In the previous post, we spoke about how isolated innovation labs rarely achieve the success that executives and stakeholders expect. For the next few articles, we will focus on how to better set up the labs for success by managing and focusing expectations, giving them the freedom (and accountability) to move really fast, and to build bridges into the parent organization so that when they do find something worth investigating, there are ways to bring the technology, business model and experiment inside.

What should the lab do?

There probably isn’t a right answer to this question, but there are many wrong ones. The first answer we want organizations to avoid is “everything.” The lab needs a strong and clear definition of where to stop. What does ‘done’ look like?  

That definition will depend on the organization’s capabilities, the type of people working in the lab and the industry they are in, but what’s important is that it is consistent. Labs get caught when this isn’t clear. As an example, as with many of the corporate innovation labs at Communitech, co-op students (or interns) are an important part of the team, meaning there is significant turnover. It’s difficult to deploy enterprise software when 50 per cent of the team turns over every four months. On the other side of the coin, if the lab considers a functioning prototype as ‘done’ and there is no other team to pass it off to, then there is no way to consistently bring these prototypes to life. If the organization understands what ‘done’ is, then there is a clear understanding of and accountability for next steps.

What should the lab focus on?

Our experience suggests that innovation labs located outside the walls of the head office should focus on things linked to the business strategy but beyond the current organization’s capabilities. They should have metrics separate from day-to-day operations, and most likely should not have revenue expectations. These metrics would focus on customer discovery, better problem definition, technical due diligence on new technologies and startups, and experiments on new business models. These are learning metrics.

The lab directors need to have business leaders onside with what they are building and exploring – not because the business leader sees a chance to drive new revenue this quarter, but to learn things they couldn’t learn inside the organization. This helps pull the lab away from “what have you done for me lately?” to “how can we work together?”

What else?

The lab needs to set new baselines; specifically, how fast a large organization needs to learn about changing markets, changing customers and changing technologies. Decisions need to be made faster, processes need to be created to remove barriers and create speed. Experiments and hypothesis testing become the new way to do business research. The lab becomes the subject-matter expert on these new processes, and coaches and trains others to learn this new way.

In our next post, we will look into the importance of speed in business, and use analogies from military history, to apply to 21st century business.