70 20 10 Rule:How Founders Should Split Their Time
70 20 10 rule for service businesses: put 70% on today, 20% on next year and 10% on long bets. See how founders break the ratio and how to hold it for growth.
Pull up your calendar from last month and run an honest audit against the 70 20 10 rule. How many hours went into delivering for the clients you have right now — and how many disappeared into the five-year vision? The partnership decks. The new market you might enter someday. The category you intend to define. If you're like most ambitious founders of expertise businesses, the split is embarrassing.
Here's the uncomfortable part: while you were sketching the future, a delivery deadline slipped, a client quietly grew less happy, and a process you depend on developed a defect nobody caught. Strategic problems give you years to respond. Operational problems give you weeks. A service business almost never dies of bad vision — it dies of bad execution while the founder was busy visioning.
In Scaling Up, Verne Harnish argues that a scaling company has to hold three time frames in its head at once: the plan it's executing today, the capabilities it's building for tomorrow, and the opportunities it's exploring for the day after that. Holding all three at once is the discipline. Weighting them equally is the mistake.
The weighting that works is the 70 20 10 rule. Seventy percent of your resources on the current business, twenty on next year's build-out, ten on speculative exploration. Drift too far in either direction and you pay for it.
The 70%: Run the Machine You Already Own Under the 70 20 10 Rule
Today's clients, today's quality, today's cash
The first horizon is the business as it exists this quarter. Engagements delivered on time and to standard. Revenue collected from the services and subscriptions you already sell. Your delivery team — whether employees, associates, or certified practitioners — supported, monitored, and improving. Clients satisfied enough to renew and refer.
None of this is glamorous. It's onboarding the next cohort. Chasing the late deliverable. Reviewing performance. Processing renewals. Fixing the quality issue before the client notices. It is, quite literally, running the machine — and it deserves seven out of every ten units of time, attention, and budget you have.
Why does the 70 20 10 rule weight the first horizon so heavily? Not because operations outrank strategy in importance, but because operations pay for strategy. Every future initiative you want to fund gets funded by present-day execution. Neglect the current business in favour of the exciting one and you run out of cash, run out of credibility, or both — usually before the exciting one materialises.
You also need instruments on this horizon, not vibes. Watch the vital signs: engagements completed per delivery person per quarter, client satisfaction, retention of your best people, recurring revenue as a share of total, and whatever proprietary asset your delivery feeds — data, IP, methodology refinements. Healthy vitals mean you've earned the right to invest forward. Declining vitals mean everything else waits until they recover.
One clarification: the 70% is not maintenance. It's compounding. The core business should be measurably better every quarter — tighter delivery, better tooling, deeper client insight, a more engaged bench. If the current machine looks identical to last quarter's machine, the 70% is being spent, not invested.
The 20%: Build What Next Year Will Demand in the 70 20 10 Rule
Capabilities with receipts, not fantasies
The second horizon is next year's business, built this year. The platform feature that removes a manual bottleneck currently capping your capacity. The second and third markets you'll serve. The data or IP products that turn what you already know into a new revenue line. The senior people you're developing now so they can lead delivery later.
This gets two units in ten. In practice that might look like one day a week of your own time on the build, a contractor funded from a slice of the budget, or a senior practitioner spending a fifth of their time mentoring the next tier instead of billing.
The test for any second-horizon project is simple: can it show receipts from the first horizon? The automation should target a bottleneck you can name and measure today. The new market should be answering demand signals you've already received — inbound requests, practitioner interest, clients asking. The productised data offering should formalise something you're currently doing by hand. If a project can't point to present-day evidence, it isn't a Horizon 2 build. It's a Horizon 3 guess wearing a Horizon 2 budget.
That distinction is where companies burn fortunes. Expanding into new territory before proving density in the first one is the classic version — Ron Adner's account of Better Place, an $850 million collapse fuelled by going global before the model worked locally, is the cautionary tale every service founder should keep within reach.
Done right, the 20% in the 70 20 10 rule never feels like a leap. It feels like laying track directly in front of a train you can already see coming.
The 10%: Keep One Eye on the Horizon Line
Small, cheap, deliberately uncertain bets
The third horizon is the speculative edge. The industry standard you might one day author — the benchmark analysts and regulators cite. The API partnerships that could embed your methodology inside enterprise platforms. The adjacent market where your data and approach might unlock something nobody has spotted yet.
It gets one unit in ten. Concretely: an afternoon a week. A modest exploration budget. A coffee with a potential partner. Enough to keep the long game alive; never enough to starve the short one.
Here's the quality check that surprises people: third-horizon work is supposed to feel uncertain. If a project feels like a sure thing, it's mislabelled — promote it to Horizon 2 and resource it properly. The whole purpose of the 10% is to probe things that may not work. The partnership may stall. The adjacent market may shrug. The standards play may need years more data than you have. That's not failure; that's the job description.
And the payoff is sequencing. When your current Horizon 2 builds ship and you need the next growth vector, the 10% has already scouted the candidates. Skip it, and one day you'll finish the roadmap, look up, and find nothing behind it — growth stalling while you scramble to figure out what's next.
The Two Ways Founders Break the Ratio
Violations come in two flavours. The first is all present, no future: a business that executes superbly today but has no pipeline of initiatives behind it. The current model eventually saturates, and nothing is ready to take over. The second is all future, no present: a founder intoxicated by vision while delivery deteriorates, the best people drift away, and clients lose patience. The second failure mode is faster, and — for ambitious founders — far more common.
Treat the 70 20 10 rule as a discipline, not a daily quota. Some weeks an urgent fire will pull ninety percent of you into Horizon 1, and that's exactly as it should be. But measured over a rolling quarter, the ratio should roughly hold. Businesses that hold it compound. Businesses that don't, stall — usually while telling themselves a very exciting story about year five.