Innovate on Purpose: Innovation Portfolio Gymnastics

The 70/20/10 innovation rule is not a fixed proportion, but rather a rule of thumb that should be modified by every company based on competition and market changes. Companies should not limit themselves to just creating new products, but also consider new services, customer experiences, and business models across all three horizons of innovation. To build a real innovation portfolio, companies should first focus on sustaining and extending existing products and services, then consider new additions to their portfolio, and finally analyze how they can disrupt other industries or defend against potential disruption in their own industry. However, innovation is often not well-organized, strategic, or carefully planned and executed, and does not have a single point of responsibility, indicating the need for improvement. To improve innovation, companies should define a corporate-wide innovation portfolio, classify their innovation as incremental, transformative, or disruptive, and enforce the right ratios across the three horizons. Companies should also invest in learning, discovery, and customer engagement to gain more insight for transformative innovation, research disruptive innovations to attack other industries, and research disruption that is expected to happen in their own industry.