When an Innovation Lab is Great for Business, and When It’s Not

Innovation labs are not for everyone, so here's some advice on recognizing whether or not it's a worthwhile investment for your company.

With the world fixated on digital innovation, a corporate innovation lab seems like an attractive prospect for many businesses looking to advance their digital strategy.  

In reality, while it may impress customers and communicate that the company is taking innovation seriously, it isn’t always the best course of action.

It may be tempting to jump on the bandwagon, especially if the competition is making noise about their new innovation lab. However, without knowing why the company needs one, or how to guide it towards a valuable outcome correctly, it can quickly become a waste of time and money.

Here’s how to recognize the advantages and disadvantages of establishing an innovation lab, along with some of the critical considerations required to make it a worthwhile investment.

Results-Driven Mindset

The innovation lab’s ultimate goal should be producing measurable business results, not just churning out fresh new ideas that go nowhere.

For example, let’s say the lab designs a virtual reality meeting room, with animated avatars for all participants. This idea might sound exciting at first, but anyone involved in the meeting would need a VR headset, some headphones with a mic, and maybe a handheld controller for certain gestures. It would be inconvenient—and expensive—to join the meeting, and would probably be laced with technical glitches, so would it really improve the performance of meetings? Perhaps aesthetically, but efficiency would suffer.

Innovation is not just about having great ideas; it’s about leveraging those ideas in an impactful, paradigm-shifting way to benefit the business and its customers. If the innovation lab is failing to provide value to the company—not just creating shiny new digital toys that offer no measurable improvements—then it either needs new management or to be shut down completely.

When it’s great: The lab is aligned with business goals and focused on delivering solutions that produce impactful results.

When it’s not: It develops impressive—but useless—products that cannot reasonably be implemented into the core organization.

Freedom, Autonomy, Experimentation

Innovation labs fail when they come under pressure to solve the company’s existing problems. Why spend time and resources on creating a space for innovation and filling it with creative, imaginative people if they are not free to innovate?

It’s essential to encourage lab workers to be creative and give them the freedom to work on new ideas while validating and scaling new business models. Its goals should be tied to the company’s overall mission and vision, but not to overcome an existing challenge. The best innovation comes when new issues are discovered—and hopefully solved—by the lab’s work.

The innovation lab should be treated as a separate entity, not part of the main business. Its team needs the freedom to take risks and experiment, an approach that may not be suited to well-established processes or departments. It should also be a diverse space, with people from multiple different backgrounds and cultures—innovation is boosted by a mix of individual viewpoints, especially when given adequate freedom to try new things.

Although freedom is important, it is vital for business leaders to outline a robust innovation strategy, and not simply stick their best and brightest in a room and hope for the best. Start by thinking about how to track and measure the success of the lab and its products. In the long run, this will help with the difficult task of managing the lab for future breakthroughs.

When it’s great: It has a diverse portfolio of talent, it’s separate from the central organization, and has the freedom to explore new concepts, along with a strong innovation strategy for managing the success of its solutions.  

When it’s not: Stakeholders in the lab’s output choke innovation by attempting to steer it towards existing departmental challenges. The lab should be focused on disruption and discovery, not fixing outstanding company issues.

Innovation Lab, not Innovation Theater

Often, corporations mistakenly establish an innovation lab with no real strategy and expect success, only to find that a couple of years later they have achieved nothing of value. This scenario has been labeled “innovation theater” by respected Silicon Valley veteran Steve Blank, highlighting the pretense associated with unproductive innovation labs.

The problem is exacerbated by the failure of companies to properly incubate and accelerate the ideas that come from the lab, stemming from a lack of confidence or investment by decision-makers. For the people who work in the labs, any resistance to the solutions they have developed is frustrating and demotivating, so obtaining leadership’s unwavering support for the lab should be priority one.

Instead of focusing on the superficial, inflated expectations that come with establishing an innovation lab, companies will find greater success when securing top-down stakeholder buy-in. Business leaders should be acutely aware of the projects that the lab is working on and cherrypick those that can scale. Only then can the lab become successful.

When it’s great: Corporate leadership supports the lab’s efforts and monitors production for scalable solutions, resulting in measurable business results.

When it’s not: Inflated expectations of the lab’s potential lead to it becoming an innovation theater, or a complete misalignment with business goals, making it a superficial and worthless investment.

Key Takeaways

Under the right circumstances, these labs can be great for business, especially as companies look to get a more significant foothold in the digital world. However, achieving success from an innovation lab requires the company to commit to widespread leadership buy-in, strategic alignment with business goals, and a diverse, talented team with the freedom and resources to experiment.

Without these three key elements, the lab will not turn out to be a worthwhile investment and will end up becoming just another worthless innovation theater.

Written by Matt Kendall

Nellie Luna

Posted by Nellie Luna on February 7, 2019