Making Next Generation Labs Front and Center

Scott Kirsner, Co-founder, Innovation Leader

Many companies engage in “innovation theater,” where they showcase a new generation of products to highlight an executive’s vision, impress shareholders and investors, win favorable press, build their brand, and fake out the competition.

Elon Musk has proved himself to be a master of innovation theater, most recently by showcasing the Hyperloop magnetic train connecting San Francisco and Los Angeles. Amazon has similarly positioned itself on 60 Minutes with its Delivery-by-Drone showcase.

Both might lead to something big. Or they could prove to be vaporware. But what kind of impact will they ultimately have on their organizations? I’ve been thinking a lot about successful innovation throughout my career, working to help traditional media, directories and brands embrace the digital future.

So has longtime innovation analyst Scott Kirsner, who has launched Innovation Leader, a research and events organization dedicated to corporate innovation centers (as opposed to traditional R&D, funding university driven projects, or teaming with incubators). His conclusion? These innovation projects will only be truly successful if they become deeply integrated into a company’s vision and output for the future.

During a Webinar today, Kirsner noted that we’ve seen a spate of innovation projects face sudden death. Indeed, an estimate by one executive interviewed by Innovation Leader suggests that “about 80 to 90 percent of innovation centers fail, and end up being a massive waste of resources.”

Mostly, Kirsner notes, it is because they weren’t integrating with other company outputs, didn’t articulate a second act, or weren’t positioned to receive next round funding. Target, for instance, has just closed down its highly publicized Store of The Future; The New York Times has shut its NYT Labs; and Alaska Airlines has dropped its newly conceived Customer Innovation Team.

In some cases, companies have lost faith in home-grown “lab” efforts to develop new products and change company cultures and simply acquired existing players. That would be my take on WalMart’s move to acquire Jet, a ready-made digital solution. In doing so, it pushed aside WalMart Labs, which it had ambitiously developed in Silicon Valley.

A company’s “Disney World approach” to innovation doesn’t endure very long, says Kirsner. A company that intends to win with innovation will quickly shift “from showcases and meeting places to collaborative work spaces,” he says. An innovation Center is “insulated, but not isolated” from a company’s customers and business partners.

Kirsner further notes that many companies begin evaluating their innovation efforts with “activity metrics” such as the number of workshops they produce, patents won, or ideas they have in the pipeline. To survive and thrive, however, innovation centers must be evaluated on “impact metrics” such as revenue, market share, app downloads, store traffic and/or expanded geographic reach.

The key is to make innovation “a Standard Operating Procedure for a company,” he says. It can’t be a “nice to have.”

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