This series of blog posts on the state of innovation labs was created with 3 years of collected interviews, conversations and experience. The goal is not to present winners and losers, but show problems and common roadblocks that labs face in their creation and operation. The collected pain points in these posts are an aggregate from my experience and research.
Some iteration of innovation lab has become a trend (or fad) for large organizations. Every large company, university and institution is rushing to create one to show relevance in relation to the startup economy. Millions of dollars are being spent to recreate this startup feel within these large organizations. Whether they are a method to transform the business, bring about institutional change, getting good press, or trying to attract a different demographic; these labs suffer from similar traits that are causing them to fail over and over again.
Here is the ten most common reasons innovation labs fail:
- No mission that aligns with the larger organization. Most labs do not have a detailed mission statement or focus. The mission “to innovate” or “transform the business” are not enough to create a detailed roadmap of the intended products that will be explored in the lab. “Innovation” as a mission will always fall out of alignment with an institution with a set culture and strategy. Without a detailed focus on the new audience, market, or direction for potential products the lab fails to ally itself with the overall company strategy – thus failing at its purpose.
- Cannot synthesize innovation. Startups create innovation based on necessity. Urgency is created due to disrupting an existing market, another startup competitor, or just lack of funds. As labs are fully funded by a larger organization, and traditionally staffed with internal candidates, the lab has no need to push the teams and leadership. Managerial oversight cannot create the immediacy three months of runway can. Without this necessity the lab is unable to quickly create innovation in products and content, it just doesn’t need to for survival in the market.
- Separated from the entire company. Innovation labs sit in a different space, a different building, and in some cases a different city then the entire organization. Without being visible to employees the perception is being created that “innovation happens over there” and not inside of the company. Like any core value, innovation has to be a company wide pursuit. This separation does not allow the culture of innovation to get distilled back into the company’s own culture. The transparency of the lab is essential to build ties back into the creation of a larger culture of innovation –with this split the lab fails.
- Focused on Innoganda not Innovation. Author Scott Anthony coined the term “Innoganda” (innovation propaganda) to describe the marketing effort not directly associated with creating innovation. Organizations are using innoganda to market the perception that they are innovative, but without showcasing actual innovation or products created. After the initial hype of innoganda, the continuous pushing of it falls on a deaf audience. In the long-term, innoganda hurts the lab by showing that there is not real content or products being created, just hype.
- Hires internal candidates only. Labs build teams by using internal candidates from the larger organization. As most do not have the history and experience to push a product to market or to innovate these new products; the lab suffers by not quickly being able to deliver. Teams are being told to “fail fast” but are not being mentored by external sources on how to originate their ideas and how to build off their failures. In most cases, the culture of the large organization is not pro-failure, so there is trepidation of “failing fast” as it is at odds with the current company culture or accountability measures.
- Becomes an outsource company. As the lab builds its own experienced team of designers, engineers, and mangers a big risk is that the larger organization views this as an opportunity not to build new products, but as an excuse to take overflow work from the organization. The lab gets treated as an outsource company and not an innovation lab. It is tempting, there is a pod of skilled, flexible resources as a part of the organization, but syphoning workload into the lab hurts the company and the innovation effort. The lab looses experienced staff, while the organization never gets products developed and incorporated back into the larger company.
- Creates no products. The goal of all innovation labs should be to build a new “products” that can be grown, expanded upon, or built as a new revenue stream for the existing organization. When no products are successfully built or delivered this is the first sign of trouble for any lab. When nothing is created, there is no way to judge the labs success or have any metric that the cost of the lab has generated a return. Like any startup, the lab must deliver a return on investment (ROI) proof point by having revenue or investment.
- Not part of the startup ecosystem. Startups build a series of checks and balances using, advisors, investors, customers, and partners. Their ecosystem is something that is attractive to innovation labs, but they fail to interact with it. This comes in the form of not hiring external candidates, not connecting with the venture community, not using existing technology partners, and not building upon relationships within the local startup community. When a lab is too internally focused it misses the opportunity to create a bridge to potential new customers, partners, and new ways of generating revenue outside of the existing organization. In short, the lab fails to think and act outside of its own walls.
- No external market validation or product management. A common missing component of most labs is product management. Without a view of potential competitors, potential new customer audiences, and potential new market opportunities, the products or experiments in the lab are being created in a vacuum. Most labs focus on using specific methodologies (Lean, Design Thinking) or team models (Spotify teams, Agile) to build products, but without any detailed roadmap the teams are building in the dark. Getting no market validation, customer feedback, or connection to external partners is a recipe for failure. Without this level of external validation the lab is not creating products anyone will buy (product management 101).
- Cannot gain internal acceptance. A common reason of failure is the inability to gain internal acceptance within the larger organization. Labs miss this important aspect that any culture or products created have to be quickly be re-embedded back into the larger organization to provide the change that is promised. If any products created by the lab do not get an internal stakeholder, internal market acceptance, or funding from the larger organization – then the lab fails at its mission. A functional lab needs to exist between two cultures: the world of startups, and its’ home institution if it is to succeed in bringing change.
