Innovation labs were once hailed as the way in which established companies could “build in” innovation and ensure that it happened. For a while it was almost the default approach. However, in the last few years, several of these high-profile innovation labs have been shut down. It’s clear that not everything in the garden is rosy. So does this mean that innovation labs are a thing of the past? I would argue that the opposite is true: There is very definitely a place for innovation labs, and they are perfect for some organisations, but care is needed in how you set them up and how you use them.

Thinking about innovation

Innovation is often hard for large, established organisations. The agility and appetite for change of youth and start-ups gives way to a less creative and risk-averse middle age. Maintaining the status quo simply becomes the easier option. It is also important for established organisations to maximise the benefits from existing technology; that awful term “sweat the asset” and so increasing value is often best achieved through incremental changes.
The skills required to maintain the status quo and to innovate, however, are very different. It is therefore extremely challenging for both individuals and organisations to try to do both, especially when you need to stay in business. Separation has become the accepted way to manage this, and innovation labs are one way to provide that separation.

Innovation labs, broadly speaking, are constructs designed to allow relatively free innovation in a way that will not damage the business if it goes wrong. The best innovation labs bring together employees, stakeholders and customers with experts in innovation and design, and allow them to experiment to solve customer problems. Some are physically separated from the business. For example, a big data lab may have full access to company data sets, but not the “active” data connected to production processes. This allows experimentation without risk of disruption of business. Others may be virtual spaces, but with defined and carved-out employee time to contribute.

There is, however, more than one way to do anything, innovation included. While some organisations have gone down the innovation lab route, others are partnering with start-ups or incubator programmes. Some are even using hackathons to generate and gather innovative ideas, or to recruit innovators into the company.

Learning from experience

Lessons from the early successes and failures in innovation labs suggest that it may be important to consider several issues before you make any investment. From observation, there are four broad areas to explore.

1. The first is whether a lab is really necessary, or if another route would not be equally suitable. This fundamental point will determine whether you are actually committed to innovation, or just the idea of looking busy .
2. The second is whether the idea is genuinely supported by leadership, which is crucial in getting any kind of lab off the ground, but perhaps even more in getting the ideas out of the lab and into the organisation.
3. The third question, which is perhaps more practical, is whether you will really create space to innovate. Not a physical space, but time and resources. It is linked to the idea of responsibility and day jobs; whether innovation is seen as anyone’s responsibility, or expected of everyone as an add-on to their day job – in which case, it is unlikely to happen.
4. Finally, what you are going to use it for, and how. If it’s a random place for random people to test random ideas, it will lead to nothing concrete. What’s required is the boring stuff no one wants to do: a plan, with measures of success from both a business and technical standpoint.

Following on from point four, one common reason for failure has been that technology has become more important than problem solving. In other words, the innovation lab is a place to play with new tools for a global audience, not to try different ways or new ideas to solve problems. There has therefore been little structure or process involved in either identifying problems, or working out how to do so.

Where innovation labs can help

An innovation lab can be a way to bring innovation into the heart of the organisation. It is part of the business in a way that other models are not. It can – and should – work closely with business units to identify problems, and move innovations from the lab to the business. Since its inception, Aviva’s digital garage has delivered new capabilities such as co-branded insurance products, a new quoting portal, a redesigned website, and an Amazon Alexa application with auto quote and insurance questions answered via voice. In the Dutch water company Rijkswaterstaat, for example, implementation has become a key part of the innovation lab’s role.

This closeness is also important when testing goes beyond technology. Increasingly, organisations are concerned about whether artificial intelligence and algorithm use will be culturally acceptable. An innovation lab allows this acceptance to be tested with business users and customers, alongside the technology itself. Perhaps an innovation lab is not right for all, but it certainly still has a place for many.

Design priorities for business smart innovation labs

We hosted a digital panel discussion on Twitter covering this theme. Read the #saschat summary here: Design priorities for business smart innovation labs