There has been a lot of press recently about some of the challenges that corporate labs are facing. They aren’t delivering on all the promises that executives made for them.
The stories assert that the labs, too often, become mere innovation theatre. There’s some truth to the observation. It happens. Too often labs are told to spark new thinking, told to build cool shit, but aren’t given a clear system within which to do so.
In this and a following series of blog posts, we’ll take a deeper dive into how corporations can take advantage of their external corporate labs, as well as a bunch of other innovation activities, by rethinking how their innovation initiatives fit into the overall business system.
Having been part of the Communitech corporate innovation program from the beginning, I’ve seen a lot of corporate labs operate in an open innovation system. I’ve been on the inside of one of these labs, building and running the lab itself, growing it to three locations, and have witnessed, first hand, the opportunities, challenges and failures that came with building a lab. I’ve seen other labs operate and influence larger organizations, and I’ve seen labs that have struggled to have an identity and a vision inside the company. I’ve learned a few things and I’ll share them here.
Let’s start with the underlying problem that large organizations are trying to solve: It’s not disruption, technology or talent … it’s speed. The speed of change and the speed of technological development have outstripped large organizations’ ability to keep up. It takes a long time for big organizations to make decisions – and for good reason. The checks and balances that have been built into organizations have been created in response to problems from the past. So, for existing business problems, those processes are appropriate. For new problems or new customers, those processes are probably not appropriate. Companies that get this right are ambidextrous – they have an ability to execute on existing business models, but also explore new ones efficiently and effectively.
The takeaway? When trying to maintain the existing business, use existing tools and people, and add new ideas and processes to incrementally improve the business. But when exploring new problems, customers, and opportunities, use new tools, metrics, and teams. Don’t burden new solutions with old tools; this is the time to explore.
Labs often lose credibility inside organizations because they are trying to disrupt everything. For most large companies, their existing business model isn’t going to disappear in the next 18 months. That doesn’t mean it shouldn’t be constantly tested, tweaked, and improved; it just doesn’t need to be disrupted with every startup, prototype and idea. By working on new problems with new customers, innovation labs can work with the existing business to learn about what is working today, but leverage new tools and ideas to build new customers and products. This creates an opportunity for the lab to work with, instead of against, the business.
My next post will dive deeper into setting proper expectations and timelines for the lab.