How the 70:20:10 model applies to business innovation

In business, there are two variants of the 70:20:10 model – managing innovation and education. In this article, we’ll look at how applying the former variant of 70:20:10 can transform your return on investment and your employees’ roles.

By Kasper Spiro on Sep 24th

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As a learning and development tool, the 70:20:10 framework suggests that we learn in the following ways:

  • Challenging Assignments (on-the-job) – 70%
  • Developing Relationships (knowledge sharing) – 20%
  • Coursework and Training (formal training) – 10%

The majority of learning comes from experience, feedback, mistakes, etc. Therefore, on-the-job experiences, problem-solving, and working on tasks accounted for around 70% of learning. In terms of working with colleagues, listening to feedback, and working with both good and bad examples, this fell to 20%. Essentially, this left just 10% of learning to come from official training and courses.

Managing Innovation

The 70:20:10 model’s second main application is in managing innovation. This model is so popular, in fact, that Google bases its innovation investment on it.

In this model, it suggests that you should invest your focus and your capital in the following ways:

  • Core Initiatives – 70%
  • Adjacent projects – 20%
  • Transformational projects – 10%

The return for this investment is typically inverse, with transformative initiatives driving 70% of revenue. Additionally, companies who employ this innovation framework, tend to outperform their competitors.

According to Eric Schmidt, CEO of Google, this is the best method for encouraging innovation within a group of employees.

“Just as importantly, the 70:20:10 model supports a culture of “yes” rather than “no.” It promotes “what-if,” out-of-the-box thinking. This positive framework feeds our core business while also encouraging new ideas and big dreams that can become huge wins for the company—those 10x moonshots we were talking about earlier. In the long run, a few of those unrelated 10% ideas will turn into core businesses that become part of the 70%. And that’s good for business and the bottom line.”

Core Initiatives – 70%

This refers to investing in improvements to your existing product. These tend to require a lower financial investment and fit your current customer base and work processes. Just look at Apple, they spend more time and money on making improvements to their current product line than they do to releasing entirely new ones.

Adjacent Projects – 20%

Adjacent projects are ones that are similar (adjacent) to your current business, yet still a new market. No matter how successful your business or your product is, (practically) every business will need to adapt and change to meet new market needs. Investing in adjacent projects allows you to control and take the lead in this process. This could be a new geographic region or a new market (e.g. a cosmetics company branching into men’s skincare), or extending your product offering (e.g. an online retailer expanding their product categories).

Transformation Projects – 10%

Transformative and innovative projects can be risky, think about Google Glass or Amazon’s Fire smartphone, so this is why resources are limited to 10%. But when they succeed, the ROI can fund these failed projects over and over, take Apple’s iPad or the iPhone as an example.

How can L&D leverage 70:20:10 for innovation

Applying the 70:20:10 model for managing innovation doesn’t need to be limited to your product team. L&D can extend this thinking to how employees across the business should operate and innovate in their day-to-day roles. For example, an employee should spend 70% on their core role and daily tasks, 20% on looking for new opportunities, and 10% on out of the box thinking or personal projects that will improve their overall performance.

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About the author

Kasper Spiro is the CEO of Easygenerator and a recognized thought leader in the world of e-learning. With over 30 years of experience, he is a frequently asked keynote speaker and well-renowned blogger within the e-learning community.

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