Three reasons innovation labs almost always fail

Lack of alignment with the business is one of the three main reasons innovation labs fail, according to Simone Bhan Ahuja, an author, speaker and founder of innovation advisory Blood Orange.

The lack of metrics to track success and lack of balance on the team are the two other reasons, Ahuja wrote Monday in a Harvard Business Review blog titled Why Innovation Labs Fail, and How to Ensure Yours Doesn’t.

Early-stage metrics (like “how many users are finding value in the idea?”) and financial metrics (“how much revenue is being generated from these new offerings?”) can be used; there is also a need to have both outsiders and long-standing employees involved in innovation efforts.

“Here’s a quick litmus test: You’ll know you have the wrong team when everything is running along smoothly but the team’s output doesn’t look much different from business as usual,” Ahuja wrote. “You’ll know you most likely have it right when the team emerges with good ideas, has plenty of the healthy tension that arises when diverse voices challenge one another, and effectively manages the ambiguity inherent to innovation.”

A 2015 report from Capgemini found that the vast majority of innovation labs – up to 90%, one expert said – fail to deliver on their promise of adding value and generating growth. In the financial services sector, over half of financial services firms have started their own creative spaces.

Not having a clear strategy that’s aligned with the company’s, or not having one at all, is one of the main problems with innovation labs. “Many labs install kegs and offer kombucha on tap to get the creative gears turning, and then begin to ideate with only a limited idea of their goals,” Ahuja said. “Some of the innovation teams I’ve met recently seem unsure if they are charged with serving the core business or with disrupting it.”

She calls this a common system of “‘innovation theatre:’ boards and C-suite leaders unveil labs that are mostly for show, so they can check the box of having a team dedicated to innovation – and especially disruption. Yet the curtain comes down quickly, either because ideas from these labs are disconnected from real customer needs or because no one is on the hook to carry the ideas through to implementation.”

Leaders need to think through the implications of opening a lab, decide how it will complement or disrupt current and future business, and do the difficult work of determining how new ideas will be executed. Here are a few considerations:

Vision – Creating clear goals for the lab helps both intrapreneurs and company leaders understand the direction and purpose of innovation initiatives. Ahuja recommends using “from/to” statements. For example, “We want to go from placing big innovation bets to trying many small experiments and rapid prototyping,” or “We want to go from having a limited range of innovation to being able to test out lots of new ideas while simultaneously growing the main business”

Growth – What happens when an idea has been validated and needs to keep growing outside of the lab? Where will the idea go for additional support? Options may include going back into the core business or to an incubator or an accelerator. Potentially disruptive innovations may go somewhere outside of the core organization, where they can be further developed while being protected from “corporate antibodies and business-as-usual fingerprints,” Ahuja said

People – How will the lab support the intrapreneurs doing the hard work of bringing forward new ideas and executing them in uncharted territory? How will the lab facilitate close connections with the end users or customers for whom these ideas will solve a problem? “People, along with their passions and purpose, are at the heart of the most successful innovation initiatives.”