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70/20/10 Model for your Business

Many of us are aware of the Pareto principal, also known as the 80/20 rule, founded by Italian economist Vilfredo Pareto, who in 1906 discovered that 80% of the land in Italy was owned by 20% of the population.

Later Joseph Juran, a 20th Century figure, who studied management techniques and principles, applied the principal to a number of areas of business and the economy, and found that it applied to the relationship between almost every input and output, for example:

20% of a company’s staff could drive 80% of the profit

80% of your work related output could come from only 20% of your time at work

80% of a country’s wealth is controlled by 20% of its population

20% of your customer base will account for 80% of your sales

80% of your channel’s activity will come from 20% of the partners

70/20/10 rule for learning

The 70/20/10 rule, as it is known today, was created in the 1980s by three researchers and authors working with the Centre for Creative Leadership, a not for profit educational institution in Greensboro, N.C. The three, Morgan McCall, Michael M. Lombardo and Robert A. Eichinger, were researching the key developmental experiences of successful managers.

It’s a model that has been widely adopted in the training industry and is used as a framework that captures three key types of learning – experience, exposure and education:

70% Experience – day-to-day tasks, challenges and practice

20% Exposure – being with others coaching, colleagues and other collaborative relationships

10% Education – through structured courses and programs

Interestingly, this is something that the Chinese philosopher Xun Kuang (312-238 BC) contributed to one of the “Hundred Schools of Thought” books:

Not having heard something is not as good as having heard it; having heard it is not as good as having seen it; having seen it is not as good as knowing it; knowing it is not as good as putting it into practice.

Translated in 1928 as “tell me and I forget, teach me and I may remember, involve me and I learn”.

Google Adoption of 70/20/10 for innovation

Recognising inability to keep pace with rapid development as the demise of many large brands of the past, Google set about to significantly strengthen its capacity for innovation. This necessitated the firm to harness the creative abilities of its employees, and in doing so, challenge conventional management and organisational models to support innovation.

At the core of its business Google is combining engineering skill and computer science. To encourage the best from their skilled workers the unorthodox model that was adopted is based on six management principles:

  • Dynamic capability – Integrate, develop and reconfigure internal and external competencies to meet rapidly changing surroundings
  • Continuously changing organisation – A proactive approach to change, not delaying taking action when problems arise
  • People centric – Liberating individuals’ innovative power to enable them to be creative
  • Ambidextrous organisation – Combining daily production with innovation. Requires the ability to combine conventional planning-and-control with freedom to innovate
  • Open network – Develop a conscious exchange of information with their surroundings
  • Systems approach – Moving away from a linear way of working to a holistic view of how departments influence each other

The success of this model rests heavily on the ability to live by the ambidextrous principle, which is where Google applies the 70/20/10 rule specifically. Built into their culture, engineers and employees in other departments are entitled, and expected, to use their time for their own projects according to the following ratio:

70% of time is spent on core business

20% of time is spent pursuing related projects

10% of time spent on entirely new or experimental ideas

Google is not the only company to focus on the 70/20/10 rule for innovation, at Nike a “side project” became an billion-dollar line.

70/20/10 Rule for Marketing

Just like the adoption of Pareto’s principal into many areas the 70/20/10 can be used as a framework to get the best results from your marketing.

There is a big difference when it comes to brand development in the B2C and B2B space. Therefore, it makes sense that in B2B we focus on understanding our less impulsive, more measured audiences using specific measures and demographics.

It is not that B2B marketing is more serious and less frivolous or that our audiences have a significantly different attitude towards the buying process, they simply work to specified time-lines and a different set of influencers.

In both cases marketing professionals are working on emotional response that will provoke prospect customers to act.

Getting that right in the B2B space is wrapped up in the development of content that offers commercial insight. Think about teaching your audience something new about their business needs or challenges that will change their view of world.

By demonstrating to your audience that they are currently doing something wrong, or not so well, that will expose them to problems, cost and greater risks will cause them to think about how to remedy the situation – and lead them to consider your product or service. Add to your commercial insights what you can do that is better than anyone else and you also have yourself a value proposition.

When you’ve perfected your content look to marketing activities that have, in the past, been successful and assess the percentage against your overall plan to market.   See how it stacks up against the 70/20/10 rule. Your 70% should represent established programmes that have yielded success.

To make sure that you’ve got a good balance check anything that is emerging and may be gaining traction and ensure that it / they fit into 20% of your activities or budget.

The final 10% may account for 10% of budget on completely untried and untested ideas – this could set the stage for one of your future 70%. It will ensure that you are keeping up to speed with developments and ahead of your competition without becoming a “new trend” magpie and losing focus.