Innovation labs have been around for a while, and they come in many shapes and sizes. Some are internal to large organisations, while others are associated with research practices. As an academic institution, RWTH Aachen University invites companies to join the European 4.0 Transformation Centre (E4TC). I caught up with Thomas Gartzen, managing director of the centre, to find out more about how to make innovation labs work.
Thomas, tell me more about E4TC, and what you do here.
E4TC is a cooperation platform. It brings together industrial companies with the university, and its purpose is to research, develop, apply, validate and test digital transformation ideas through bilateral and multilateral cooperation. What is different about us, compared with some innovation labs, is that we concentrate on using the most realistic environment possible (a real production environment, if possible). For example, we do a lot of work with e.GO, a startup founded by one of the university professors back in 2015. It aims to produce a low-cost electric vehicle and sell it in the market. The market launch is this year, so the development process has been very swift. This has been a great opportunity for a centre like ours to work with that kind of process and see how things can be done a bit differently.
So you have focused on digitisation?
The thinking now is really that if we focus on digitisation, we will be able to stay agile and iterative. Therefore, we can develop and launch a new product very quickly, even if it is a disruptive product. The E4TC and its partners, who are mainly from the software industry (with some from the hardware industry), have been able to use e.GO as a super use case for their products and show how something like this is actually possible. e.GO is actually the real experiment for us to a certain extent, because it shows what can be achieved with digitisation and the impact and advantage of this for the manufacturing industry.
Do you think this process is only possible with a startup, or can established companies also benefit?
The term ‘digital transformation’ is a bit fuzzy. You can't do one project and then be digitally transformed. It is very much a long-term journey or process. I think any company can do it, provided they focus on three different perspectives. The first is cultural context. For example, in Germany, it’s a bit of a stereotype, but we are very focused on efficiency. So much of our digital transformation work focuses on processes, including production and development processes. This sounds very inward-looking, but it also includes customer-focused processes. Elsewhere, you might focus on customers more at the beginning. The next area is future consumer expectations. Companies need to be thinking about how they can make products fit for digitisation in the future and digitally enhance them. Maybe in the future, we will not only sell a physical product, but also linked software; or offer a value-added service based on a connected product, which delivers data. This can even force companies to think about new business models, which is the third area: extending the customer life cycle by thinking beyond the current business model, asking how to keep in touch with the customer and keep offering them more value.
E4TC is effectively an innovation lab. What lessons would you offer for companies thinking about setting up innovation labs?
Perhaps the most important thing is to find the balance between being part of the organisation and being free to innovate. The danger with innovation labs is that they go off and innovate, but not in a way that is useful to the organisation. They are almost off in orbit, doing their own thing. It is essential that the people in the lab know what their parent company does, and why they are innovating, but still have enough creative freedom and separation. One way to do it is just to take small teams (maybe five or six people) off-site temporarily. Give them the freedom to experiment, but also access to experts.You can't do one project and then be digitally transformed. It is very much a long-term journey or process. Any company can do it. #InnovationLab #DigitalTransformation #Road2AI Click To Tweet
If you get the location right, then there will be other companies around. This is the real benefit that we have here, that there is an ecosystem surrounding the centre, and lots of expertise and support readily available. Whatever you need to know, there is someone around who is an expert. This kind of temporary innovation team also makes it easier to take the results of innovation back into the company. And that is the other thing I would say to anyone thinking about an innovation lab: How are you going to integrate the innovations in due course?
In the next instalment of this interview, we explore the broader impact on business models and the redefinition of innovation.