The Problem of Limited Resources

How to Balance Innovation and Efficiency

Every organization exists in an ongoing tightrope walk to allocate their resources appropriately, both planning for today while also preparing for tomorrow.

On one hand, you want to maximize efficiency and value creation where it currently exists, but you know you need to invest in new ideas and new opportunities to create success in the future.

Similarly, you need to look broadly — at the market, analogous examples, and into the unknown — while also being laser-focused on what you do well and what makes you uniquely great.

So what’s the right balance?

We often recommend organizations focus 60% of their resources on existing initiatives, 30% that are adjacent to or extensions of their existing initiatives, and 10% on things that are new — on a rolling basis.

What does that mean? It means what is in each of these buckets should evolve and change. You shouldn’t be reviewing the same initiatives each quarter, all year. Initiatives are either making progress, or they’re not. They’re either on track, or they’re off. If they’re off, they’re either moving back to on, or they’re moving out. There’s no standing still.

.

So how do you know what should be in the 40% that are extensions or new efforts?

Pursue a mix of:

1. Things your customers want or might want (Remember that customers don’t always know what they want.) You learn this from talking with them, truly getting to know them, and understanding the life they live with and around your product. You need to have real empathy with your users.
2. Where society is going — Specifically, what’s happening in the social, cultural, political, or regulatory environment. For this, look to the future and speculate about what might be coming and why it might matter. Create a point of view for your organization in your industry and use this as a guide to inform your decisions.
3. Technological trends and capabilities — Regardless of your business, technology will continue to be a part of everything. Looking at where things are and where they’re headed can unlock new ideas and opportunities.

.

You’ll notice we didn’t mention competitors. Competitors matter — and they don’t. You need to be aware of what your competitors are doing, but not with the intention to do what they’re doing or being a “fast follower”. Instead, pay attention to what they might be seeing (in existing markets, in new markets, in your customers’ lives) that you’re not, and consider why they’re focusing on it. Have you missed something? Is there a latent need you’re not considering? Is there a new technological enabler you’ve missed? If it’s true, grab onto it and figure out why it matters to you. If you aren’t missing anything, take that confidence and continue down your path into the future.

.

How should you allocate your resources?

1. Allocate your resources to maximize the opportunities you have now while maintaining an eye toward where you might go in the future. (Use the 60/30/10 rule as a guide.)
2. Take a portfolio approach, in which you pair the initiative (activity + investment) with the key benchmarks that are appropriate given the stage it’s in. Review your portfolio each quarter. Are you investing enough in the right things?
3. Maintain balance. Don’t fear the new, but don’t discard everything in pursuit of it. Look at things broadly, but don’t give up focus, either.

To learn more about how to balance efficiency and innovation or how to make the best use of limited resources, contact us.

Related Reads:

• Roger Martin — Strategy and Competitors
• Design Thinking for All — The Power of Divergent and Convergent Thinking

Northome Group empowers business owners, leaders, and individuals to use design thinking tools and techniques to solve real business problems and seize opportunities. Learn more about Northome Group at NorthomeGroup.com.

Design Thinking for All is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.