Four Bets, Not One Word
Innovation fails in planning meetings for a boring reason: everyone in the room means a different thing by the word. The fix is the classic two-by-two that maps how new the offering is against how new the market is. Bottom left sits incremental innovation, existing offering, existing market. Top left and bottom right are the two adjacent moves: new offering to existing customers, or existing offering to new customers. Top right is transformative territory, new offering, new market, where both the risk and the temptation live.
The map earns its keep the moment a proposal lands on it. An idea in the bottom-left quadrant needs a business case and a quarter. An idea in the top-right needs a test budget, a kill date and an executive sponsor who has accepted the odds. Problems start when bottom-left discipline, annual budgeting and ROI gates, is applied to top-right bets, or when top-right enthusiasm, prototypes and stage energy, is applied to core work that simply needs to ship.
The Portfolio Rule: 70-20-10
Once the types are named, the next question is allocation. The 70-20-10 heuristic is the most durable answer: roughly seventy percent of innovation resources on core improvements, twenty on adjacent moves, ten on transformative bets. The specific numbers matter less than the enforcement: without a stated allocation, the core, with its urgent deadlines and provable ROI, will eat the entire budget every single year, and the transformative bucket will exist only in the strategy deck.
The rule also disciplines conversations about risk. A portfolio that is 100% incremental has no future beyond the current product cycle; a portfolio that is 40% transformative is a venture fund wearing a company costume. Leaders who defend the 70-20-10 split in budget meetings are doing the single most underrated act of innovation management, which is protecting the small, weird, unfashionable bucket from the quarter's math.
Sources: McKinsey three horizons, popularized at Google · McKinsey three horizons · Aggregated new-product failure studies
The Ten Types: Beyond the Product
The Doblin framework widens the aperture further: innovation is not only what you sell but how you configure the business, how you build the offer and how you experience it. Doblin names ten types across those three layers, from profit model and networking through product performance to customer service and channels. The research behind it carries a punchy finding: organizations that integrate six or more types outperform competitors that average fewer, because product-only innovation is the easiest kind to copy.
The framework is most useful as a checklist against one-sidedness. A team that has shipped four product tweaks in a row can run one session through the ten types and usually finds that the profit model, the service layer or the channel is where the unfunded idea sits. The table below summarizes the ten with a recognizable example each.
| Type | Layer | One-line definition | Recognizable example |
|---|---|---|---|
| Profit model | Configuration | How you make money differently | Razor-and-blades; freemium software |
| Network | Configuration | Partner structures that create value | Airline alliances; app marketplaces |
| Structure | Configuration | Talent and asset alignment | FedEx hub-and-spoke redesign |
| Process | Configuration | Signature methods of doing the work | Toyota production system; Zara fast fashion |
| Product performance | Offering | Better features and functionality | Electric drivetrains; camera phones |
| Product system | Offering | Complementary products and modules | Ecosystems of devices and accessories |
| Service | Experience | Support around the offering | White-glove onboarding; maintenance plans |
| Channel | Experience | How the offering reaches users | Direct-to-consumer; instant delivery |
| Brand | Experience | Promise and identity | Category-defining brands |
| Customer engagement | Experience | How the relationship feels | Loyalty programs; communities |
Source: Doblin (Deloitte), Ten Types of Innovation framework.
Disruptive Innovation, Used Correctly
Disruption is the most quoted and least understood of the four. Christensen's insight was structural: incumbents abandon low-end and new-market footholds because the margins look trivial, then the entrant improves along the very trajectory the incumbent defined, and by the time the numbers look threatening the customers are gone. The theory predicts which markets are vulnerable, not which startups will win, and that distinction is what makes it useful for incumbents.
The practical test for any claimed disruption is threefold. Did it start with customers the leader was happy to ignore? Was the first version worse by the leader's own metrics? And did it improve on the leader's trajectory rather than attacking the high end? If all three hold, the response belongs in the adjacent and transformative budget, not in a dismissive line in the competitor review. Our guide to strategic thinking covers the positioning questions that follow.
Choosing the Right Bet This Quarter
Type selection is mostly resource honesty. Incremental innovation needs measurement discipline and a quarterly cadence; adjacent moves need customer immersion and a pilot budget; transformative bets need sprint testing, a kill date and a sponsor with authority. Teams should pick the type that matches the resources they actually have, not the type that sounds best at the offsite, and should say out loud which quadrant each active project occupies.
A workable quarterly rhythm: run a steady stream of core improvements with visible metrics, keep one or two adjacent pilots alive with named owners, and give the transformative bucket a fixed, small budget that renews only on evidence. The sprint method in our innovation sprint guide is the natural tool for the riskier quadrants, and the techniques in our creative problem solving playbook feed all four.
- Core: quarterly improvement cadence, measured against current-product metrics
- Adjacent: one or two pilots, customer immersion first, pilot budget fixed in advance
- Transformative: at most one or two bets, sprint-tested, kill dates written down
- Every project: named quadrant, named owner, named metric, named kill condition
The People Layer Under the Bets
Different innovation types stress different people, and the cultural requirements diverge. Core innovation runs on recognition for reliability; adjacent work needs airtime for people close to customers; transformative bets need visible protection for the people who run the tests that fail. Leaders who switch the cultural setting per quadrant, rather than enforcing one company-wide style, get contribution in all four.
That switching is a leadership craft more than a process, and it is where coaching-style programs such as the Leadership Coaching Mastery certification pay for themselves. For the technical layer, the seven-day Innovation & Creative Problem Solving program runs portfolio thinking, sprint testing and the technique library against your own business, with a free first day.
Frequently asked questions
▸What are the main types of innovation?
Most practical taxonomies converge on four types defined by how new the offering is and how new the market is. Incremental innovation improves what you already sell to people you already serve. Adjacent innovation takes an existing capability to a new market or a new offering to an existing market. Radical innovation creates something genuinely new. Disruptive innovation, in Christensen's original sense, starts at the low end or a new market and eventually displaces incumbents.
▸What is the difference between incremental and radical innovation?
Incremental innovation defends and extends the current business: a faster checkout, a better battery, a clearer invoice. It is low risk, fast feedback and mostly predictable. Radical innovation changes the basis of competition and usually demands new capabilities, new customers and patience. Most organizations need far more incremental innovation than they admit and are structurally worse at radical innovation than they believe.
▸What is the 70-20-10 rule in innovation?
Popularized through Google and rooted in McKinsey's three horizons, the rule allocates roughly 70% of innovation effort to core improvements, 20% to adjacent moves and 10% to transformative bets. The percentages are a calibration point, not a law: the discipline it enforces is that transformative innovation gets explicit funding instead of surviving on whatever the core business leaves over.
▸What is disruptive innovation exactly?
In Clayton Christensen's original formulation, disruptive innovation starts by serving customers incumbents ignore, often with a cheaper, simpler offering, then improves until it takes the mainstream market. It is the most misused term in business: a superior product attacking the high end is not disruption, it is a better product. True disruption looks unattractive to incumbents precisely when it is most dangerous.
▸Which types of innovation should a mid-size company prioritize?
The honest default is core-heavy: 80% or more of effort on incremental innovation that funds itself this year, a bounded adjacent program of two or three moves, and one transformative bet at most, sized so that failure is survivable. The mistake mid-size companies copy from enterprises is running a transformative program their cash flow cannot carry through the inevitable three years of no revenue.
▸How do I train a team to run these different types of innovation?
Each type rewards a different muscle: incremental rewards measurement and process discipline, adjacent rewards customer immersion, transformative rewards testing under uncertainty. The five-day sprint and the technique library behind it cover the shared core; the seven-day Innovation & Creative Problem Solving program drills them against live problems, and our guide to innovation management shows how to run all four types as one portfolio.