Google’s 70/20/10 Rule

I just got done writing a short memo on Google for one of my classes. I thought since I have been publishing a lot lately on innovation and business building, you might be interested in an excerpt of it.

“In the constantly changing online environment, it is imperative to be look toward innovation to stay competitive. Firms sometimes lose focus on exploring new concepts and then see their competitors gain the lead. Google has implemented an interesting solution to maximize each individual’s effectiveness. This solution has been coined 70/20/10.

In order to always develop leading edge ideas, Google empowers every one of their employees to think of their time as a whole, or 100%. When divided up, they require that each employee concentrate 70% on the main task, 20% on related tasks, and 10% on completely unrelated tasks.

In Google’s eyes, the main task is search. The core of their business is search algorithms and their advertising solutions, Adsense and Adwords. Continually changing the search preferences and maintaining their pay per click model keeps them profitable. Each employee is required to focus 70% of their time on main goal.

Secondly, 20% of the time should be spent on related tasks. These projects are not considered part of the main driving force of Google, but revenue driven as well. They include Froogle, the online shopping assistant, or Google Checkout, the checkout option that was just released.

Finally, the last 10% of an employees workday needs to be spent on completely unrelated tasks. This could be reading a book, drawing in Photoshop, or watching a movie. The ideas are twofold though. You gain a fierce employee loyalty if you allow them to do what they want to do for 10% of the week, but you also capture innovation out of it due to the fact that the people are still thinking.

The core process yields amazing results. In a long tail environment, what ends up happening is projects that were originally conceived in the 10% realm begin to get developed. They then move to the 20%
category and begin to be profitable. Once they are completed through that phase, they roll into the 70% realm
and are considered core to the business.

Both of Google’s advertising solutions followed this pattern. Search was Google’s primary business model until they discovered how to advertise. Once they began targeting keywords, Adsense and Adwords began to move from the 10% category into the 70% category.

Actions like this keep a firm innovative. With so much of the business world in a top-down infrastructure, the ideas of a few get cascaded to many. Likewise, those few executives get charged for the fall of the company. On the other hand, innovative companies like Google take a proactive approach and encourage innovation through their everyday habits.

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