70-20-10 Innovation Rule Template

What is the 70-20-10 Innovation Rule ?

The 70-20-10 Innovation Rule is a strategic framework that guides organizations in allocating time, budget, and resources across three categories of innovation: core, adjacent, and disruptive. It proposes that approximately 70% of innovation investment should focus on improving existing products and processes, 20% on expanding into adjacent markets or offerings, and 10% on exploring transformative, disruptive ideas that could redefine the business.

This model is designed to help organizations strike a balance between optimizing current operations and exploring new frontiers. It provides a clear structure for managing innovation portfolios, ensuring that efforts are not disproportionately focused on either incremental improvement or risky experimentation.

By intentionally diversifying innovation investments, companies can sustain day-to-day operations, capitalize on near-term opportunities, and simultaneously prepare for future shifts in market dynamics or technology. The 70-20-10 rule is especially useful for organizations seeking to create a scalable, repeatable approach to innovation without compromising focus or overextending resources.

70-20-10 Innovation Rule in Innovation

The 70-20-10 Innovation Rule plays a vital role in real-world innovation projects by organizing and prioritizing efforts based on potential impact and risk. In practice, this framework offers a strategic method to guide decision-making and ensure that innovation is both purposeful and sustainable.

In a typical innovation initiative, many organizations struggle with misallocated resources—either focusing too heavily on short-term gains or betting too much on unproven ideas. The 70-20-10 model provides a guideline to distribute resources more effectively:

• Core Innovation (70%) emphasizes the continuous improvement of existing products, services, and processes. These are initiatives with low risk and high predictability, aimed at maintaining market share and improving operational efficiency.
• Adjacent Innovation (20%) targets expansion into related markets, new customer segments, or additional product lines. This area leverages existing capabilities but requires some adaptation.
• Disruptive Innovation (10%) involves high-risk, high-reward initiatives that have the potential to create entirely new markets or disrupt existing ones.

This structured approach helps companies avoid innovation imbalance. It ensures that while core operations are maintained and optimized, there is also a strategic push toward diversification and exploration.

From a process standpoint, the 70-20-10 framework enables innovation leaders to create separate pipelines or work streams for different types of innovation. These streams can then be managed using different governance models, timelines, funding structures, and performance metrics appropriate for their level of risk and uncertainty.

By using this model, teams can:

• Prioritize projects based on impact and alignment with strategy.
• Justify innovation investments to leadership and stakeholders.
• Encourage a culture of innovation without overwhelming resources.
• Balance long-term visionary thinking with short-term business needs.

The model’s versatility makes it applicable in industries ranging from healthcare and manufacturing to tech startups and service sectors. It fosters alignment between innovation teams and executive leadership while offering a roadmap for innovation scalability and sustainability.

Getting Started with the 70-20-10 Innovation Rule

Implementing the 70-20-10 model requires deliberate planning, stakeholder engagement, and a dynamic approach to innovation portfolio management. Below is a step-by-step guide to applying the framework in your organization.

1. Conduct an Innovation Audit

Begin by reviewing your organization’s current innovation activities. This involves:

• Listing all ongoing and proposed innovation projects.
• Categorizing them into core, adjacent, and disruptive efforts.
• Evaluating the current allocation of resources (time, budget, personnel).

This audit helps identify gaps, overlaps, and misalignment that the 70-20-10 rule can help correct.

2. Define Strategic Priorities

Align innovation categories with broader business goals. Ask questions such as:

• What are the current market challenges we must respond to?
• What are our growth areas over the next 3–5 years?
• What capabilities do we need to develop to remain competitive?

Strategic clarity ensures that each innovation category supports the long-term vision.

3. Create Distinct Innovation Streams

Establish dedicated work streams for core, adjacent, and disruptive innovation. This includes:

• Assigning teams or champions to each category.
• Setting unique evaluation criteria, timelines, and governance structures.
• Designing tailored processes for idea selection, development, and scaling.

For example, core innovation might follow an agile project cycle, while disruptive innovation could use design thinking or open innovation models.

4. Allocate Resources Accordingly

Apply the 70-20-10 distribution to time, funding, and talent. Consider:

• Budget planning: Allocate 70% of the innovation budget to core initiatives, 20% to adjacent, and 10% to exploratory or disruptive ideas.
• Staffing: Assign experienced personnel to core and adjacent projects, and a dedicated, entrepreneurial team to disruptive ones.
• Time management: Encourage employees to dedicate time to disruptive projects through innovation sprints or internal competitions.

These allocations can be adjusted based on business maturity or market volatility.

5. Set Metrics and KPIs for Each Category

Tailor performance metrics to match the nature of each innovation type. For example:

• Core innovation: ROI, cost savings, customer satisfaction.
• Adjacent innovation: revenue from new markets, customer acquisition, market share growth.
• Disruptive innovation: number of validated prototypes, learning milestones, venture partnerships.

Measuring success differently across categories prevents misjudging high-risk initiatives by short-term standards.

6. Review and Re-balance the Portfolio

Regularly assess the innovation portfolio to ensure the 70-20-10 distribution remains effective. This step involves:

• Reviewing project performance and impact.
• Reallocating resources based on shifting priorities or market dynamics.
• Retiring under performing initiatives or scaling promising ones.

Quarterly or biannual portfolio reviews help maintain agility and relevance.

7. Foster a Culture That Supports All Innovation Types

Successful application of the 70-20-10 rule depends on organizational mindset. Encourage:

• Executive sponsorship for all three categories of innovation.
• Psychological safety to promote experimentation and risk-taking.
• Recognition and rewards for contributions across innovation types.

Culture acts as the foundation for a balanced and sustainable innovation strategy.

Project Recommendations for Success

Resistance to Disruptive Innovation

Create a safe space for experimentation without judgment.

• Set separate evaluation criteria for high-risk projects.
• Share case studies and successes to build confidence.
• Use internal incubators to explore disruptive ideas away from core operations.

Imbalance Toward Core Innovation

Ensure leadership prioritizes long-term vision alongside short-term gains.

• Link innovation goals to strategic KPIs.
• Encourage mid-level managers to sponsor adjacent or disruptive ideas.
• Use budgeting tools to enforce allocation discipline.

Poor Categorization of Projects

Establish clear definitions and criteria for each innovation type.

• Train teams to distinguish between core, adjacent, and disruptive efforts.
• Use visual tools or matrix models to map projects accurately.
• Assign innovation leads to oversee portfolio balance.

Complementary Tools and Templates for Success

• Innovation Portfolio Tracker – Categorizes and visualizes projects across the 70-20-10 spectrum.
• Resource Allocation Matrix – Guides distribution of budget, talent, and time across innovation types.
• Innovation Charter Template – Defines goals, scope, and KPIs for each project based on category.
• Risk Tolerance Assessment – Helps determine organizational readiness for disruptive innovation.
• Quarterly Innovation Review Toolkit – Facilitates structured portfolio evaluations.

Conclusion

The 70-20-10 Innovation Rule offers a pragmatic and proven framework for managing innovation across multiple horizons. By intentionally allocating resources to core, adjacent, and disruptive initiatives, organizations can balance risk, drive growth, and foster adaptability.

This model ensures that innovation is not left to chance or skewed toward immediate returns. Instead, it provides a disciplined yet flexible roadmap for sustaining current success while planting the seeds for future breakthroughs.

In an era defined by rapid change and increasing competition, the 70-20-10 approach empowers organizations to innovate with purpose, agility, and strategic intent. When integrated into daily operations, portfolio planning, and cultural values, it becomes a cornerstone of long-term resilience and leadership in innovation.