When I meet with companies, I find that many of them are interested in creating an “innovation lab” to drive passion projects within the organisation. These might be projects that are tangentially related to the mission of the company - or they might be projects that will become essential to the running of the business in short order.
The sheer variety of projects that can be grouped under an “innovation lab” aegis is tempting in and of itself. And many businesses realise that creating a center dedicated to excellence and creativity helps attract and retain the most talented employees. Essentially, innovation labs create a safe space to really create and test ideas that can radically change a business for the better.
But how do you know if you're really ready to press play on an innovation lab initiative?
I've been working with one huge media company - I'll call them Doodle, Inc. here - and these are the questions they had to answer before they could get the full complement of funding and support.
(1) Do you want this for a prestige reason? Or do you really want to innovate?
In the case of Doodle, the appetite for acquisitions and integrations has dwindled, but the appetite for innovation hasn't. And there's the rub - companies know they need to innovate, but they're not really sure if they can do it if they don't set up a construct to enforce the concept. And that's usually the wrong approach.
Innovation labs are shutting down. Ogilvy, Microsoft, Disney, Turner, Coca Cola and the New York Times have all shut their labs within the past 5 years - mostly because all were set up with the idea that once a lab was created, “innovation” would happen magically. Once considered the hottest and most hipster concept, it's no longer the only way to fly.
Companies are doing partnerships with startups and venture hubs, So if you want it, you'd better have some good, solid math to back up why now is the time and HOW the resulting innovation will be cultivated, tracked, measured and implemented.
(2) Does your CEO know about this, and do they think this is a good idea?
I always ask this question next, because let's be realistic - if the CEO isn't on board from the beginning, you won't succeed. Let me repeat this. You won't succeed. For these purposes, “on board” does not mean 'shows up for showcases and approves the next big idea.' It means, in addition to supporting the idea, the CEO is committed to engaging and working WITH us. I have encountered organizations, where executives want to treat innovation efforts as an outsourced effort versus a partnership, and that doesn't work.
To move beyond innovation being a good 'idea,' it is important to ensure there is investment, both time ($) and emotional/ cultural, in the success. The biggest challenge: to prove that while it will not be a revenue producer for the first 12-18 months, it will likely extend the capabilities of the company as a whole.
When presented this way, the commitment is easy. “An innovation lab gives you the ability to test out, experience and experiment with new technologies and experiences and, more importantly, to find out how they will integrate with existing business processes or enhance them,” according to this great article on innovation labs in CIO magazine.
(3) Do you really need to create a space? Or are you just hoping for a plaque on the wall?
I'm always surprised that space seems to be the functional turning point for a concept. Because, really, there are two considerations: the physical place dedicated to idea generation and experimentation, and the theoretical space for these efforts.
Before thinking about place, organizations really need to consider space first. By space, I mean time and resources carved out for innovation. It is impossible to generate new ideas and build the practice of innovation into the organization, if your resources are also trying to run the business. If this is a priority, organize accordingly and have governance to guide when things move from innovation to scale within the core business.
If, and only if, you are prepared to organize for innovation, then you are ready to answer the question of place. For some, visibility of innovation efforts will require a place in close proximity to executives and the core - this will emphasize the strategy and has the potential to breathe new energy into stagnant culture. For others, the separation of place may be the most effective way to empower experimentation without fear of micromanagement from the core. The key to success here is an agreed upon approach for experimentation, metrics, communication and decision making.
Balancing the pros and cons with an eye on reality
Ultimately, when an enterprise gets stuck in “this is what we're doing because we've always done it,” an innovation lab can be a useful boost to support the introduction of the concept of innovation as a key tenet in a company. The entire corporate culture needs to see that innovation is useful and - more importantly - desirable so that that cultural shift can happen in older organisations, but the biggest caution I give to all companies considering an innovation lab is, “iI your whole business ready to support the innovations you create?” Otherwise, if you're doing innovation for innovation's sake, it's going to be a short-lived run.
So how is Doodle, Inc. doing? Having got through these questions, and realizing they would get far more out of building the innovation capabilities internally, than by buying IP and retrofitting into the organization, they made their case. In doing so, Doodle has reduced its reliance on external partners and effectively improved their bottom line. The long term ROI on this was strong enough for the C-suite and board to support the innovation efforts from the ground up - and all systems are go for Doodle.