Make an innovation lab the centre of your transformation

How enterprises can build an innovation lab

Nearly every tech giant today boasts their own innovation lab – Google X, Amazon Lab126, Microsoft Research, IBM Garage and Facebook Reality Labs – where ideas blossom and new products are born. Digital transformation initiatives are given a boost by streamlining the process from idea generation to implementation.

The 2019 Gartner Tech Innovation Study indicated that 89 percent of respondents with a formal innovation program have an innovation lab with a physical space related to innovation. This makes the creation of an innovation lab one of the most used innovation tactics, especially considering there are also “virtual” labs that don’t have a dedicated physical space.

Whether a physical or virtual space, these centres are dedicated to helping a company stay on the cutting edge of its industry. The innovation lab should offer a framework for using exploration, free time and creativity to achieve a specific outcome. This can be anything from creating new products, entering new markets, to improving culture and employee engagement.

Other innovation tactics such as the creation of an innovation team, engaging academics or startups, or doing hackathons or brainstorms, are often initiated or coordinated from an innovation lab. Well-designed labs can accelerate many innovation related activities.

The Gartner study revealed that enterprises using innovation labs report higher revenue growth and customer satisfaction on average. Despite this, many enterprises struggle to achieve significant impact and many labs get shut down a few years after launch. They often fail because they’re lacking a clear, business-relevant goal.

One of the issues may be that the terms used for an innovation lab are vague and indicate a variety of different types of centres. That variety ranges from pure R&D-type labs that focus on technology breakthroughs to development centres that aim to quickly deliver working software using agile methodology.

Making a lab a reality

Whether creating a new innovation lab or revamping an existing one, here are the four activities they should be responsible for.

1. Scanning for trends

Trendspotting keeps your organisation abreast of new opportunities and potential threats that arise in the industry. If done effectively, it will prevent your organisation from chasing hype. Proper trendspotting requires a three-step approach: finding sources of information, digesting them and filtering them through the lens of the organisation’s strategy.

The output should be a document, presentation or briefing for decision makers within the organisation. These findings should be framed in the context of the business, to highlight potential market opportunities to leadership.

2. Bringing ideas to value

Innovation happens when ideas create value. An innovation lab is the ideal place to explore and establish how the organisation will accomplish this.

In addition to taking ownership of idea generation, the lab is responsible for overseeing successful implementation. This can be done by measuring the outcomes of ideas along the way. Investments in innovation require proof to gather more funding.

3. Communicating to prepare the organisation

When ideas leave the innovation lab, they become the responsibility of the larger organisation. Think of innovations as seedlings and think of the organisation as the garden where they will grow. The organisation can help the innovation seedlings flourish through support, sponsorship, funding and alignment across various stakeholders. The lab’s job is to tell the right stories and find the potential fertile grounds where innovation is most welcomed or needed.

Whether through direct contact with stakeholders or through more creative channels such as innovation competitions, speaking engagements or blog posts, communication is essential for helping ideas grow into reality.

4. Working with third-party partners

Outside parties, such as startups, universities, industry groups, governments and other organisations, can be greatly beneficial for accelerating innovation. These third parties can offer ideas, technology, IP or even execution capabilities. The innovation lab is an ideal place to engage with these partners.

When liaising with third parties, find opportunities for face-to-face conversations and allow for personal connections. Prepare a clear value proposition that outlines a vision for the future and what the organisation is willing to invest.

When not to pursue an innovation lab

While innovation hubs help organisations create value and transform, don’t pursue if the desired innovations are so disruptive that they’re barely tied to the original organisation anymore. An innovation lab most often retains a connection to the “mother organisation.”

If truly ground breaking innovation is desired, perhaps a corporate startup model would be more apt, or even a pure venture capital approach for a portfolio of startups could be pursued. In these cases, a new entity could be started that can apply a true “greenfield” approach.

Erik Van Ommeren is a senior director analyst at Gartner, where he helps CIO clients understand trends, innovation and transformation. Eric is presenting on innovation strategies at Gartner IT Symposium/Xpo 2019 on the Gold Coast, 28-31 October.