Innovation plays a major role in staying relevant in the business. Hence, companies must give their teams everything they need to generate new ideas and execute them.
However, does this include investing in innovation labs? What are the benefits of building these maker spaces? And how do you run them effectively?
In this article, you will learn what innovation labs are and whether or not they are valuable in achieving novelty within your industry.
Let’s begin.
What is an innovation lab?
Innovation labs are hubs and other physical areas that foster the formation, improvement, and execution of revolutionary concepts.
This place is where organizations develop opportunities to create a series of ideas and processes that they can implement for the company or products and services that they can generate income with.
In addition, innovation labs can be called many things. Sometimes, businesses refer to these places as innovation centers, creativity laboratories, or even maker spaces. They are areas that support the development of new revenue streams and the improvement of existing ones.
Why are innovation labs important?
Businesses from various industries are now in the era of innovation. Hence, companies build innovation labs to stimulate both the creative and inventive side of every employee.
As a result, companies gather innovation teams and establish collective creativity, forming and applying new ideas to the organization.
In innovation labs, participants can also carry out experiments and other market research activities, particularly identifying their industry’s potential disruptors.
When to start an innovation lab, and when not to?
Usually, an innovation lab is found in a separate building to keep innovation teams extremely focused on creating novel solutions and processes. However, such a setup can be challenging, especially in establishing a culture of innovation, which promotes inclusivity.
Moreover, making these spaces without establishing any specific innovation objective would only make innovation labs useless.
Hence, before you spend a portion of your company’s budget on building one, ask yourself the following questions first:
- Is the cost of launching and running a lab within your means?
- What do you need it for?
- Is it truly essential in raising your revenue?
- Will it make a major difference in creating your products and services?
- Would a lab solve any of the organization’s main challenges? If so, what are they? And how can making an innovation lab solve it?
- What methods will you use in determining the lab’s contribution to the business?
- Will you be able to handle the daily programming necessary to run the lab effectively?
Note that there are different types of innovation that you can perform within the organization, and not every type requires a lab to complete. Innovation goes beyond the creation of breakthrough products and technologies.
Sometimes, even the simplest changes that you can make to improve your current processes are already innovations by themselves.
By the way, if you want to read more about innovation, we got a free innovation ebook you can download right now. We shared here some secrets to developing an innovative organization in the best way possible.
How to build an innovation lab
Building an innovation lab involves five steps:
Step 1: Distinguish what the organization wishes to accomplish upon the creation of the lab
Everyone must obtain a clear picture of what the company can achieve with an innovation lab in place. Remember that businesses characterize places like these by their results, culture, and activities, rather than the amount of space it occupies.
Furthermore, an effective innovation lab requires an imaginative and inventive setting. Determine what issues you can resolve or what changes you can execute with the lab at hand.
Establish what role it will play in the company and how its results can help the rest of the departments. Don’t forget to create detailed road maps on how you can accomplish the goals that you’ve set and in what way the lab can contribute to them.
Step 2: Choose people you can trust
Behind every successful project lies a group of dynamic and committed people.
That is why businesses must have a team of dedicated, knowledgeable, and creative employees who will passionately do what they can to play a part in the organization’s success, particularly that of the innovation lab.
Companies also need teams that are vocal about their ideas and are open to the suggestions of others. This way, suggested concepts are easily discussed and consolidated in the operations.
Meaning, the lab must become a place of collaboration and exchange of ideas, discourses, and scientific deliberations between creatives. Innovation teams must dissect projects fully, where they determine the boundaries of your products and services.
However, it is vital to note that these people do not have to focus solely on achieving short-term goals — but more importantly, on the long-term ones and eventually becoming a main force in the industry.
Step 3: Decide on your innovation metrics
For your innovation lab to be effective, innovation teams must determine how to assess its outputs and evaluate whether the lab is helpful in the business. Plus, you can’t improve what you don’t measure.
The key performance indicators you have in the business will help you identify the actions and decisions you need to make to achieve your goals. It will also influence the attitude and behavior of the rest of the team in undertaking tasks.
On the other hand, unmonitored activities will most likely fail or end up forgotten.
Some of the most considered metrics are the following:
- Number of ideas brainstormed by the innovation team
- Number of projects completed
- Percentage of customers acquired
- Amount of revenue added
Remember, your chosen metrics will give you some valuable insights to move forward in the industry.
Step 4: Obtain the funding that you need and work your way on the budget
One inevitable fact about innovation is that it always comes with a risk.
But this doesn’t mean your organization should delay it. And while it is true that some innovations do not need much money to accomplish, most innovation budgets are either underfunded and overlooked.
Research what technologies, changes, and concepts are aligned with your strategies. Determine the right people to work it out with, and develop holistic methods and techniques to resolve any challenge that comes your way.
Businesses must treat innovation initiatives as a critical factor of improvement and transformation. Hence, the budget for innovation must be spent on the right activities that will increase the projects’ success, such as intense research and manufacturing.
In the end, lack of access to space and resources may inhibit innovation in some ways.
That is why it is imperative to gain secure funding for innovation labs and determine how much is required to run them efficiently. Look for sponsors or collaborate with organizations with the same perspectives.
Step 5: Gather ideas and integrate them into the business
Finally, establish a roadmap in gathering ideas and incorporating them together. Include the amount of space your team needs, including the necessary tools for building the concepts you’ve discussed altogether.
Find out how you can integrate them with your current line of products and services or how you can tie it all up as one if you want your customers to perceive it as something separate from your main offerings.
Determine how you can effectively relate lab outputs to the actual business. And in the process, instill an atmosphere that encourages creativity, collaboration, and resourcefulness. Include all tools and resources to test out ideas and products.
How to ensure your lab doesn’t fail?
To ensure your innovation lab ends up productive, avoid the following situations:
Absence of metrics to track and measure success:
- Progress comes when performance is measured and reported. Without KPIs, some of your employees might not take your objectives seriously. In the end, you won’t have any results to improve from.
- Overlooking ROI. Not paying enough attention to the ROI of your innovation lab means failing to understand how it helps your business. Hence, as an entrepreneur, you won’t be able to identify what value it brings to the organization and whether its outputs align with its strategies.
- No stage-gate process. The stage-gate process is an innovation funnel that separates every stage with a “gate” containing various assessments. These evaluations help innovation teams decide whether it’s okay to proceed to the next step. Without it, backtracking for mistakes might be difficult if things don’t end up the way they were supposed to.
Omission of strategic alignment:
- Unclear vision. Without any goals or objectives to work with, innovation labs will fail to produce any significant outcome. Hence, setting innovation labs must come with themes and innovation problems to address.
- Poor project management. Delays on innovation projects cause them to fall behind schedule. As a result, sponsors and other stakeholders might withdraw support.
- Unreasonable expectations. Stakeholders need to manage their expectations, especially if some of their decisions do not match the results that they wish to achieve.
- Focusing too much on technologies. Concentrating on specific technologies might lead organizations away from their real innovation objectives.
- Executing plans without concrete steps. Determine milestones early on and bring in consistent wins.
Lack of balance within the team:
- Unmatched tasks. Innovation leaders must assign certain duties, functions, and responsibilities with their members’ knowledge, skills, talents, and capabilities.
- Factoring out other possible sources of ideas. Entrepreneurs must apply diverse thinking in gaining insights from different perspectives, including outside forces like customers and other people who are not part of the team.
If you think launching an innovation lab is the key to creating tangible results, be sure to solve existing problems within your industry so you can add value to your customers’ lives and make this investment worth your while.
To help you with setting up an innovation lab, check out our free innovation toolbox that contains various models and canvases you can use to manage and realize innovations and set up an effective and efficient process.
