How Innovation Labs Play a Key Role in De-Risking Disruption

Innovation has become a bit of a buzz word of late, and with good reason.

According to a study by Boston Consulting Group (BCG), 83% of senior executives now rank innovation as a top-three strategic priority for their organisations, a significant increase from previous years.

However, this elevated priority coincides with a sharp drop in what it calls ‘innovation readiness’, with just 3% of organisations deemed prepared to act on these ambitions.

On top of this, McKinsey reports that 84% of CEOs believe innovation is critical to growth, despite 80% of business models being at risk. It also finds that just 6% of CEOs are satisfied with their innovation performance.

So, how is this shift being tackled?
The primary corporate response to this challenge has been the innovation lab – a purpose-built environment designed to foster creativity, experimentation and rapid development, intentionally ringfenced from the constraints of daily operations.

These labs enable the development of groundbreaking solutions, from new products and services to entirely new business models, allowing companies to anticipate future trends and maintain a competitive edge.   

The makeup of the specialised environment used to foster this innovation varies and can be a physical space equipped with advanced technology or even a virtual platform that connects diverse teams across locations.

Innovation labs operate with a somewhat startup-like mindset, focused on rapid ideation, prototyping and testing, allowing teams to explore potential innovations in a risk-free environment.As a space that allows businesses to safely challenge the status quo, innovation labs play a strategic role in driving business growth.

They encourage cross-functional collaboration among employees, customers, partners and sometimes competitors, bringing diverse perspectives together to spark unique solutions. 

These labs support a culture of innovation and help organizations move faster in identifying emerging trends and developing technologies that create value – whether through new products, improved processes or disruptive business models.

Kyndryl

Kyndryl’s AI Innovation Lab – launched in May in Liverpool’s iconic Royal Liver Building – exemplifies the new blueprint for lab success by embedding itself within a broader strategic context.

Rather than operating as an isolated R&D centre, its purpose is explicitly tied to addressing the critical AI skills gap, a challenge where only 29% of business leaders feel adequately prepared. 

The lab’s ambitious goal to create up to 1,000 software engineering and AI-related jobs over three years directly supports the UK Government's AI Opportunities Action Plan, transforming the lab into a vital regional ecosystem hub.

This model avoids the ‘ivory tower’ trap through two key mechanisms: First, the inclusion of a Kyndryl Vital Studio facilitates designer-led, open co-creation sessions, ensuring that innovation is developed in direct collaboration with customers to solve real-world problems.

Secondly, an expanded, multi-year partnership with Liverpool-based retailer The Very Group was established from the outset, grounding the lab's work in a tangible, large-scale use case focused on enhancing end-to-end digital capabilities.

This ensures its innovations have a clear and immediate path to market relevance and implementation.   

“With businesses eager to develop AI capabilities, our new Kyndryl AI Innovation Lab Liverpool represents a significant step in addressing the AI skills gap,” says John Chambers, Kyndryl’s President for the UK and Ireland. “By fostering AI innovation here in Liverpool, we aim to ensure that organisations are ready to capitalise on the transformative power of AI.”

Barclays

The Barclays Innovation Hub in London’s Shoreditch district is a striking example of the power of the ‘Open Innovation’ model, where collaboration is used as a strategic tool to overcome internal limitations and tap into a wider talent pool.

Powered by the bank's Eagle Labs incubator ecosystem, the hub is a consortium of industry giants, with Microsoft and Nvidia as core partners.

This partnership creates a uniquely powerful ecosystem for the 150 AI and Deep Tech startups it houses, reflecting the belief of Hannah Bernard, Barclays’ Head of Business Banking, that “key players from across the industry need to come together to help nurture and develop the next wave of tech entrepreneurs”. 

The model’s strength lies in its synergistic expertise: Barclays provides the financial infrastructure and innovation banking specialists while Microsoft offers its vast AI and cloud platform and Nvidia contributes essential GPU hardware and developer upskilling programmes.

For the corporate partners, the hub functions as a strategic listening post, providing a de-risked and capital-efficient method to engage with cutting-edge technologies. 

“The Barclays Innovation Hub is a vital catalyst for upskilling the UK’s workforce in AI and accelerating the growth of its ambitious startups,” says Anthony Hills, UK Country Manager of Nvidia. “Nvidia’s contributions to the Innovation Hub supports our broader commitment to upskill UK developers with AI skills.”

Amazon

Amazon’s European Operations Innovation Lab in Vercelli, Italy is a masterclass in solving the strategic disconnect that plagues so many corporate labs.

Its mission is not to explore abstract, far-future technologies but to design, test and implement solutions that directly enhance the safety, efficiency and sustainability of its global fulfillment centres. 

Amazon’s problem-first approach ensures that every innovation is born from a tangible need within the company’s core business.

Technologies developed at the lab, such as the Flat Sorter Robotic Induct (FSRI) for automated sorting and the Universal Robotic Labeller to minimise packaging waste, are all targeted at specific operational pain points like reducing repetitive tasks for employees. 

Because the lab is an integrated part of Amazon’s operations, it completely bypasses the ‘corporate immune system’ that often rejects external ideas. 

The lab is open to the public and has a dedicated visitor centre, meaning any interested individuals can take a peek inside and learn about the advanced technologies developed by Amazon at the facility.

“I want visitors to see how every innovation is always focused with the customer in mind, always trying to deliver in time and more efficiently,” the Innovation Lab’s Head, Richard Zeger, says. “I also want them to understand that new technologies are constantly being developed in the heart of Europe. We are really proud of that.”