovation exploring adjacent spaces and 10% in truly transformational horizons.
70-20-10 Rule for Innovation
The 70% investment helps you hit the budget in the year for the year, keeps the lights on and at a steady pace. The 20% investment allows you to develop new products for your existing customers adding increment revenue in the mid-term (2-3 years). These are spaces your current customers give you full permission to explore based on your brand’s track record of delivering products in line with their expectations. It is why we are open to buying a cell phone from a computer company like apple. Lastly, transformational investments (10%) are long shot bets to make sure you are not the same company in ten years to continue to be relevant in an ever changing world.
While this 70-20-10 formula is less of a rule and more like lane markers, I have found that many of us naturally gravitate towards one end of the spectrum or the other. For me, I am a “ten-er.” I wake up thinking about incremental and transformational innovation and what new horizons could be explored to bring life to customer’s standing desk and work life.
I am often accused of ignoring the core business as I get complacent in the details of daily operations and I truly light up when I contemplate what could be. For others (ahem, Blockbuster Video I am talking about you) they get stuck in the safety of the known core business and do not look up to see the future streaming by. There is operational excellence in the known, but you are blind to the evolution of what the core will want in the future. Like all things, beauty is found in moderation and so it is true within innovation for both companies and you.
Moderation Creates Balance
Moderation of innovation is challenging, because an investment in your core business gives you quick feedback to the bottom line and a transformational investment can stroke your ego because you are going where no person has gone before. But just like a financial portfolio, balance lets you reap the gains of a hot market and weather the storm of a slow one. Hence 70-20-10 and the importance of investing 70% in your core, 20% in organic extensions and 10% in crazy ideas, regardless of where you naturally sit on the innovation spectrum. I learned the hard lesson, you can’t just chase the 10 without the foundation of the 70 to keep the lights on.
This formula is easily adapted to our personal lives. Invest 70% of your time and resources in the core aspects of your life. The things that keep the lights on with all systems go for your body, family, core friends and your fiduciary responsibilities. Make a 20% investment in adjacent exploration of your daily life with adventure, travel, the edge of personal athleticism (regardless if that is a 5K or 100), reading, new hobbies and getting to know people outside your core.
Lastly, make a 10% investment in areas that will have the opportunity to make transformational changes in your life in the next decade. For me this tends to live in places beyond the tangible: love, spirituality, the illusive “zone” in athletics, random acts of kindness and transpersonal experiences.
While this feels fairly straight forward, like all things, the practice is tricky. For anyone that has tried meditation, a simple practice to sit 5-20 minutes a day is easily taken over by the demands of your core responsibilities or the busy mind. The trick is to schedule innovation and give yourself permission to fail and learn when you are playing on the fringe.
I have used a virtual ten bead strategy that I always threaten to make into a product; seven beads for the core, two beads for adjacent spaces and one for transformation. At the end of the day I move the ten beads through my head by how my day fell. While not as exact as I am sure my accountants bill me their hours, it is a gentle reminder to over invest in my core so my family has a solid foundation, so we can chase the possible.
In the spirit of one of the greatest innovators, Steve Jobs…
Wait there is one more thing. I break out 1% of my “10” innovation investment for those little windows of life that fuels the dreams, fantasies or imagination of those closest to me. I found a simple 1% investment in their dreams multiplies my life exponentially. A selfish investment magnifying my life through theirs. The challenge is to really know what their 1% is at their core. <Insert my wife rolling her eyes, here> Yes honey, I know you just want me to truly listen, but it is so hard not to try to fix it first 😉 even though I have not listened to what it is.
I call it a “Love/Cent.” A simple 1% allocation in our awake hours to exponentially fuel dreams. 70.20.10>1