XT … Innovation Labs … Report by Innovation Leader

What exactly is an innovation lab?

Ask ten companies, and you’ll get ten different answers. But we increasingly see large companies creating something they call a lab as a way to cultivate and test new ideas, separate from the demands and pressures of the business units.

More often than not, they exist within companies that haven’t traditionally had research and development teams. And they typically have some kind of “showcase” element to them — they’re intentionally designed to look and feel different from the rest of the company, serving as a place to expose employees to new tools, approaches, and technologies; to bring in outsiders like entrepreneurs or customers for collaboration; or to help with recruiting.

But to achieve impact, innovation labs need to be much more than a Google-esque showcase full of bean
bags, espresso machines, and whiteboards. They need:

» A clear mission, which can evolve over time
» Proper staffng and resources to pursue that mission
» Support from senior management
» A way to communicate with and test ideas with actual customers
» Strong relationships with business unit executives who will eventually bring projects to market
» A way to measure results, if they hope to survive over the long-term.

To understand how those elements actually get put in place in real companies, and how labs can generate real value, we’ve spoken to more than 20 executives who run innovation labs over the last six months.

One of the longest-running, and largest, labs we spoke to was Fidelity Labs, part of privately-held Fidelity Investments in Boston. It was started in 1998, and has more than 100 dedicated employees. The mandate, says Fidelity Labs vice president Rick Smyers, is “incubating products and services and entirely new
businesses.”

At Royal Dutch Shell, with 94,000 employees and $265 billion in revenue, Shawn Murphy of the Shell TechWorks lab says that “our primary mandate is to bring technologies, methodologies, and entrepreneur-
ship from outside oil and gas to the larger group.”

There is no standard recipe for creating an innovation lab, and at many companies there may not be the
resources or motivation to start one. But where we found labs that are working well, they can help to keep
the business looking ahead, exploring new technologies and business models, defending markets, building
skills among employees and loyalty among customers, and sustaining a company’s competitive advantage.

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