Enabling marketing innovation in highly regulated industries

The enterprise marketing function has struggled with an image problem?

Historically seen as either an execution shop focused on “running the engine,” or as a brand shop that makes sure the logo and color palette are used appropriately, marketing was rarely invoked as a key lever for strategic growth.?

Fast-forward to today. The pace of social, economic, and technological change has prompted many business leaders to look at marketing as a growth accelerator. In fact, research has shown that CEOs who place marketing at the core of their growth strategy are twice as likely to have greater than 5 percent annual growth compared with their peers.?

An uphill climb for highly regulated industries?

You’ve likely experienced the difficulty of driving both ongoing improvements and innovation using the same pool of money and resources. Within any large enterprise, there are challenges with constrained budgets, implausible timelines, capacity issues, and misaligned priorities.?

Marketers in highly regulated industries, like financial services, face additional hurdles due to strict regulatory requirements. Operating under conservative guidance from internal legal and compliance teams, it is often easier to negotiate strategically placed “may’s” than rock the boat with something new and different.?

Therefore, “more of the same” marketing strategies become the norm as campaigns will follow a predictable schedule and limit risk. This operating model accommodates incremental efforts to improve the status quo, but it won’t easily facilitate experimentation with new ideas that can help accomplish more ambitious growth goals.?

Regardless of the complexity of challenges, intentional structuring and resource planning is necessary to test new ideas and expand proven strategies at scale.

Benefits of an Innovation Lab

An Innovation Lab is a dedicated platform where new, potentially significant marketing concepts and approaches are ideated and evaluated — then quickly developed, tested, analyzed, and quantified for expansion at scale (or killed). Typically, the specific criteria for Lab tests include ideas that involve more risk, whose contributions may not be confidently sized a priori, with hypotheses that are clear but unproven.?

A stand-alone Lab catalyzes innovation, encouraging ideas to be bold, exploratory, and unconstrained by existing marketing efforts, infrastructure, technology, or other existing capacity or capability issues. It also expands the organization’s capacity for experimentation – without sacrificing attention to mission-critical programs required to meet business goals.

An Innovation Lab can be utilized to:

• Uncover and pilot novel marketing concepts to quickly identify winners with potential…and dismiss those not worth pursuing further.?
• Deliver marketing approaches that are complementary to, but different from, existing and optimized efforts.?
• Employ a down-and-dirty, unencumbered, data-driven, results-oriented approach that doesn’t require significant resourcing or high-cost technology builds.
• Rapidly test-and-learn a variety of marketing concepts while being liberated from pressure for consistent success or the drag of building for scale.
• Diversify and broaden the marketing portfolio of proven strategies and tactics.
• Capitalize on changes within the marketplace and exploit new opportunities to create sustainable differentiation.?

How an Innovation Lab works

Marketing teams that leverage an Innovation Lab can safely test new concepts on a small scale without making significant investments of time and money using a three-part methodology:

1. Gather, generate, cultivate, and thoroughly analyze new marketing ideas in vitro. A Lab acts like a think tank, collecting and vetting ideas that come from all sources—internal and external— to identify the best ideas to pursue.?
2. Quickly test market validity in vivo. In-market testing can be performed by the Lab through rapid prototyping with off-the-shelf tools and techniques that do not require a long or expensive build. Depending on synergy, size, or consistency with current priorities, prototyping can utilize in-place structures.?
3. Quantify opportunity at scale. For pilots successful in the Lab setting, full business cases are developed to provide rationale for implementation at scale. Test results are shared with relevant stakeholders with an eye toward making sure the broader expansion is well defined and complementary of other business objectives, plans, and priorities.?

Standing up and operating an Innovation Lab

Just like with any marketing campaign, a successful Innovation Lab requires a well-thought-out plan. A Lab facilitates out-if-the-box ideation, and rapid test-and-learn cycles to evolve your company’s portfolio of strategies and advance your marketing maturity.?

Benefits can be achieved in a series of steps:

STEP 1: Define the Innovation Lab’s charter

A charter will define your Lab's scope, goals, and demonstrate alignment to business objectives. Key business leaders—including product owners, stakeholders and select partners—should be part of this step to ensure their full support as they have visibility across all company-wide efforts and, as such, will be able to determine if the proposed Lab concepts are appropriate.?

For example: [ABC Company’s] marketing Innovation Lab seeks to test [X] new marketing concepts per quarter in support of [business OKR] and [Y] new concepts per quarter in support of [sales OKR]. The goal is to identify [z] new concepts to complement or replace existing tactics by [date].?

Some organizations may even set a failure goal and budget to help take the fear out of failed experimentation and reward the behaviors that teams aren’t accustomed to (i.e., test and retire [z] concepts that do not successfully meet [business/sales OKRs]).?

STEP 2: Establish operating requirements

The Innovation Lab’s operating model captures ideas from all levels but puts leadership in control of facilitating the execution of the most meaningful, valuable, and important efforts required to support company goals.?

• Resourcing: With the objective and scope defined, socialized, and approved, a Lab can begin evaluating and resourcing the appropriate mix of talent—such as marketing strategists, analytics, and product experts. Ideally, dedicated Lab resources will focus on important but unproven marketing concepts critical to the future of the organization’s success, while other resource pools (i.e., PODS) remain focused on the achievement of declared goals through the continuous optimization and expansion of today’s marketing strategies.?If resources are not 100% dedicated to the Lab, it’s important to set expectations for the amount of time members are expected to spend on testing activities. Outsourced models are also sometimes very effective when BAU is all consuming of existing resources.?
• Process: Next, a process to define and maintain a formal learning agenda in support of the Lab’s goals must be established. A learning agenda is a shared collection of “big questions” from a cross-functional group, translated into hypotheses that, eventually, will be the basis of the Lab’s test plan.?Ongoing governance and oversight of the learning agenda should be designed to make sure tests are aligned with your company’s objectives, are crafted to be complementary to in-place efforts, and do not inadvertently undermine progress toward established goals or current efforts but rather are relied upon to establish real future growth opportunities.

STEP 3: Execute experiments

The purpose of The Lab is to test concepts, identify winners and quickly rule others out; therefore, short cuts are taken to execute with speed.?

Learning agenda items are prioritized using a light evaluation that summarizes the hypothesis, expected impact/effort, success criteria, budget, urgency of environmental opportunities, and anticipated success measures. Often using an agile approach and design thinking, a pipeline of opportunities is presented to and refined with company leadership with a predetermined frequency (i.e., monthly, or quarterly).?

Once each concept is approved, a schedule is created and tests are executed. Experiments will not typically involve large test volumes or extended durations in order to keep costs to a minimum and accelerate results. Therefore, results will be directional – and not always statistically significant. Most experiments run for 45 – 60 days to evaluate effectiveness.

STEP 4: Evaluate results

Successful Innovation Labs thrive on careful planning, adaptability, and a commitment to continuous learning. That’s why the evaluation phase of testing is so important.?

For tests that show substantial promise:?

• a deeper dive and formal business case is created—applying test performance to quantify expanded opportunities. This includes a more comprehensive view of economic viability and efficacy at scale (i.e., CBA, SWOT, payback period, short and long-term KPIs).?
• the Lab updates the learning agenda, refines any interrelated hypotheses and shares best practices for incorporation in ongoing BAU efforts.?
• recommendations to expand or include winning concepts in future growth strategies will include strong cautions and articulation of caveats to enable well-informed decisions regarding broader implementation.
• If results are inconclusive, the Lab partners with the business to determine if additional testing is warranted. Future tests will be worked into upcoming prioritization efforts.
• If tests underperform controls, learning agenda hypotheses are updated and revised. However, the concept itself is retired and the team can celebrate the money and time saved in preventing a failed broad-scale implementation.?

Identifying your key success factors?

Everyone loves the idea of innovation, but innovation without experimentation is impossible. The creation of a dedicated “safe” place to take risks and test new ideas—without obstacles or fear—is critical to innovation success. An Innovation Lab offers a place to prove or disprove a wide range of solid marketing concepts. When these pilots fail, they fail fast and cheap...and without significant disruption to the larger organization or its clients. When winners are identified, marketers gain access to a more diverse portfolio of strategies. That diversity expands the tools needed to achieve existing business objectives... and establishes marketing as a real lever in accelerating business growth.?

Ready to stand up an Innovation Lab for your organization?

Carrie Donahue

Carrie is CMO at Intelisent. Entrepreneurial and results-oriented, Carrie and her team develop strategic and savvy solutions to complex business problems. Bringing?25+?years experience to her role, Carrie and her team help growth leaders at financial institutions identify new growth pathways and optimize functions and processes to capture and capitalize on them.?

About Intelisent

Intelisent isn’t a typical management consultancy or marketing agency. We diagnose organizational and operational challenges faced by Fortune 500 marketing teams. Our approach is customer-focused and data-driven, enabling us to deliver practical solutions, like the creation of Innovation Labs, with measurable impact.?

We’re a dynamic team of seasoned professionals with a solid understanding of the financial services sector. Our team brings deep business acumen and a hands-on approach to minimize the learning curve to swiftly spot opportunities to help you grow and tackle the toughest business challenges. Valued for our strategic vision, marketing ingenuity, and execution excellence, we’ll guide you toward an operating model that fits your needs and enables next-level business growth.?