The 70:20:10 business model: managing innovation
As a learning and development tool, the 70:20:10 framework suggests that employees learn skills or obtain new knowledge in three ways. With on-the-job experience, making mistakes, completing tasks, and so on.
That’s the 70% bit of the model. Employees also learn by asking others, working with a coach or mentor, and through social learning. That’s the 20% part. 10% of what employees learn happens outside of work: through classroom training or e-learning. However, some organizations use 70:20:10 as an innovation model, which completely changes its meaning.
70:20:10 as an innovation model
The 70:20:10 model’s second main application is in managing innovation. This model is so popular that Google bases its innovation investment on it.
This model suggests that you should invest your focus and capital in the following ways. Keep in mind that the numbers are just a rule of thumb – it’s not necessary to apply them literally.
- 70% on core initiatives
- 20% on adjacent projects
- 10% on transformational projects
The ROI is typically inverse, with transformative initiatives driving 70% of revenue. Additionally, companies that employ this innovation framework tend to outperform their competitors.
Google has successfully used 70:20:10 for innovation, according to Eric Schmidt, the search engine’s former CEO. He says it 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.”