Innovation Resource Allocator
Enter your total available resources (Budget in USD or Annual Hours) to see how they should be distributed according to the 70/20/10 framework.
Allocation Visualization
Maintain & Optimize
Expand & Adapt
Disrupt & Innovate
Quick Wins for Resource Allocation
- 70% Core: Focus on keeping the lights on and making your main product better.
- 20% Adjacent: Explore new markets or slightly different versions of what you already do.
- 10% Transformational: Take big swings on ideas that could completely change your business model.
The Heavy Lifting: The 70% Core Innovation
Most of your energy goes here because this is where your money comes from. In the world of Core Innovation is the process of making incremental improvements to existing products to maintain market share , you aren't trying to reinvent the wheel. You're just making the wheel roll smoother. Think of a company like Apple updating the iPhone. When they move from one version to the next by adding a slightly better camera or a faster chip, they are playing in the 70% zone. It's low risk, predictable, and keeps customers happy.
If you ignore this area, your current customers will leave for a competitor who offers a more polished version of your product. But if you spend 100% of your time here, you're just polishing a sinking ship. The goal of the core is to maximize efficiency and extend the lifecycle of your current assets. You're looking for 1% to 5% improvements in performance or cost, which, at scale, translates to millions in added profit.
Expanding the Horizon: The 20% Adjacent Innovation
This is where things get interesting. Adjacent Innovation involves applying existing capabilities to a new market or developing a related product for current customers . It is a bridge between the safe harbor of the core and the wild frontier of transformational ideas. You aren't starting from zero, but you are stepping outside your comfort zone.
Let's look at a real-world scenario. Imagine a company that makes high-end running shoes. Their core (70%) is making those shoes lighter and more durable. An adjacent move (20%) would be launching a line of athletic apparel or expanding into a new demographic, like high-performance hiking boots. They already know how to make footwear and they know the athletic customer; they're just applying that knowledge to a slightly different problem.
The risk here is higher than the core. You might find that the new market doesn't actually want your product, or that the cost of entering a new segment is higher than expected. However, the payoff is a diversified revenue stream. When the core market eventually saturates or declines, your adjacent bets provide the safety net you need to survive.
The Moonshots: The 10% Transformational Innovation
This is the "crazy" part of the budget. Transformational Innovation, often called Disruptive Innovation, is the pursuit of breakthrough ideas that create entirely new markets or disrupt existing ones . This is high-risk, high-reward territory. Most of these projects will fail. That is actually by design. If every project in your 10% bucket succeeds, you aren't taking big enough risks.
Think of Amazon. For years, they were a bookstore (Core). Then they became the "Everything Store" (Adjacent). But then they built Amazon Web Services (AWS), which was a total pivot from selling physical goods to selling cloud computing infrastructure. AWS started as a transformational bet. It didn't just add to their business; it changed the very nature of how the company makes money. Today, AWS is one of the most profitable parts of their empire.
The 10% is where you experiment with Artificial Intelligence, blockchain, or completely new business models. You don't expect these to pay off in six months. You're looking for the one "hit" that will define the next decade of your company's existence.
| Attribute | Core (70%) | Adjacent (20%) | Transformational (10%) |
|---|---|---|---|
| Risk Level | Low | Medium | High |
| Time Horizon | Immediate (0-1 yr) | Mid-term (1-3 yrs) | Long-term (3-10 yrs) |
| Goal | Efficiency & Retention | Growth & Expansion | Breakthroughs |
| Example | Software Patch | New Product Line | New Industry Pivot |
Common Pitfalls in Implementation
Many leaders treat these numbers as a suggestion rather than a rule. The most common mistake is "Core Creep." This happens when the pressure to hit quarterly targets forces the company to pull resources from the 20% and 10% buckets to fix a problem in the core. Suddenly, your 70/20/10 becomes 90/5/5. You might hit your numbers this year, but you've just mortgaged your future.
Another mistake is applying the same metrics to all three tiers. You cannot judge a transformational project (10%) by the same ROI (Return on Investment) standards as a core project (70%). If you demand a 20% return in the first year from a moonshot project, you will kill every innovative idea before it has a chance to breathe. Transformational bets should be measured by "learning milestones" rather than immediate profit.
Finally, there is the "Innovation Theater" problem. This is when a company creates a fancy lab or a "Chief Innovation Officer" role but doesn't actually allocate a budget or give the team the power to fail. If the 10% bucket doesn't have the freedom to experiment and fail fast, it's just a marketing exercise, not a strategy.
How to Start Your Own Allocation
If you're applying this to a team or a personal career, start by auditing your time. Track your hours for two weeks. How much of your time is spent on the "day job" (Core)? How much is spent learning a skill that complements your current role (Adjacent)? And how much is spent on a side project that could potentially change your life or career path (Transformational)?
To implement this at a corporate level, create separate budgets. The 70% budget is managed by operations. The 20% budget is managed by product growth teams. The 10% budget is a "venture fund" that operates like an internal startup incubator. This prevents the core business from swallowing the innovative projects whenever a crisis hits.
Can the percentages be adjusted?
Yes. The 70/20/10 ratio is a guideline, not a law. A startup in a volatile market might move to a 50/30/20 split to find product-market fit faster. A very mature company in a stable industry might lean more heavily into the core. The key is not the exact number, but the act of intentionally diversifying your risk.
How do I handle failure in the 10% category?
Failure in the transformational bucket should be expected and even celebrated if it happens quickly and cheaply. The goal is "validated learning." If a project fails, the a success is defined by how much the company learned about the market or the technology, which can then be fed back into the core or adjacent buckets.
Does this rule apply to small businesses?
Absolutely. Even a freelance consultant can use this. 70% of your time goes to your current clients; 20% goes to learning a new tool or reaching out to a new type of client; 10% goes to building a product or a course that could eventually replace your hourly billing model.
What happens if the 10% project becomes a hit?
When a transformational project gains traction and finds a market, it graduates. It moves from the 10% bucket to the 20% bucket as it scales, and eventually, it becomes a new 70% core for the business. This cycle is how companies evolve over decades.
How do I convince executives to fund the 10%?
Frame the 10% not as a "cost," but as "insurance." Explain that the cost of the 10% is far lower than the cost of being disrupted by a competitor. Use examples of companies that failed because they only focused on the core (like Kodak or Blockbuster) to illustrate the danger of ignoring the transformational tier.
Next Steps for Your Strategy
If you are in a leadership role, your first move should be a resource audit. Stop looking at your budget as one giant pool of money and start tagging expenses by innovation type. You'll likely find that you're spending 95% on the core and wondering why you aren't growing.
For the individuals in the organization, start treating your professional development as a portfolio. Don't just get certified in the tool you use every day. Find an adjacent skill that makes you more valuable and one wild-card project that excites you. Balancing these three speeds is the only way to ensure you don't become obsolete in an era of rapid AI integration and market shifts.
