In defence of innovation labs

A lot has been written about the potential pitfalls of innovation labs/hubs in the academic literature; many of the same concerns are reflected in the general conversation on innovation within Defence – and I suspect in other large organisations.??Innovation is an overused word, which understandably has started to create a sense of fatigue – not least because of a lot of well-meaning but poorly executed or hollow efforts (‘innovation theatre’).??In this blog I will mount a defence of the innovation lab, arguing that there are several business models through which they can add substantial value.??Many of the concerns are valid – but should be seen as cautionary tales in ensuring there is clarity on the business model for an innovation lab/hub, with senior level buy-in, rather than these potential pitfalls undermining the utility of innovation labs/hubs out of hand.

Why should what I have to say about this be of interest? I’m not a career technologist, or thoroughbred innovation expert… I’m a Royal Marine by background but have had the privilege of leading the jHub for the last two years: UK Strategic Command’s innovation hub.??I have steered the jHub through a process of organisational alignment to set it up for enduring success, whilst preserving its freedoms, and then through a period of rapid scale up.??I think I’ve learned a fair bit along the way that is probably broadly applicable outside of Defence; equally, I’m always keen to learn, and would welcome any comments, observations and discussion that might be triggered with others who have had different experiences and hold other perspectives.

The critique?

Innovation labs have been lambasted as vanity projects, allowing large organisation to ‘virtue signal’ without really making any meaningful changes.??They are also accused of drawing resources away from the core business, leading to duplication, inefficiency, unnecessary disruption and waste.??The initiation of projects in innovation labs, we are told, leads to ‘orphaned projects’, which cannot be sustained – or only at the expense of sacrificing some other (implicitly more important) activity in the core business.??They are at times simultaneously criticised for being both irrelevant and for being over-powered (not a useful tool in shaping the direction of the business, but with too much access and influence with senior leaders).??The ‘artefacts’ of innovation hubs, such as the ubiquitous post-it notes, or some idea of everyone sitting around on bean bags, become a source of derision… viewed as the embodiment of wasted effort… as props in the execution of ‘innovation theatre’.?

How to avoid these pitfalls

First, at the highest level, and borrowing from the great Scott D. Antony: innovation is simply ‘something different that adds value’.??An innovation lab is a mechanism to help an organisation achieve this.??There are several approaches that an innovation lab can take to do so successfully.??The most important component of an innovation strategy that avoids the pitfalls outlined above is to ensure alignment between the innovation team and the organisation’s senior leadership: the innovation agenda must directly serve the organisation’s strategy, with the direct support of the senior leaders – otherwise many of the potential business models for innovation become unattainable, and lessons from industry suggest that the innovation lab will become marginalised and struggle to add enduring value (living out some of the criticisms above!).

My second observation is that many of the criticisms laid out above can be exacerbated by an insular focus within an innovation team: allowing a zero-sum, ‘us and them’, or confrontational tone to engagement between an innovation team and the core business.??Innovation teams, and intrapreneurs more broadly, should recognise their dependence upon the core business functions if any of their efforts are to have enduring value – and so should guard against any sense of antagonism, and ensure that there is strong alignment and good two-way communication.

My third observation is to ensure that sufficient thought has been applied to defining the innovation business model.??There is sometimes a binary choice presented in innovation literature, suggesting a lab can either successfully pursue specific products/projects (framed as innovation), or pursue business change (framed as transformation) – but warning leaders of the pitfalls of trying to achieve both.??There is a lot of wisdom in this advice, but it does reduce the range of potential options unnecessarily.??I will argue that it presents a false dichotomy – drawing on my experience in Defence.??In fact, I think the most valuable positioning for an organisation like the jHub is very much to contribute to both the narrow and broad agendas – but to do so with distinct parts of the lab/hub.

Innovation business models

Let’s explore innovation business models a little more.??Borrowing from climate science, I will use the concept of multiple ‘stable equilibriums’.??In any organisation at a given time and set of circumstances, there are likely a number of distinct stable equilibriums that are viable for an innovation lab to add value.??Most of the issues come from trying to position a lab outside of one of these equilibriums (where conditions are not favourable to deliver the intended value) or trying to deliver against multiple very different objectives concurrently, without clarity as to why, or without the necessary organisational structure or enabling resources (lacking focus).

The most common model for an innovation lab / hub sees a focus on projects, to develop new products or capabilities, which can then be absorbed by the core business.??The overall idea here is that the structures and mechanisms in the main organisation have developed to be highly effective at assuring the existing business model but can limit the ability to spot opportunities and develop and exploit new business models.??Remember that Scott D. Antony’s definition of innovation starts with ‘something different’ – it follows that trying to achieve this in the same way as usual, with the same assurance mechanisms as usual, is likely to be limiting.??Charles O’Reilly and Michael Tushman’s seminal 2004 Harvard Business Review article – The Ambidextrous Organisation – helped to mainstream this idea and the need for large organisations to be ‘ambidextrous’ to maintain advantage, with different processes for managing innovation.

If we explore this business model a little further, it follows that – from the senior leaders’ perspective – the investment in an innovation lab that is pursuing this model is a worthwhile investment if it can help mitigate the risks that are held at that level… the sort of risks that are existential to market share, or competitive advantage.??It follows that a lab/hub that is positioning itself to focus on the value of individual projects that it delivers will seek to ensure it has the resources, mandate, and support to go after these most ambitious of opportunities.?

Taken to its logical conclusion, this approach would see a high level of commitment to exciting new opportunities, like DARPA in the US Government, or X – the ‘moonshot factory’ – in Google.??There are factors that make positioning at this extreme end of the spectrum quite challenging in Defence – which may resonate with others.??It requires a patient commitment of significant resources, accepting a high failure rate, over extended time horizons (years), before successful projects are likely to emerge.??Those projects are also likely to be highly disruptive to the existing capabilities / product lines of the core business, meaning there must be substantial senior commitment to implementing the innovations (and their supporting business models).??With the right senior level commitment, I believe that this model would be viable in Defence (a stable equilibrium), but for a variety of reasons it is not where I have positioned the jHub currently.??It is where the Government’s new Advanced Research and Invention Agency initiative is intending to focus.

At the other extreme, there are some who argue that the first rule of innovation hubs is that they shouldn’t innovate: that they shouldn’t deliver projects themselves, but only enable those in the core business to do so.??This argument builds on the ‘islands of innovation’ critique: that if you have an innovation lab, people believe that is the place where innovation should happen, and implicitly people believe there isn’t a mandate to innovate in their current role.??Advocates of this broad approach argue that unleashing the whole organisation with an innovation culture will be far more impactful to business outcomes than the delivery of a small number of exciting projects from an isolated innovation lab.??It is a reasonable argument, and I believe represents a ‘stable equilibrium’ business model.??A great deal can be achieved by changing the culture in an organisation to unleash the innovation potential of the whole workforce.??It requires a clear focus on the desired innovation behaviours, and the associated structures, approach to risk, empowerment, support and culture.??This business model would see the innovation hub act as a focal point for a broader change programme, an information exchange, enabler, and champion of innovation.??It will be clear that the same level of senior mandate and support is essential to such an endeavour: it must be the senior leadership’s agenda, being implemented through the innovation hub, rather than being a standalone innovation agenda, otherwise the team will struggle to make real change or have impact.??

Both of these are quite extreme positions, so let’s look at a more nuanced position.??First, let me set out my rationale for believing in the importance of having an innovation lab that focusses on project delivery.??It is very difficult to make real change in a large bureaucratic organisation by simply discussing the merits of a better way of doing things.??When was the last time you came away from a conference and remarked how quickly it led to immediate and tangible change in the organisation? Was anything really different on the following Monday morning???On the other hand, when an innovation lab develops a project that pushes up against policy or accreditation barriers, there can be a real imperative for change (backed by a bought-in user community around the problem and senior leadership support).??There is a real power in enabling change through the crucible of delivery.??If you want to do something different that adds value, you have to start by actually doing something!??

The focus on project delivery doesn’t necessary mean that an innovation hub must move to the extreme position of being a ‘moonshot’ factory in order to succeed.??My experience is that it is necessary to calibrate the innovation model to a series of factors: the limits of the core business’s ‘adoption readiness’; the organisation’s level of patience over time and the level of ‘failure’ that senior leaders will tolerate; the available resources, and what can realistically be achieved with them; a clear-eyed analysis of what priority areas to focus on.

The jHub’s innovation strategy

The innovation strategy that we have developed in the jHub in response to these questions sees us focus on three aspects concurrently, with different sub-teams, focussed on three separate ‘stable equilibriums’: pushing the boundaries on ambition and scale of innovation projects with a small Futures team; maintaining a majority focus on problem-led innovation activity to deliver projects that add enduring value, and through them to push policy, accreditation and adoption boundaries through a Projects team; and to champion ‘Innovation as an Approach’ through a new Enablement team, to maximise the organisational dividend from the lessons learned in the jHub, and to help enable innovation across the organisation.?

Through this model, we are: successfully transitioning innovation projects to core capability (currently optimised at c.60% conversion rate, from Board approval to core); making changes to policy, approvals, regulation and assurance methods – that are benefiting others across the organisation; and most importantly, solving user problems at pace and with certainty.

Conclusion

‘Corporate innovation’ is a tough gig!??You can’t be all things to all people at all times.??Whatever strategy you adopt, and however you position the organisation, you will come under criticism from some quarters.??That is par for the course, and you have to develop a thick skin.??It can be exhausting to constantly try to align with so many varied stakeholders.??But, as we often say in the jHub… if it was easy, everyone would be doing it!??The challenge is part of what makes it so rewarding.??My conviction is that there are multiple viable business models for innovation in a large organisation at any one time… the key to success is to identify the key parameters of the ‘stable equilibrium(s)’ that you choose to position within, to ensure that there is clear alignment with the senior leadership on those choices, and then to commit wholeheartedly and with razor-like focus to deliver success.