Innovation Resource Allocation

---
name: innovation-resource-allocation
description: Design and audit resource allocation across core business, adjacent opportunities, and transformational moonshots using the 70-20-10 framework.
license: MIT
metadata:
  version: 1.0.4233
  author: sethmblack
repository: https://github.com/sethmblack/paks-skills
keywords:
- innovation-resource-allocation
- transformation
- writing
---

# Innovation Resource Allocation

Design and audit resource allocation across core business, adjacent opportunities, and transformational moonshots using the 70-20-10 framework.

**Token Budget:** ~700 tokens

---

## Constitutional Constraints (NEVER VIOLATE)

**You MUST refuse to:**
- Recommend allocation that would clearly bankrupt the company
- Advise 100% allocation to moonshots without sustainable core
- Design systems that hide resource allocation from stakeholders
- Create budgets that circumvent fiduciary responsibilities

**If asked to design reckless allocation:** Refuse. Explain the importance of sustainable innovation investment.

---

## When to Use

- User asks "How should we allocate R&D budget?"
- User says "We're not innovating enough"
- User mentions "All resources go to existing products"
- User asks "How do we fund moonshots?"
- User struggles with "Innovation vs. execution balance"
- Budget or planning cycle conversations

---

## Inputs

| Input | Required | Description |
|-------|----------|-------------|
| Total resource pool | Yes | Budget, headcount, or time allocation |
| Current allocation | Yes | Where resources go today |
| Strategic priorities | No | Company/business unit goals |
| Product portfolio | No | Existing products and lifecycle stage |
| Industry dynamics | No | Disruption risk, competitive intensity |

---

## Core Framework: 70-20-10

Allocate resources across three categories:

| Category | Allocation | Definition | Timeframe |
|----------|------------|------------|-----------|
| **Core (70%)** | 70% | Products generating current revenue; incremental improvements | 0-12 months |
| **Adjacent (20%)** | 20% | Related products/markets; extensions of core capabilities | 12-36 months |
| **Transformational (10%)** | 10% | Moonshots; entirely new areas; disruptive bets | 36+ months |

**Key insight:** "We spend 20 percent on adjacent businesses and 10 percent of our time on things that are truly new." - Eric Schmidt

---

## Workflow

### Step 1: Audit Current Allocation

Map existing resources to the three categories:

| Question | Data to Gather |
|----------|----------------|
| What generates revenue today? | Revenue by product/business |
| Where does engineering time go? | Sprint allocation, project counts |
| What adjacent bets exist? | Products in development, pilots |
| What moonshots are funded? | Research projects, skunkworks |

**Common finding:** Most companies are 95-5-0, not 70-20-10.

### Step 2: Categorize Portfolio

For each project/product, assign to category:

| Category | Criteria |
|----------|----------|
| Core | Existing customers, proven model, incremental improvement |
| Adjacent | New customer segment OR new capability, not both |
| Transformational | New customer AND new capability, or entirely new market |

### Step 3: Calculate Target Allocation

Apply 70-20-10 to total resource pool:

```
Total resources: $X million / N engineers / H hours

Core (70%):           $0.7X / 0.7N / 0.7H
Adjacent (20%):       $0.2X / 0.2N / 0.2H
Transformational (10%): $0.1X / 0.1N / 0.1H
```

### Step 4: Identify Rebalancing Actions

Compare current to target:

| Gap Type | Action |
|----------|--------|
| Over-indexed on Core | Protect 20% and 10% budgets; create dedicated teams |
| Under-invested in Adjacent | Seed 2-3 adjacent bets; create incubation process |
| Zero moonshots | Fund 1-2 transformational experiments; accept 90% failure |
| Too many moonshots | Consolidate; kill low-conviction bets |

### Step 5: Design Governance

Different categories need different management:

| Category | Metrics | Review Cadence | Decision Rights |
|----------|---------|----------------|-----------------|
| Core | Revenue, margin, NPS | Monthly | Business unit leads |
| Adjacent | Milestones, customer pilots, unit economics | Quarterly | Executive sponsor |
| Transformational | Learning velocity, option value | Semi-annual | CEO/exec team |

### Step 6: Protect the 30%

**Critical:** Core business will always demand more. Protect adjacent and transformational:

- Separate funding pools (not fungible)
- Dedicated teams (not borrowed from core)
- Different success metrics (learning, not revenue)
- Executive sponsorship (visible protection)

---

## Outputs

| Output | Format |
|--------|--------|
| Current Allocation Audit | Pie chart with $ and % |
| Categorized Portfolio | Table of projects by category |
| Target Allocation | 70-20-10 with specific numbers |
| Rebalancing Plan | Actions with owners and timelines |
| Governance Framework | Metrics and review cadence by category |

---

## Error Handling

| Situation | Response |
|-----------|----------|
| Startup (< $10M revenue) | May be 50-30-20 or even 40-40-20; core less established |
| Regulated industry | Core may need 80%; protect 20% for adjacent/transformational |
| Existential crisis | Temporarily 90-10-0; survival first |
| No moonshot culture | Start with 70-25-5; build capability |
| Unclear categories | Use customer + capability matrix |

---

## Constraints

- Do not use this analysis as the sole basis for critical decisions
- Do not apply this framework to situations outside its intended scope
- Acknowledge that analysis is based on available data, which may be incomplete
- Honor the complexity of real-world situations that resist simple categorization
- Present findings with appropriate confidence levels
- Recognize the limits of the methodology

## Example

**Input:** "We're a $500M enterprise SaaS company. All engineering goes to our main product. How do we start innovating?"

**Output:**

### Current State Audit

| Category | Current | Target | Gap |
|----------|---------|--------|-----|
| Core | 95% ($47.5M) | 70% ($35M) | -$12.5M over-invested |
| Adjacent | 5% ($2.5M) | 20% ($10M) | +$7.5M under-invested |
| Transformational | 0% ($0M) | 10% ($5M) | +$5M missing |

### Rebalancing Recommendations

**Year 1 Actions:**

1. **Protect 20% for Adjacent (Q1)**
   - Carve out $7.5M and 15 engineers into dedicated adjacent team
   - Identify 3 adjacent opportunities: [API platform, vertical expansion, partner ecosystem]
   - Different P&L, different metrics

2. **Seed Transformational (Q2)**
   - Create $2.5M innovation fund (start at 5%, grow to 10%)
   - Fund 2-3 experiments with 6-month timeboxes
   - Accept that 2 of 3 will fail

3. **Optimize Core (Q3-Q4)**
   - With 70% ($35M), focus on highest-leverage improvements
   - Kill low-impact features; redirect to adjacent
   - Core should be more efficient, not just smaller

### Governance

| Category | Sponsor | Metrics | Review |
|----------|---------|---------|--------|
| Core | VP Product | ARR growth, NPS, churn | Monthly |
| Adjacent | CTO | Customer pilots, unit economics | Quarterly |
| Transformational | CEO | Learning milestones, option value | Semi-annual |

---

## Integration

This skill is extracted from the **Eric Schmidt** expert. Use Schmidt's voice when applying:
- Frame resource allocation as a strategic discipline, not a budget exercise
- Emphasize that innovation requires protected investment
- Apply data: HBR research shows 70-20-10 companies outperform by 10-20%
- Remember: "Many companies fail because they are too focused on what they have, not what they need"