Give your innovation lab a jolt

It’s never been more important for companies to look towards more innovative business models. Organizations that have sustained success in the past will not get far by doing what they’ve always done.

“Any company designed for success in the twentieth century is doomed for failure in the 21st” — David Rose

Every business model has a lifecycle, and without innovation, each has an inevitable decline. The emergence of digital technologies has led to the disruption of traditional business models and the demise of numerous companies. If an organization isn’t constantly probing the market and looking for innovation opportunities, the likelihood of disruption is high. Netflix and Uber are great examples of this kind of disruptive innovation. Airbnb disrupted multiple industries and continues to do so with constant innovation in their business strategy.

The state of corporate innovation

Innovation can be a great source of competitive advantage for companies. So it’s no surprise that corporate innovation is all the rage these days, with companies setting up innovation labs, innovation outposts, running open innovation programs and everything in between. Yet, we don’t always see innovation efforts driving successful outcomes for the business. In fact, most initiatives don’t even see the light of day.

Why Innovation Labs aren’t setup for success

Innovation, in the corporate context is all about it finding more efficient ways to execute the current business model as well as exploring the possibilities of new and different business models that fit with the corporate strategy.

Often, Innovation Labs get created as an experiment for the executives and are expected to reinvent the wheel and drive immediate results. Unfortunately, these experiments aren’t set up for success and don’t produce expected outcomes — leading to them shutting down, or being absorbed back into the mothership.

If an organization is like a cruise ship moving in a certain direction, an Innovation Lab is like a tug boat attached to that cruise ship. It needs to build momentum to actually be able to change the course of that ship. The problem occurs when the two are fundamentally misaligned.

Organizational transformation and innovation involves taking on some sort of risk — established organizations are inherently risk averse. Driving change requires a shift in thinking dynamics and operating rhythms, but that becomes a challenge in a culture that’s top down. So then, how do you move fast in a place that’s designed to move slow? How do you take on risk in an environment that lacks the appetite to do so? How do you create new experiences that are 10x better while maintaining consistency for your existing customers? How do you empower people to bring about change in a culture that’s top down?

“Organizational transformation is the collective impact of individual transformation” — Barry O’Reilly

Build momentum and drive results with these 5 tactics.

1. Establish a strong foundation

Having a clear vision and strategy is key to driving any innovation effort. You won’t get anywhere if you don’t know where you’re trying to go. Having a cohesive vision with clear directives on Horizon 1, 2 and 3 efforts will help teams know where they need to go and will encourage initiatives to be tied to the overarching business strategy. It doesn’t just help you tell the story, it also helps align and inspire your team.

“People don’t buy what you do..they buy why you do it” — Simon Sinek

Formulating a clear vision and strategy; and communicating it to everyone in a compelling way is absolutely necessary if you want to have a high performing team and see actual results.

2. Embrace uncertainty and take calculated risks

At the beginning of any project there are a ton of unknowns and risk is at its highest. The best way to mitigate risk is to start small, test quickly, learn and iterate. At the end of the day, an idea is worth the investment only if you can get actual commitment from customers.

• Test with small budgets and learn early to reduce uncertainty. Before investing resources into execution, you need proof that the initiative will result in the desired outcomes for your business.
• Talk to customers early and often, experiment with product changes to determine whether an idea will work and if customers will be willing to pay for it. Read our guide to running quick research to get started on customer validation tactics.
• Needless to say, building rapid behavioral prototypes to gauge customer reactions is a lot more cost effective than building full fledged MVPs and waiting to see what happens.

3. Adopt a rigorous approach to data collection and experimentation

Start with a clear hypothesis around a challenge and conduct experiments to validate or invalidate it. Each hypothesis might require different types of experiments to test your assumptions.

We recently worked with a client to gauge the viability and target audience for a new business idea. We built a landing page and set up a fake entry into an offer to direct traffic to that site through an online ad. This helped the team gauge initial interest and narrow in on a subset of the market as they continued to explore the initiative. The bottom line is that the sooner you can validate your assumptions, the faster you are likely to deliver a successful product to market.

Establishing discipline around hypothesizing and testing is imperative to building a culture of experimentation and is much easier if you work in short cycles, evaluate progress frequently and have the autonomy to change direction as needed. Teams that adopt this mindset can turn uncertainty into valuable insights to inform product direction with customer needs at the core. Experimentation leads to risk mitigation, which bodes well with the risk-averse culture of organizations.

You can use this experiment card to carefully plan out tests and track progress.

4. Align key stakeholders from the get go

Alignment and buy in is a big challenge for most innovation teams trying to move quickly and drive results. So how do you bring key stakeholders along for the journey and drive collaboration in a culture that’s top down? We run rapid design sprints with teams to bring their vision to life and along the way, get stakeholder and executive buy in for long term alignment.

A great way to tackle a new opportunity or solve a strategic challenge is through a design sprint. It’s a rigorous process that brings together a cross-functional team to solve a key business challenge and get valuable insights in less than a week. Exploring solutions together as a team plants the seeds for a culture of collaboration, not to mention potentially breakthrough ideas. Every sprint ends with a round of customer feedback and there’s nothing more valuable than seeing reactions from real customers and validating critical hypotheses right from the get go. Above all, it is the single greatest tool to drive organizational alignment and get everyone on the same page going forward. A successful design sprint needs the right amount of preparation but when done right, a week’s effort can save you months of back and forth, especially when it comes to getting executive buy in.

5. Stay away from business plans

This is a hard one to implement but business plans are merely execution documents and they make it hard to prove/disprove hypotheses. Sticking to business plans and ignoring the truth in data will inevitably lead to failure and loss of money. Instead, focus on constantly testing critical business assumptions, gaining real world feedback as quickly as possible.

The Flywheel

Building momentum in your organization to drive change can be challenging and tricky. Driving change involves constant and consistent effort to move the flywheel. Small wins internally, can lead to huge outcomes over time. The key is to bring team members and executives along the journey to innovate and transform your organization.

TLDR;

Large organizations are cruise ships designed to move slow. Innovation labs are the tugboats that can lead the ship to shift direction if they have enough momentum. Build momentum with these tactics:

1. Establish a strong foundation through a clearly articulated vision that inspires teams.
2. Embrace ambiguity and take calculated risks that are small, easy and safe to reduce uncertainty.
3. Make experimentation a practice and create room to test, fail, measure and learn constantly.
4. Alignment is key to get stakeholder and executive buy-in; try design sprints to bring your vision to life and get everyone on the same page.
5. Business plans are created in a vacuum and present the world in a snapshot of time; stay away from them and test your assumptions in the real world.

If you found this useful, sign up for our newsletter below for free tools/resources delivered in your inbox every month.

N5 is an innovation & design strategy studio. We help innovators solve tough challenges, validate ideas quickly and launch products with confidence. Our mission is to empower teams with the strategy, tools and insights to innovate with velocity and get to market faster with winning outcomes. We use a combination of problem discovery, business model innovation and design sprints to help drive impactful results quickly. Each engagement moves our clients an order of magnitude ahead in progress in a ridiculously short amount of time.