Innovation labs: critical for business or innovation theatre

Many businesses use innovation labs to improve operations, we explore how critical they are to business success or if they are more a marketing tool

The industry has seen the adoption of digital technologies accelerate following the COVID-19 pandemic. With more and more companies realising the importance of innovation to business success, many have sought to develop innovation labs to drive ideation and the development of new ideas.

Innovation labs both challenge the existing thought processes in a company and bring together early-stage ventures with corporations. In doing so, it can bring about new ideas as a source of externally produced innovation.

Acting as a safe place for businesses to trial and error new ideas, innovation labs have the potential to be an incredibly successful tool for business success and development. However, there are some businesses and professionals that believe they don’t deliver on promises and could be doing more harm than good.

Some have reservations about innovation labs as they fail to align with the business. This lack of strategy is symptomatic of ‘innovation theatre’; an innovation initiative that doesn’t have any significant business impact.

Innovation labs: supporting businesses as they navigate digital transformation

Despite these reservations about the effectiveness of innovation labs, Mark Williams, UK Partner and Ignition Lead at KPMG UK discussed the success of their innovation lab.. He said: “At KPMG Ignition,we use technologies to visualise and share knowledge and insights. We co-create together face to face, virtually and in a meaningful hybrid manner.”

As an advocate for innovation labs, Williams explained: “Innovation labs are critical for helping organisations navigate each stage of the digital transformation lifecycle in an accelerated manner, increasing innovation, de-risking outcomes and reducing wasted effort.”

Williams does recognise that innovation labs need to be designed in a specific way in order to be successful. As Ignition Lead, Williams understands how to bring together people, insights and technology to spark innovation and deliver lasting change.

“Labs in the future need to help clients understand the signals, trends and disruption they can take advantage of, and then translate these into meaningful conclusions and options for their organisation,” Williams said.

“They can also help companies shape strategies that will make a difference and build leadership coalitions that will genuinely own and drive change,” he continued.

Significance of innovation labs post COVID-19

Noting the significance of the pandemic to the accelerated adoption of new technologies and innovation, Williams said: “COVID-19 has focused people’s minds on what high-end collaboration should actually look like.”

To respond to the new ways of working brought about by the pandemic Williams suggested they should be adapted to both remote and in-house working: “When organisations bring people together, they want the experience to be very powerful, even when it is applied to a virtual space. 

“Labs need to be able to support creative methods where the virtual, or hybrid, participant is at the core of the approach and not a second-class bystander,” he added.

Are innovation labs a PR tool?

Although a well thought out and executed innovation lab can lead to significant business success, Simon Hill, CEO of innovation firm Wazoku, is more reluctant to celebrate innovation labs as a key business tool.

The CEO warns against innovation theatre, concerned that any companies use labs as a PR and marketing tool masking what real strides they make in technological innovation.

Hill explained: “Being innovative is essential to long-term business success and growth. Innovation labs are more about PR and theatre.” 

“To be innovative requires a different culture and a different mindset. It requires objectives and a long-term plan about how to achieve them, and an idea of what success will look like and how it will be measured,” he continued.

Can you change the game without labs?

Suggesting alternative ways to develop and incubate innovative ideas, Hill shared his insights into best practices: “This idea of open innovation is increasingly popular because even with a healthy culture,businesses will face challenges their own innovation ecosystem can’t solve.”

“Game-changing innovation actually comes from using the crowd, canvassing the thoughts of a range of stakeholders and providing them with a platform to submit, discuss and develop ideas.” 

“Using this approach, firms can gradually become more innovative, much more effectively than by launching a lab,” he added. 

Innovative approaches across the whole business as a driver for success

Although cautious of the success and significance of innovation labs, Hill suggested it was the theatre behind some of them that has bred this cautiousness. 

“Too many labs that I come across are more about telling the world how innovative a company is, rather than actually showing a genuinely innovative approach,” said Hill.

“They are as much a marketing tactic as they are innovation, aiming to convince the world of a more open style and a willingness to innovate. There’s nothing wrong with this as such, but labs should never be the entirety of an innovation portfolio. If they are, I would ask any organisation to rethink,” he continued.  

Hill did note he is not opposed to these labs: “Good ones can be effective, but they are not an innovation panacea or strategy. They are not some pathway to a next-gen organisation and to restrict ideas and innovation to a select few that work in a lab seems counterproductive.”

What Hill is keen to focus on, and what he believes other organisations should be focused on, is simply innovation itself rather than the concept of a lab. 

Expanding on this point, he said: “The world (and the businesses within it) is facing major challenges, especially around sustainability. These big challenges require big solutions, and this entails a more holistic approach to innovation than setting up a lab."

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