The 70/20/10 Innovation Model

Spend 70 percent of your time on the core business, 20 percent on related projects, and 10 percent on unrelated new businesses.”
Attributed to Eric Schmidt here on CNN.com.

Yesterday we spoke of the 70/20/10 Learning Model. Today we apply the same ratio, but this time it relates the the principle used by Eric Schmidt at Google to allocate effort (as described in the quote above).

Getting the right mix of core, adjacency and bleeding edge has always been tough for OSS providers too… at least the ones that I’ve worked closely with over the years.

70% – The core products are what the business is built around, as the name implies. Many of today’s OSS tools are built around cores that were founded decades ago, but constant tweaking is required to keep up with changes to infrastructure (eg servers, databases, virtualisation, etc), programming languages, networks under management and the list goes on.

20% – The effort assigned to adjacent developments is required to expand product lines and meet the needs (demands?) of customers and their changing environments. A challenge in this space is whether to do custom development for a small sub-set of customers, or whether to allocate adjacency effort towards a consistent platform for all users.

10% – Then there’s the effort required to develop whole new ways of doing things. The OSS industry, or more to the point the customer-base that use OSS tools, is crying out for innovation in many ways – to improve efficiencies, to decrease risks, to simplify implementations, to reduce costs and so on.

Do you think 70/20/10 is the right ratio? Like me, do you think it depends on the level of maturity of the OSS provider? For example, does an up-start have to do something highly innovative to take market share away from the behemoths? Given the massive scope for innovation, should all OSS providers allocate a higher ratio of effort to bleeding-edge innovation to steal a march on their competitors?

I don’t think there is one right answer here, but the ratio seems to provide Google with a pretty good balance at this stage of its evolution.

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