Google's "70-20-10" Formula

Liisa Välikangas, Managing Director of the Woodside Institute, wrote an interesting piece recently for Strategy & Leadership called The golden spur: Innovation independence. In it, she reveals some surprising facts about the importance of personal independence in the innovation process. I found Google's independence formula particularly revealing: the company has a management philosophy that requires it to dedicate 10% of its investment to employee- initiated projects unrelated to the core business.

From the article:

According to CEO Eric Schmidt, 70 percent of their resources are channeled to the core business of internet search and advertising, and 20 percent is channeled to adjacent products such as desktop and product search services. The remaining 10 percent is focused on highly experimental products - innovations important for the long term.

Välikangas aptly demonstrates that the importance of efficiency and reliability in business has stifled our freedom to explore new things. "The industrial revolution may have made us rich but it also subjugated us. This servitude is of a subtle kind: we get paid for doing what we are told to do."

Välikangas response: All hail the amateurs! Amateurs, she writes, "are not under pressure for short-term performance, strict job descriptions or titles, nor under managerial surveillance. Amateurs have the independence to innovate...the freedom to experiment and openly explore a wide array of fringe options."

Which brings me back to Google's formula for innovation. Incentives do not have to be monetarily based in order to work. Linux is testament to that. While not a panacea for success, injecting a bit of personal freedom into your innovation process may just prove to be a best practice.

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