How to make innovation labs work for you
What all these facilities have in common is that they are outposts planted by companies to help them catch some of that Silicon Valley lightning-in-a-bottle disruption. There is a widely shared conviction, held by companies from across the world, that business as usual isn’t enough in a world where a startup can put a significant dent in an industry in a matter of months.
So company executives come to Silicon Valley to learn. They then distill that knowledge into new practices that become everyday processes throughout their companies, no matter the location.
There’s only one problem. For every successful lab story, there's another story about a lab that failed to achieve anything. Instead of being founts of innovation, these failed labs are often boondoggles filled with smug, self-described visionaries who are resented by the rest of the organization for their perks and lack of responsibilities.
The impulse toward innovation labs, imperfect as they may be in actuality, is perfectly comprehensible: If the world is increasingly being transformed by digitization, it’s critical to learn how the digitization process works. Where better to learn that than in the center of digitization—Silicon Valley? And if you believe, as many business leaders do, that the pace of digitization is accelerating, that makes figuring out how to absorb those lessons even more critical.
So what distinguishes successful and unsuccessful innovation lab efforts, and how does one increase the odds of the former and reduce the odds of the latter?
For senior IT leaders, the issue is no academic matter. Treating an innovation lab initiative as the responsibility of the business unit that launched it and standing idly by while it fails isn’t the appropriate behavior of a peer executive. Moreover, in a “software eating the world” environment, failing to make use of every tool to learn how to become a digital enterprise is shortsighted. Digitization efforts necessarily fall into IT's lap, so it’s up to IT to figure out how to make them successful.
It's helpful to look at one innovation lab that is widely regarded as successful and draw out its lessons. I had the opportunity to work with Capital One's lab in the past and have kept up with its progress. I've been impressed with how the company is using what it learns in the lab to transform itself.
Here are three lessons from the Capital One innovation lab:
1. Have the appropriate personnel strategy
As I noted, many companies hire some “digital natives,” put them in some hipster office space, and wait for magic to happen. Capital One did those things, and even acquired some digital agencies, but it did much more than that.
Rather than maintaining an organization segregated from mainstream IT, Capital One rotates staff through the lab in both directions. Mainstream IT personnel transfer into the organization for a specific period or project, in part to learn new technologies and techniques by osmosis. And lab personnel often move into mainstream IT roles, to transfer new products or knowledge to a wider group of users. In this way, Capital One diffuses digital talent throughout the organization, while also ensuring mainstream IT perspectives are present within lab activities.
2. Create a process to integrate lab outputs into mainstream IT
It's all very well to foster productive interaction between corporate and lab personnel, but if there’s no concrete way to migrate lab innovations into the mainstream organization, it’s unlikely that the initiative will succeed. It's crucial to create a structured process for moving new projects into the rest of the organization.
This goes beyond specific projects, of course. Innovation labs also create new tools and processes that must be transferred if lab projects are to become mainline offerings. Defining the migration process requires deftness—many an innovation has been drowned by recipient organizations insisting that the new technology map to existing practices. The best way to make this process successful is to build collaboration among participants (enabled by the personnel strategy described above, which fosters mutual respect) and address the needs of both organizations.
3. Recognize that an innovation strategy is never done
Innovation strategies that start and stop with the lab are doomed to failure. Instead, labs must catalyze processes and then disseminate them throughout the organization. Capital One publicizes its lab innovations endlessly. It has launched new open source projects and presented on them at OSCON. It also sponsored the inaugural Serverless Conference. Such activities help with recruitment as well as PR. By hanging out in locales where advanced technology developers congregate, Capital One can illustrate its commitment to innovation and help build a critical mass of talent.
Love them or hate them, innovation labs are here to stay. They can help companies tap into new technologies and accelerate the pace of change for their sponsors. It’s not enough, however, to launch your lab and declare victory. Too many innovation labs end up as Potemkin villages practicing cargo cult techniques. A bit of a mixed metaphor there, but the point is, absent a concrete strategy and methodical processes, simply creating an innovation lab does not guarantee success. However, the right innovation lab strategy can accelerate your journey toward becoming a digital enterprise.