The majority of companies are seeking to be innovative – to the extent that Innovation Labs are set up with the sole purpose of generating new ideas. These set-ups can fall under many different names — accelerators, business incubators, R&D hubs. Incubating spaces are safe places for new ideas and experiments. In fact, over half of financial services firms have begun their own dedicated innovative programs.
However there is evidence that a lot of the growing number of Innovation Programs are failing to keep their promises. Without these outlines, an Innovation Lab can be somewhat a white elephant. Let’s unpack a few of the reasons why Innovation Labs can fail to achieve success for the company.
There is often a problem that these initiatives have no clear goals, or the sufficient metrics to track their success. Without the ability to manage metrics, any new Innovation lab is doomed to fail. The fact of the matter is that the innovative process needs more than enthusiasm and a shiny new office to actually work.
It is true that innovation operates within a slightly different sphere to strict commerce. And as such, needs to be viewed through a slightly different financial lens. Labs need financial support and the time to nurture and tinker with ideas. However, no matter how great a leash you allow the Innovation Lab, there does need to be some form of return in the long run.
And these returns need to be outlined in advance and be tracked over time…
From an executive point of view, Innovation Labs begin to lose their value if they fail to make contributions to the bottom line over time. This is perpetuated by the fact that many labs are set up and run without ever having clear metrics put in place from the start.
There is the argument that projects to stimulate innovation are hard to define in terms of clear benefits. Perhaps they hint at reforming company culture, or are possible generators of future profit in some way. But these things are difficult to quantify within the parameters that Innovation Programs operate. However these are conceptual obstacles that have to be overcome if a lab is to be run successfully within a commercial organisation. And it is not an impossible leap. Metrics can be proposed.
Specifying particular metrics for an Innovation Center has multiple functions. Firstly, it serves to define precisely what is at stake. This applies to the lab operators as well as the decision makers within the company. Secondly, it can help to reiterate the benefits of having an Innovation Center in the first place. A financial return on investment is a very tangible metric that can help develop a lab. Moreover, a return on intelligence – new knowledge and insight – is another exciting metric to keep in mind, though perhaps less tangible.
No matter the form that these metrics take, it is essential that the means of measuring progress allow for the progress itself to be configured in the right direction…
Creative spaces are often associated with isolated gangs of innovators working independently of any large organisation. This stereotype has some layers of truth to it. And separation can be important to successful innovation. This is especially true in enormous companies where the cogs of bureaucracy can ensnare and strangle new ideas to death.
But actually, separation isn’t necessary for creation; and being part of a company is seldom a problem on its own. What creates issues is that the freshly-inaugurated Innovation Center doesn’t possess a clear strategy that’s aligned with the company’s. Or even worse, it doesn’t really have one at all. It’s casting a wide and ineffective creative net, so to speak.
There is a danger that innovation teams within businesses can actually become more of a disruption that a service. The term “innovation theatre” is often bandied around – used to describe the perceived circus of labs with no common strategy in place. Some labs are opened up simply as tick-boxing exercises to demonstrate an innovative streak, yet are closed down just as quickly.
Why are these labs such ineffective flashes in the pan? Labs are locked back up either because they are generating ideas that bear no resemblance to anything like what a customer needs, or simply because these ideas are never seen through to completion.
Innovation projects are rarely spoken about in the language of KPIs. This is the language that commercial projects are discussed and planned in. Decision makers should firstly consider the long term implications of opening an Innovation Center. Weighing up these implications, they should assess to what extent it would prove an addition or a disruption to the business. And with this in mind, work to put in measures that will ensure new ideas are generated and executed within the companies forecasted growth.
Services delivered by ENO8 help empower companies to design and develop innovative, impactful digital products. Our partners realize real business returns from new technology initiatives because we arm them with our proprietary innovation process and a best-in-class, experienced team. Through working with us, our clients move faster, reduce their risk, and increase the impact of bringing new digital products to life.
We understand innovation. We believe innovation initiatives should be measured in outcomes that deliver value. We help companies uncover disruptive opportunities, inspire ideas, and actualize big thinking.
Rishi Khanna is a serial entrepreneur and high growth CEO. He works closely with clients and internal leaders to think 10X. He enables business growth and improve operating efficiencies/profits through leveraging emerging technologies and digital transformational strategy. Avid about the sharing of knowledge, Rishi has written and been featured in Inc. Magazine, Entrepreneur Magazine, USA Today, Dallas Business Journal, Dallas Morning News, IndUS, and various other publications. He likes to use his time to guide, mentor and assist others to follow their passion and purpose in hopes of being a catalyst for innovation.
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