Innovation labs have become popular as a way for established corporates to manage innovation. A quick search of the term “innovation labs” on Google news reveals quite a large number of innovation labs being opened on a monthly basis. Companies like Huawei, Unilever and Cisco have all launched new innovation labs in the past month. It appears that companies are finding innovation labs to be good way to explore new technologies and startup ideas.
So What’s The Problem?
Innovation labs can also present some serious challenges. One part of the problem is what Steve Blank calls "innovation theater." This happens when teams in innovation labs use lean startup tools without really understanding how they work. They take the canvases, sticky notes, whiteboards and bean bags, and they start thinking that they are all set for doing innovation. The teams then focus their attention on making cool products, without thinking about the business models that underlie those products. This often leads to failure and the unjustified sense that lean startup doesn’t work as a method for innovation.
But there is an even deeper problem with innovation labs. Eric Ries calls this the problem of success. This challenge causes the most frustration among people who work inside innovation labs. These are hard working diligent people who understand how to apply lean startup methods and tools the right way. They often succeed in creating great products with good business models. However, when they are ready to take these products to scale they face resistance from their parent company.
Innovators are often frustrated by this situation. They are also puzzled as to why corporate leaders would fund an innovation lab and then refuse to scale the products that are created there. Why waste time and resources in this way?
The Myth Of The Lab
This is the myth of the innovation lab. This idea that the leaders who funded the lab understand its purpose and support innovation. The innovators working inside the lab assume that their parent company loves them - and this lulls them to sleep. What we are learning is that the opening of the innovation lab itself often represents innovation theater - played out at the leadership level within the company.
It is very rare that you find a leadership team that has thought through the implications of opening the lab. The first symptom of this is the lack of a clear innovation strategy. A lot of corporate leaders have not taken the time to consider where the world is going and how this will impact their business in the future. And for those who have thought about the future, only a few have developed a clear point of view about how their company will use innovation to respond.
When they set up the innovation lab, they are simply hoping that something that will save the company will emerge from there. But without clear strategic goals, leaders often fail to recognize a good product that may save their company when they see it. This is made worse if the new product from the lab threatens to cannibalize a successful core product in the parent company. The instinct to protect those traditional revenues will trump any other decision making.
A second symptom is the lack of a clear framework for managing innovation. Most companies do not have a method for tracking and measuring innovation success. Furthermore, they do not have a clear framework for taking products from the lab, back into the main company or spinning them out as standalone divisions. This means that the leadership team is unprepared for managing the challenge of success when it happens. For these leaders innovation success may not be a good problem to have after all.
Managing Stakeholders
What we are learning is that the really smart innovators understand that successful innovation requires them to manage their stakeholders well. The need for stakeholder management is most clear to people that are working on an innovation project within the parent company. In that situation, they know they their product will not succeed without support from key stakeholders within the company.
When the situation changes, and the product is being developed in an innovation lab - some intrapreneurs forget the value of stakeholder management. But the most successful innovators, know that they have to manage their relationships with the stakeholders from the parent company - even if they are working in an innovation lab. The lesson learned is to not let the creation of an innovation lab lull you to sleep. You are not in a safe space. The parent company does not love you as much as you think it does. There is still a lot of work to do to get buy-in and support from leaders and key stakeholders.
