What Comes After The Lab?

Innovation labs are changing, and some are shuttering their doors. What comes next?

There was a time, about 2 years ago, when everyone wanted an innovation lab. It was the shibboleth of legacy companies who wanted to join the cool, creative world of Silicon Valley-inspired startup culture. Now, I’m seeing a lot of these labs change, some even shut down. What gives?

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 up with all the crazy stuff that the rest of the company can’t. Radical innovation is hard in a traditional culture.

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 heuristics. 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.

But as the lab ages, there comes a time when there’s a need to pull it closer to the mothership, for a number of reasons.

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. The lab can act as a proving ground and a first-mover departement, showing the way for the rest of company. But at some point, if the company is serious about innovation, that mindset and culture needs to assimilated into, and allowed to change, the governing culture of the company.

There’s also an all-too great likelihood that the lab construction will hurt organizational credibility of that lab, 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. If the innovations are to become more than POCs and stand-alone products, they’ll need to integrate into the rest of the company’s portfolio.

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. And while you may build a great innovative culture in the lab’s own sub-organization, the rest of company remains a legacy company, and the lab becomes almost a subsidiary. That can work, if it fits with your overall strategic goals, but if the purpose of the lab is to re-invigorate the rest of the organization and make everyone more innovative, there needs to be some degree of internalization, of processes and products if nothing else. Just because you play host to an innovative culture, does not make you innovative by osmosis.

The success and the merit of labs stems from the fact that they have allowed for two things that are hard in the legacy organization: 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.

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 labs can, and in many cases should, continue, but their nature and mandate will organically evolve. In some cases, they may be absorbed into the rest of the company, ceasing to exist. In other cases, they will continue to act as the “the next step”, staying ahead of the rest of the company and testing out the next radical thing.

What comes after the lab? Integrated innovation.

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