RIP Innovation Lab

The innovation lab is dead. Long live innovation.

The heyday of the corporate innovation lab is most likely past us now. At least I’m seeing more and more corporations shut down their labs. And to be honest, with some of the labs I’ve had a chance to visit the past year or two, I’ve had the feeling for a while that we’ve hit the peak of that trend.

First up, what is an innovation lab? An innovation lab is a sub-organization of a larger corporation or organization, intended to drive radical innovation. Often, these labs will be staffed with talent markedly different from the rest of the organization, often recruited from startups, creative agencies, and digital-first companies. Culture and dress-code is intentionally different, and often the lab is geographically placed away from the rest of the business, sometimes in completely different cities (this is particularly true for companies that are located in areas where the talent in question is hard to attract).

The general idea behind them is that changing the culture of the company is hard, so rather than try and make the rest of the company innovative, we’ll make a splinter organization that will come with all the crazy stuff that the rest of the company can’t.

I get the value of that. True innovation is tricky in large legacy organizations. Any new idea has to try and find its viability in the midst of dozens of agendas and an environment with loads of prerequisites. Sure, you may want to try out a cloud-only strategy, but half of your legacy systems do not work in a cloud setting. Hyperautomation? Sounds good, except most of your processes are dependent on human heuretics. Much easier to build these radical new strategies in a separate unit, and then only introduce them into the organization when they’re more fleshed-out.

I’ve had my reservations about innovation labs from the start. Yes, I see their value, but they also come with limitations.

First and foremost the idea that innovation can somehow be outsourced, and new thinking should be compartmentalized and given its own little sandbox to play in, when in fact it should be at a core principle in everything a company does.

There’s also an all-too great likelihood that the lab construction will hurt organizational credibility, making the innovation lab the business equivalent of the kid’s table at a party. Sure, you’re welcome and you’re fun and all, but you don’t really get a seat at the big table.

It is also very common to see innovation labs that are severely disconnected from the business. The lab becomes an ivory tower, disconnected from the rest of the decisions, and the reality that the rest of the company lives in. Yes, you can revamp the logistics process, but only once you understand the logistics process. Empathy is the first part of design thinking, and real empathy is hard to have if you’re 200 miles from the rest of the company. I’ve heard companies argue that the innovation lab was removed from the rest of the company to be closer to the customers. Which also makes me want to ask, if being here is the only way to be close to the customers, why the hell isn’t the rest of the company here?

Some innovation labs worked for a while, because they allowed for two things: adoption and recruiting. Adoption by creating those crucial first-wins needed to get the organizational credibility that is the platform upon which all else happens. And recruiting because these labs can help attract a talent profile that normally wouldn’t join these kinds of companies.

But in many cases, this has either been achieved, or the lab has failed to show any measurable success. In both cases, closing them down makes sense.

What smart companies will now do is to integrate the innovation initiatives into the organization and start building a true innovation culture throughout the entire company.

The corporate innovation lab is dead. Long live corporate innovation.

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