It’s not uncommon for executives to launch an innovation lab with the lofty goals of business transformation or forging a new marketplace for the enterprise. It’s far too common, however, for innovation labs to get bogged down in simply making iterative tweaks to the core business rather than producing the sort of disruptive innovation which the C-Suite wants – or at least say it does.
Despite being tasked with producing The Next Big Thing, most innovation teams are structured to only deliver incremental improvements to core business lines. If executives want to keep their innovators focused on transformative innovation, the innovation lab must be guarded in a few key ways.
Rally Behind an Innovation Champion
Successful innovation requires top-down leadership, paired with the tolerance to fail (often repeatedly) before finding success. Many innovation labs lose their way simply by lacking a steady hand on the wheel. Without an innovation champion in the C-Suite, the innovation department often falls under the sway of VPs and other line executives who are judged by the standard P&L metrics of the core business. While this can often result in successful and repeatable incremental innovation, it weakens the enterprise mandate to pursue new business lines or beat smaller, more disruptive companies at their own game.
The agenda of the innovation lab must be set and maintained by a leader who understands the vision of the core business unit but is not judged by the same profit metrics of other line executives.
Align with the Core Business, Don’t Follow It
There’s nothing wrong with incremental innovation; in fact, it’s a necessary output for the core business to remain competitive and grow. Yet, it will never result in your company’s next $100 million business unit. It will only improve the current business of the organization.
New product ideas and business lines should absolutely reflect the core values and competencies of the enterprise, but to achieve transformational development, innovators need to move beyond the organization’s core business model. The innovation lab should be a sandbox for the business to explore new ways of reaching new customers, not just reaching the same customers with an improved product.
Build Businesses, Not Just Ideas
Too often, corporate innovators seem to work in a vacuum of merely proving an idea works or uncovering a slightly larger audience for a core product. They fail to consider all the fundamental things required to make an idea a marketplace success: customer-journey mapping, user experience, product design, pricing structure and more.
If executives truly want transformational innovation, the innovation lab must go beyond merely new product R&D; innovators need to explore and validate entirely new business models and lines for the enterprise. While alignment with the core business remains critical, embracing emerging technologies and seeking new lines of revenue fundamentally requires a break from the practices of the core business.
Transparency and credibility are the corporate innovator’s currency. In our interview with Jeff Anop of Equifax, he explained how innovation is built on a culture of openness – openness to new partnerships, new ways of thinking and communicating within the organization. Without that dedication, the innovation lab will struggle to find the traction it needs to truly affect the organization’s bottom line.