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February 21st, 2017

Innovation Labs Are Failing

Almost every Fortune 500 company opened an innovation lab over the past three years, but are they delivering results?

Over the past two years I’ve spent time with 30+ innovation hubs, labs and teams across finance, automotive, retail, manufacturing, transportation, telecoms and hospitality. If their purpose is to reinvent business they are failing, but they are also failing to deliver new products, services and business models to the market. Examples of companies that have shut down their innovation labs during the same period include Coca-Cola, Unilever, Nordstrom, Target and Ogilvy Labs.

Why Are Innovation Labs Failing?

The innovation labs that we observed:

  • are too slow in decision making, processes and delivering results
  • are not taking enough risks and focusing on incremental innovation
  • lack integration with the core product/service lines of the business
  • are not clear on what problems they are to solve
  • are working within an overall company culture that does not buy into the change required to embrace innovation (more about this below)

In conclusion, they turn into trendy money pits without buy-in throughout the organization.

How Could Innovation Labs Work?

We believe that what organizations really need is an embedded approach to innovation and testing that is measurable. Having a central hub with a mandate to push innovation is a great idea, but the role should not be to innovate but to help the organization become innovative. The innovation hub should help all areas of the organization and need to:

  • Identify and understand the problems that the business can solve
  • Change ways of working and processes so that the time-to-market becomes a few months (and not years)
  • Understand that it’s OK to fail, because otherwise no one will test radical ideas
  • Prototype, test, test and test fast to ensure that the cost of failure is minimal and that the big concepts are identified
  • Set measurable objectives with data-driven innovation

As mentioned above, we will follow up with another blog post on the topic of people and culture. Without getting the people and culture on board, there is no way to succeed.

Want to learn more about successful innovative organizations and how to innovate? DMI helps organization reinvent products, services and business in a mobile world. Contact us to learn more.

Magnus Jern
Chief Innovation Officer

Tags: innovation innovation labs insights

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