Innovation Labs: Good For My Brand Or A Fad?

It seems as if everywhere you look these days, in whichever sector, there’s a launch announcement about another innovation lab, hub, or incubator. But what is driving this trend, and is it right for you?

Large businesses are under pressure to do more than just compete with peer companies in their verticals. They must now also set themselves up to win in the years ahead in increasingly dynamic, competitive climates where no incumbent market leader seems solidly immune to external disruption.

And with good reason: since 2000, 52% of Fortune 500 companies have merged, been acquired, or gone bankrupt. As a result, leaders are anxious to prove their genuine commitment to innovation, while also producing ongoing results. A survey of senior executives conducted by management consultancy Capgemini last year revealed that 65% face increased pressure to innovate.

The climate now is “disrupt or be disrupted.”

Technology And Customer Expectations …
Technology is often at the heart of disruption. Customers’ attention spans are getting shorter and there is more willingness to experiment with new products and services. Companies which could once milk a leadership position for years without trying very hard are now challenged to keep pace with escalating consumer expectations in better, more personalised, and more efficient ways.

In this pursuit, technology is a double-edged sword. It is simultaneously opening new possibilities for companies to serve their customers and create new value while also propelling those customer expectations ever higher, making stable customer satisfaction an increasingly elusive thing.

Engagement between a company and a customer has changed from a simple matter of messaging and purchase to a more fluid and context-specific set of thin and transient connective threads. This is why many labs aim their explorations of technology at creating totally new forms of customer engagement.

… Which Pervade All Experiences
Across industries, there are new consumer expectations around speed, responsiveness, and personalisation. Uber is certainly a poster child for this dynamic. In the years since Uber’s launch, it has moved from just a ride-sharing service to shape the future of how physical things are delivered on demand. Uber’s success has inspired other innovators to mobilise their own moral equivalents in other verticals and spawned the term “Uberfication” as a strategic encapsulation of the transformations they’re unleashing.

This cross-fertilisation of expectations across thoroughly unrelated businesses seems to be playing out with unprecedented frequency and velocity. The result is a consumer whose expectations are not necessarily being driven by your direct competition.

The Challenge Of Employing Millennials
As a generation, there hasn’t been an age group as disruptive as the millennials since the baby boomers. They use completely new platforms to mobilise, communicate, and create. And they aren’t just creating trends; they are creating entire new industries. Yet many established brands are failing miserably at sustaining millennial interest. For companies looking to bring on the next generation of innovators, they will need to become more innovative to attract this new workforce and create a casual, collaborative work environment in which millennials can learn and thrive.

For many businesses, there is also a realisation that these labs need to catalyse not just shiny new products, but a shinier new company—which manifests as impact on company processes, approaches, and culture.

So the rationale for these innovation labs is clear:

  • Stir up innovation activity.
  • Help companies stay ahead of the game.
  • Retain and attract talent.
  • Generate PR.

But, as marketers, you need a lab that is good for your brand and actually delivers.

If you find you and your brand looking to labs to help get new products and services to market, here are the ingredients for success:

Identify the problem the lab is there to solve

Ensure the lab is designed to solve a core problem. Unless it’s specifically designed to solve a core problem, adding an innovation lab is unlikely to fix the underlying issue. “We need big ideas” is too broad, but a toy company asking “how can we stay relevant to children obsessed with digital technology while staying true to our brand and being profitable” is probably getting closer.

Define the metrics

What’s measured matters. When you have identified the problem the lab is there to solve, ensure there is clarity on the goals and metrics. The count of colourful post-it notes and cutting room floor ideas in the lab aren’t the metrics that will give it staying power.

Share carefully

The lab needs runway to explore and develop ideas without hordes of company stakeholders looking in. But working in isolation can reduce the odds of incubated ideas successfully re-entering the business. Successful labs should plan what to share, when, with whom, and how often. While you might not want to share the project details with your wider organisation, you might want to share what you learnt to help the organisation grow.

Motivate your talent

Designing the careers of the talent in the lab is as important as the working process, because without world-class talent, you’ll never have a world-class lab. A key piece of this is defining performance metrics and incentive schemes for lab staff. Labs need to feel and be entrepreneurial in nature. The incentive scheme is critical to nurturing an entrepreneurial culture within the lab.

Don’t let the making overrun the thinking

The rush to start prototyping a product or service can divert attention away from big, unanswered questions around the strategic and commercial value of an idea. Agile development urges everyone to work fast, but everyone must be working fast towards a strategy so find the balance between developing the right strategy and building.

Bring in the right partners

Great labs are lean. They may not need a certain skill set full-time, but knowing when to bring in specialised help in key moments will ensure more effective problem-solving while containing the headcount in the lab. When choosing a partner, be clear about where you are in the journey and what capabilities matter most.

An innovation lab can help marketers and brands. It can help push a company into new territories, reassure stakeholders, and entice customers. But the way a lab is structured and run is critical to ensuring that it is able to deliver solutions to the problem you, as the CMO, set out to solve as well as innovations that the organisation can adopt, while also meeting and foreseeing consumer demands

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