Field notes — On corporate innovation labs
It was early April and late in the afternoon when I left the conference on corporate entrepreneurship that I had attended that day. I had been looking forward to sharing thoughts and insights on how established companies confront their innovation challenges. But after a day of keynotes and workshops, I left with an ambiguous and slightly disappointed feeling. Here were all these great stories about corporate accelerators and innovation labs, about design thinking and agility. All these successes, and yet part of me wasn’t buying it. The whole experience had left me with a feeling that most of these endeavors were just ‘talent pools’ or, at best, quirky initiatives on the outskirts of ‘business as usual’ — a must-have kindergarten for grown-up companies. ‘Innovation theatre,’ as Steve Blank would call it.
“Any self-respecting CEO now has a corporate innovation lab!” — Saul Kaplan in So Many Corporate Innovation Labs, So Little Innovation.
But despite the overwhelming, no doubt well-meant and certainly much-needed desire for innovation, we still see a huge gap between ambition and reality. At least, that’s what became apparent through a truckload of recent surveys and studies, done by, amongst others, Accenture, Deloitte and Innosight.
According to Innosight’s Corporate Longevity: Turbulence Ahead for Large Organizations, half of S&P 500 companies are expected to be replaced over the next 10 years. The survey points to organizational inertia and lack of long-term vision as the two main reasons. Some companies however, manage to overcome the forces of organizational inertia. The break free of existing mindsets and processes, and combine a long-term vision with strong leadership and commitment as primary drivers for success. But CEOs can’t lead by issuing a decree. “Leaders have to confront what might be called tensions, balances, or, even in extreme circumstances, paradoxes. They must optimize today, and discover tomorrow. They must be decisive and bet on moonshots, and defer to experiments. They have to focus, and enable serendipity. They have to leverage the core, and break its constraints.”
This quote from Corporate Longevity: Turbulence Ahead for Large Organizations immediately makes clear, why for most companies, innovation, other than incremental or tweaks to today’s business model, is so very difficult. It requires them to live in two worlds at the same time — one characterized by ‘either/or’ thinking, the other by an ambiguous ‘both/and’. One traditional and familiar, the other paradoxical and totally alien to most of today’s business leaders.
The best way to make these differences clear, is by hanging Piet Mondriaan’s Composition with Large Red Plane, Yellow, Black, Gray, and Blue (1921) next to Jackson Pollock’s Number 14: Gray (1948).
Just try to find a single straight line or distinct focal point in Pollock’s painting. You won’t. But it has numerous possibilities to ‘connect the dots’ — one as good as the other. What better way to describe the complex landscape in which companies nowadays compete.
“The modern painter cannot express this age in the old forms of any past culture.” — Jackson Pollock
But through a lack of understanding, most CEOs and their C-suite colleagues try so solve complex puzzles by framing them as Mondriaan paintings. And that’s also why most corporate accelerators and innovation labs are just another departmental square on a well-ordered canvas. From the inside this might look different, but don’t be fooled by their appearance — by the canvasses loaded with Post-it notes, and the suitless geniuses pivoting their way from one minimum viable proposition to the next. It’s all theatre, most of it anyway. However, bearing in mind what’s at stake, innovation theatre is the last thing these companies can afford. Building a better mousetrap might be a premises for growing ‘today’s business’, but it’s not going to help you catch the next wave. So, let me share a view insights.
First of all, we need to understand what we actually mean by ‘innovation’? We use this word so often, that it has become rather empty. So, what is it exactly in our context, and better still, what not? Why do we need it? What problems could it help solve? This isn’t only about creating a shared language or understanding, it’s just as much about having an open and profound conversation about what lies ahead. About our doubts, assumptions and biases. It might very well be the case — it almost always is — that these conversations result in more questions, not answers. If so, you have truly crossed a threshold and stepped into ‘Number 14: Gray’. Welcome to the world of countless possibilities. This is a confusing and even terrifying place. After all, most of us have been house trained to find the right answer, yet suddenly we need to search for better questions. And it is this change in mindset that lays the foundations for the kind of innovation that is required. The kind that truly challenges today’s business models, and triggers curiosity and exploration into the unknown.
“The changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril. My concern, however, is that decision-makers are too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future.” — Klaus Schwab in The Fourth Industrial Revolution.
But mindset alone isn’t enough. To help corporate accelerators innovate with greater impact, they need ‘a box’. A “just go, and ‘do’ innovation” may lead to wonderful and unexpected things, but not necessarily to what is best for a company. Talking of boxes, ’thinking out of the box’, one of the most cited strategies for thinking innovatively, is another misconception as the most incredible ideas don’t come from just thinking beyond the perimeter of our current perception. They come from relocating our minds to an entirely different box, where preconceived ideas don’t limit imagination (Reinventing creative thinking, Luc de Brabandere). Such a box, or scope, could very well be a specific challenge, a ‘job to be done’ or even an insight coming from an exploration into possible futures. Constraints like these are important, if not essential, but this by no means entails that possible answers or solutions are straightforward. The inside of this box still resembles ‘Number 14: Gray’, with its countless ways to create meaning. It’s a wonderful paradox, this paradox of boundaries and freedom.
But having boundaries isn’t the same as having limitations. And that’s where it often goes terribly wrong, especially if innovations that may potentially cannibalize today’s business are taken off the table. What’s left are incremental improvements and tweaks. That’s fine when you want to make this year’s budget, but it’s by far not good enough if you’re fighting potential disruption by an entirely different business model. And who isn’t, these days? You’ve got to be prepared to reinvent your business, something that takes courage and stamina, and above all a clear sense of purpose — a ‘strategic north’.
A few final field notes on autonomy. First of all, an innovation lab should fervently protect the initiatives and new business ventures it harbors. It has to shield them from unrealistic growth expectations. Expectations that make perfect sense for mature business, but smother the new seedlings before they’ve had chance to surface, let alone blossom. Never forget, requiring financial forecasts before your venture has had an opportunity to scale in the real world, only works for incremental improvements, never for transformational innovation.
Secondly, its position should be autonomous, yet well-connected with today’s business to ensure cross-pollination and the exchange of capabilities and, of course also, people. And just as it should safeguard the innovation projects from unrealistic demands, it also has to protect them from ‘greedy’ line executives who are looking for ways to grow today’s business. Because as soon as they get control of your lab’s agenda, it is destined to produce only ‘more of the same’. And we already have plenty of that, thank you very much.
And thirdly, all innovation initiatives within these labs create, and should be allowed to have their own momentum. Some mature fast, others have more difficulty scaling-up. Some never do. Knowing when to let go, and just as importantly, when to stop is crucial for maintaining a balanced innovation portfolio.
Just like Charles Handy, I truly believe that organisations can be a great playground for inventing the world of tomorrow. Be that playground. Not because innovation is something to have, a sign of the times, but because it’s a permanent state of becoming. So, don’t just ‘do’ innovation, ‘are’ innovation.
Note: This post has been published in Future Value Generation by Daniel Egger (page 232–236).