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The rise and death of corporate innovation labs

by Andreas LeicherDecember 3rd, 2017

Too Long; Didn't Read

The whole idea of building a corporate innovation lab sounds exciting, promising, hip, and somehow innovation labs are all the rage. Having the words ‘innovation’ and ‘lab’ in it, makes it sound like you’re missing the party of digital, when your company doesn’t have one yet. And while some are just considering starting their lab, and others are running their labs, the first ones get already shut down. Obviously the event of shutting down the innovation lab, that was once the holy grail on the road to digitalisation, is not made public as much as the opening.

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Great products are built, when passion hits vision.

The whole idea of building a corporate innovation lab sounds exciting, promising, hip, and somehow innovation labs are all the rage. Having the words ‘innovation’ and ‘lab’ in it, makes it sound like you’re missing the party of digital, when your company doesn’t have one yet. And while some are just considering starting their lab, and others are running their labs, the first ones get already shut down. Obviously the event of shutting down the innovation lab, that was once the holy grail on the road to digitalisation, is not made public as much as the opening.

However, following the philosophy of build-measure-learn, and fail fast, a lot can be learned from looking at those labs that failed in their journey.

Cool ideas are not enough

Most often, people conflate innovation with creativity. While creativity is an important ingredient in innovation, just ‘coming up with cool ideas’ is not enough for innovation to be sustainable. You need to combine creative ideas with viable business models, that solve real problems to come to a sustainable business model. Some labs fail to deliver on that promise, as they are not about searching and finding profitable business models, but rather about coming up with new ideas. You see yourself going down that road, when ideas are valued more than the results from experiments. Even worse so, when prototypes are made to be put on slideshows, to show how great ideas are. Originally they ought to be used to validate a business idea.

Innovation Theatre

Bean bags, pitch sessions, cool furniture, everything seems to look different. Post-Its on the walls, business model canvasses spread over the place, and all other ‘startup’-like swag. That goes together with the chatter around minimum-viable-products, agile, pivots, iterations, sprints, etc. It seems, everybody just found their inner Silicon Valley. When true innovation is put to work, you might see the same items appear, but for a reason. These are the tools and there are reasons for using these tools, the visible things are just an expression of the tools being put to practice. Innovation Sprints that last 3 days, with the goal of delivering a slidedeck in the end kind of defy the original meaning of the Design Sprint. You will rcognize you built an innovation theatre, when discussions about gadgets, showcases, take over the discussions about a user-centric approach to discover problems worth solving.

Focus on vanity metrics

It might be hard to convince the stakeholders that your main job as innovation hub is to validate business models. Hence, it is much easier to fall back to vanity metrics, which are nor directly related to impact. Number of events hosted, visitors welcomed, number of press mentions, etc. Number of validated business models? 0. Number of business models taken to scale? 0.

Putting space first

…and forgetting about the people. Yes, a shiny office, with all the innovation theatre swag you need might impress visitors and your clients. That alone does not create innovation. Focus on the people instead. Think about the process you want to facilitate. The space should work for the people who are supposed to work in there. Make sure you cater for all the different needs. You might be tempted to build a very open space, as it is great to welcome all your visitors and creates this feeling that innovation must happen here. Beware though that exactly these kind of environments can bring productivity to a standstill, as open offices have been proven to not work. If you are still building your hub, consider this article for architectural inspiration.

They tend to believe that bean bags and nerf guns create a great office culture and magically lead to innovation — Sebastian Vetter

No protected space

While the physical space needs serious consideration to support the desired outcome, you also need to think about the psychological safety you need to create in order to drive innovation. If the team cannot work autonomous, and is prone to attacks from the corporate immune system, you will sooner or later be working in the same methods and ways the existing organisation does. Your ability to innovate is inherently dependent on how independent you can be from the main organization. Good innovation labs have built an almost completely separate entity, with backing from C-level executives. Their job then becomes defending the new entity against the reactions of the corporate immune system. By being autonomous, the new entity can build the roles, processes, systems, tools, and methods that are required to even attack the business model of the existing corporation. Then slowly, the new ways of working can transpire into the larger organisation.

No investment for innovation

In today’s ever-changing world, nobody can predict what business is going to look like in 3 to 5 years. Hence, the key is the ability to adapt to change, and the speed of reacting to change. Hence, you have to take the risk that something might not work. Treat failure as learning. Optimize for early failure, and fast learning, even if that means no immediate return on investment.

Be ready to make your current business model obsolete

If you are not willing to explore the option of making your current business model obsolete, someone else will do so. Or is already working on it. In order to be able to do so, you must be ready to invest, willing to protect from the corporate immune system, and have C-level buy-in to create the protected space in which innovative business models can appear.

Building a museum not a work area

When you are on the road to set up an innovation theatre, you might as well fall trap to building a museum, full of gadgets, showcases, which is aswesome to support your vanity metrics, such as amounts of visitors, and guests. This will make a lot of buzz and increase your visibility.

Beware that exactly these outcomes are the things that will prevent your team from actually delivering value. The museum will attract many visitors. Visitors will need guidance, which will take away valuable time. At the same time you increase the distraction, keeping also those from working who are not guiding visitors. By providing your new space for corporate events, you will soon be recognized not for the value you wanted to bring, but for your ability to host events. You focus on the right catering, light and sound system and forget about the original goal: validate new business models, take risks, experiment, fail, learn, build.

The luxury and misery of many projects

You started your innovation lab, and with all the buzz around it, you get a lot of projects. This is a luxury and a sign that something you’re doing seems to be of interest. However, trying to work on all or too many of them at the same time will make you deliver less. Innovation Methods, like sprints, are designed to focus on one thing at a time, to deliver a focussed outcome. It is not about how many things you can juggle at the same time, but picking the thing that the team can juggle best, and do it. Sprinting on more than one project at the same time is an anti-pattern, still often seen in corporate innovation labs. As you want to make everyone happy, and are measured by the amount of sprints, or even worse, by the amount of hours billed for sprints. This defies the idea of making sure you do the right thing, even if that means burying an idea if it has proven not viable in a sprint.

Approaches for building innovation labs that work

While not all corporate innovation labs go down that road, or have to, it is worth exploring the common factors of those considered successful. There are several publications about successful innovation labs. These are some of their common factors:

Built outside of the regular organisation. While it might be connected in one way or the other, treating the innovation lab as an almost independent entity gets rid of most of the issues mentioned above
Ability to take risks. Moonshot ideas like the ones being set forth in Google[x] require you to take risks. If only 1-2 of them emerge after several years, it is considered a success. Experiments are mandatory.
Diversity. Diverse teams allow to look at problems from multiple angles. Only by allowing to see problems from different perspectives, and allowing all opinions, with no politics, new and innovative approaches can emerge.
Not serving the organisations demands. While this might sound counter-intuitive at first, a lot of value can be generated by doing things differently, even if that means attacking the current business model of the organisation and being truly disruptive. When you start serving the demands of your organisation, you immediately shift into the role of the service provider, trying to fulfil requirements that are already known. The key is however to discover the unknown. To understand the problem from a user centric perspective and build the right solution to that problem. This might be a solution that attacks the current business model. Hence, you inherently are in conflict of interest, when you start serving the needs of your organisation’s demands.
Have a clear vision, and be passionate about it. Great products are built, when passion hits vision. You need to state a clear vision that you are willing to defend against the outside environment, and position yourself properly against all other stakeholders. Be passionate about the vision, show your passion to the team, make sure the team understands the clear vision and can build passion for it.

Thoughts, Ideas, Comments?

As developer and entrepreneur, I am passionate about building products people love. I think that a lean and agile approach to building products, services and companies is a way to deal with the inherent complexity of today’s business challenges. Leave your thoughts and ideas in the comments.