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The business of innovation labs

How can you make sure your innovation lab is delivering value? Andy Hodgson, Head of The Lab at O2, gives some tips.

When people think of innovation labs, they often imagine a bunch of geeks playing with cool stuff or techies experimenting with whatever technologies they fancy. If you’re thinking that, you’ve got the wrong idea.

Businesses are clearly seeing there’s value in creating innovation labs. A recent report found that in the six months to February 2016, 67 innovation centres opened within companies around the world. These innovation centres – many of them are called labs – are in sectors ranging from finance, retail, industrials, to consultancy.

An innovation lab consists of a team of people dedicated to coming up with new ideas and ways of working for the company. They tend to work at arm’s length from the core business, and are allowed the freedom to experiment and come up with new products or business ideas. That freedom is a key strength of any innovation unit, but a lack of focus and responsibility could equally be its downfall.

Here at O2’s innovation lab, our remit is to discover new ideas for our business and customers, and I cannot emphasise more the importance of creating ‘business value’ – because without it, we would not exist.

While labs are being set up, many labs have also been closed down. I recently spoke at a large corporate that was looking to launch its own lab. Participants wanted to hear some tips for running their lab. Here are some of the things that I told them:


Tech first, or solution first?

When you’re thinking about what your lab will work on, do you start with a technology and find out what you can do with it? Don’t. Start with finding business problems or opportunities that make sense for your business and then figure out how technology can provide an innovative solution. The whole reason for the existence of an innovation lab should be to deliver business value. So, you have to start with what the business actually needs and then work from there. Sure, you can experiment with technology, but you should never lose sight of why you’re doing it in the first place. Remember, in the end technology is just a facilitator.


Partner with decision-makers

Within the lab you must experiment and sometimes that means failure. Ultimately, however, the driver is always the same: you want to get tangible business outcomes, whether it be a new business model, solving an existing problem, improving efficiencies or improving customer experience. This is why you need to partner closely with key decision-makers in the business. You’ve got to get them on your side about what you can do, and build relationships with them. It can be a gradual process, but it’s a must, and a key part of that is communicating what your skills are as a team and where you can help.


Raise your internal profile

Raise the profile of your lab and your team. Setting up an innovation lab is not a PR move, but you do need to do your PR internally. Put yourself in front of people in the business. Tell them and remind them what it is that your lab does and how it adds value. Once you start doing this and people are seeing tangible outcomes, they’ll pay attention and recognise what you can do. You may have great skills and enthusiasm in your team, but if the wider business doesn’t know anything about you it will be going to waste.


Talent must be diverse

Bring in a team of diverse talent. You will most certainly need a team consisting of both techies and creatives. Their brains are programmed in different ways, and each tend to approach work from opposite directions. Techies work on a more granular level – they methodically fine-comb a problem, build stuff, look for bugs, and come up with a prototype. Whereas creatives start with the “art of the possible” – when they’re given a problem, they’d ask what would be the craziest thing they can do about it. It can be difficult in getting the two to work together in harmony, but you have to have them both.

It will help if you also have people that understand the product management world and who can help map your ideas with the needs of the business. Once the business understands what your lab does and that they can get value out of you, people will increasingly ask you to come up with solutions for them. Your product managers will help you assess this demand.


Closing words

Since we were formed in 2010, our lab has worked in agile ways to come up with a vast array of prototypes, many of which have subsequently been used by or benefitted our customers. Artificial intelligence, machine learning, voice control, and virtual/mixed/augmented reality are just some of the technologies we’ve explored. We’ve also failed ideas fast, saving the company money from developing the idea further when insight showed it just wasn’t the right thing to do or it wasn’t the right time.

At our hearts, many of us are geeks. We’re a team that loves to experiment and build and we love what we do. But, we love it even more when we come up with new ideas that delight our customers or help our colleagues within the business. Now that’s really cool stuff.

Want to know more? Get in touch or visit us online.

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