At a Google@Omnicom conference earlier this year, Simon Carr and Josiah Amartey delivered a presentation asking ‘Has innovation failed?’ Here they explored how companies manage their resource to encourage innovation and argued that time and budget needed to be weighted differently.
Google famously use a 70:20:10 rule to manage their resources. This can be applied in many ways but is often interpreted as applying to budgets. For marketing budgets, this could translate as putting 70% of your spend into business-as-usual activity that is proven to be successful. 10% of your budget is allocated to innovative tests where the outcome isn’t guaranteed. And 20% of your budget can be spent on previous successful tests, that need further adjustments, before they can be considered a safe bet. This method mitigates the risk of expensive innovative tests, whilst making sure that resource is put aside where failure doesn’t risk the core business.
However, Amartey and Carr argue that trying new things takes more time than business-as-usual, which can make it difficult for businesses to make time to innovate. They argue that for time resource the 70:20:10 model is reversed. This means that 10% of time should be allocated to business-as-usual where decisions can be made quickly based on previous experience and where possible processes automated, through programmatic buying. In practical terms, this could mean taking an always on approach to some marketing channels that automatically are optimised to a conversion metric. An example could be an always on search advertising campaign for donations. This frees up 70% of time to explore new ideas and take a test and learn approach without fear of failure.
Applying this rule to marketing campaigns can be fraught with difficulties. How can you reach these strict ratios when faced with some media’s fixed minimum spends? What if the campaign is new and there aren’t any known safe bets? What if time taken away from the business-as-usual brings the quality down? Though there are clear situations where this method could be challenging to implement, rather than a fixed rule, it’s a useful tool on how to think 10, 20, 70. Overall their argument is a compelling one as, in their words: ‘10% innovation budget & 10% innovation time doesn’t make any sense’.
Google @ Omnicom conference:
Download the presentation from here.