Digital Innovation Labs
[ Technologies > Proof of Concept > Prototype > Pilot > Production ]
Some definitions
Before launching into a discussion around the minutiae of Digital Innovation Labs, some definitions of the associated terms might be of some assistance to level-set:
Innovation - is an idea that has been transformed into practical reality and creates value. In a business context this is a product, process, or business concept, or combinations that have been launched into the marketplace, impacts the bottom line, and helps to sustain these new profits and future growth.
Digital Innovation - refers to the application of digital technologies to resolve existing business problems or to realise new opportunities (e.g., product, process, or even entirely new business models).
Digital Innovation Lab – A Digital Innovation Lab is an open, collaborative space where companies bring together their employees across different departments with outside experts (such as Explore Digital) and seek to emulate the culture, speed, challenger mindset, and disruptiveness of a start-up, to develop new products and services that take advantage of new business models and advances in technology.
Note - the above serves to offer ONE view of these definitions based on our experience having established several innovation labs within both a global and national (Australian) context. There is no ultimately correct definition of these terms and googling any of them will no doubt generate a wide variety of alternatives!
Digital Innovation Labs
Why do they exist?
In today's evolving marketplace, many businesses recognise that they need to transform, innovate, and adopt new digital technologies to stay competitive. Innovation Labs are strategic, goal focused, and are used as tools to address very specific and individual business innovation requirements. They aim to create breakthrough, out-of-the-box solutions to major challenges of the present and the future.
By housing the lab within a specific organisational unit (i.e., the ‘lab’), and effectively providing time and resources to experiment with new ideas across product, process, or business concept, this helps to mitigate the risk of introducing and scaling a new product or service before it is market ready.
What do they do?
In the pursuit of addressing business issues and realising opportunities, an innovation lab provides a business with the ability to test, experience and experiment with new technologies and, more importantly, to find out how they will integrate or enhance business processes or products/services.
How do they do what they do?
The lab creates space for experimentation through facilitated processes. Participants are encouraged to “try things on a small scale, take managed risks, prototype/test and accept failure as an integral part of progress”.
The lab will operate under an agreed ‘framework’ which provides governance and accepted processes to generate/gather new ideas and then manage these ideas through a series of steps (from early ideation, to evaluation, technical feasibility testing, prototyping, piloting, and finally broad production deployment).
Labs are a fast, flexible, and creative concept that adapts to the needs of the host organisation and can be set up for just a few days or run over the course of a few months. In theory, an Innovation Lab can become an ingrained part of a company that provides a constant source of innovation.
Who ‘staffs’ the lab?
The roles within a lab are also of key importance. Technical expertise is certainly a core part of the team but must include others who excel at building and maintaining partner and customer relationships.
Innovation labs should engage a wide range of participants and encourage collaboration across diverse backgrounds (technical, sales, marketing, operations, finance, HR, legal, business, leadership etc.), professions, and pools of experience to fuel collective creativity.
Pitfalls and Risks
Several risks and issues exist when establishing an innovation lab, including (but not limited to):
Scope – The scope of the Lab and the outputs must be fully understood before a lab starts to be built.
Budget – it may be difficult to justify and quantify the budget involved in establishing and operating a lab.
Business Linkage – the lab lacks clearly defined links to specific business strategies and associated goals.
Getting the right mix of people - the lab itself will need a blend of technical skills and people who are comfortable with ambiguity. These people will need to be a mix of those directly connected with the business and those who are independent – as too much business connection will likely stifle new ideas, and too little will result in products/services not being integrated back into the business or they risk being solutions in search of problems.
Outcomes and Key Benefits
Some of the key outcomes and benefits from investing in an Innovation Lab can include:
A safe space - The lack of clearly defined links to specific business strategies and goals can also provide license to explore unconventional, or even highly radical new ideas that inspire change or present new opportunities for business enhancement.
Trendspotting - Like a business conducting a PEST analysis, trendspotting relates to scanning for trends occurring in the external business/technology environment to keep the organisation abreast of new opportunities and potential threats that may arise within its industry. If done effectively, it will prevent the organisation from chasing hype. Proper trendspotting requires a three-step approach: finding sources of information, digesting the information, and then filtering through the unique perspective of the organisation’s business and technology strategies. The output of trendspotting should be a document, presentation or briefing for decision makers and key business stakeholders. These findings should be framed within the context of the business, to highlight potential market opportunities or disruptors to leadership.
Transforming ideas into Value - Innovation happens when ideas are executed to create and realise tangible value (otherwise they remain an interesting thought bubble). An Innovation Lab is the ideal place to explore and establish how the organisation will accomplish this. In addition to taking ownership of idea generation, the lab can be responsible for overseeing successful implementation. This can be done by measuring the outcomes of ideas along the execution continuum: Emerging Technology Discovery/Trendspotting > Proof of Concepts > Prototyping > Piloting. Ultimately investments in innovation require proof via a supported business case to gather more funding.
Communicating to prepare the organisation - When ideas leave the Innovation Lab, they become the responsibility of the larger organisation. You can think of innovations as seedlings, and your organisation as the garden in which they will grow. The organisation can help the innovation seedlings flourish through support, sponsorship, watering (funding) and alignment across various stakeholders. The Innovation Lab’s job is to tell the right stories and find the potential fertile grounds where innovation is most welcomed or needed. Whether through direct contact with stakeholders or through more creative channels such as innovation hackathons, speaking engagements or blog posts, communication is essential for helping ideas grow into reality.
Third-party partnerships - Outside parties, such as start-ups, universities, industry groups, governments, and other organisations, can be greatly beneficial for accelerating innovation. These third parties can offer ideas, technology, IP or even execution capabilities (and perhaps tax breaks for R&D investment!). The Innovation Lab is an ideal place to engage with these partners and ensure any external requirements (such as correct accounting treatments to qualify for R&D grants, tax treatments etc.) are followed.
Digital Innovation Labs (an exciting new service from Explore Digital)
Explore Digital’s Innovation Labs service is an example of an innovation lab, that focuses on creating innovative solutions to complex business challenges for our clients in pursuit of promoting digital adoption and to act as a catalyst within a business (thinking digital first). Our Innovation Labs seek to bring these solutions into a client’s own organisation. We encourage external teams to join the Labs and develop and test projects and to accelerate and enrich their capabilities from different angles (e.g. sales, operations, security, compliance, strategy etc.).
We help business with digital transformation initiatives to streamline the process from idea generation to implementation
We help a company stay on the cutting edge of its industry
How Innovation Labs are delivered by Explore Digital
Explore Digital deliver Labs as a series of engagements that are customised according to the needs of each client. These are detailed on our services page and in summary are as follows:
Innovation Lab Establishment – Bringing to bear our many years’ experience in designing, building and operating Innovation labs across global organisations and national organisations (Australia).
Emerging Technologies - Leveraging our digital focus so you can keep pace with new technologies shaping your industry and customer behaviours.
Proof of Concepts - You have perhaps identified a promising new technology solution or product, but not sure if the technical features will perform as claimed (surely marketing is always in sync with actual product/service capabilities!!?). We can help you to run a Proof of Concept (POC) of the technology to test features and viability.
Prototypes - With a Proof of Concept (POC) completed to confirm technical feasibility, a Prototype is the next logical step to simulate the full system (or sizeable part of it) and helps to build confidence in your intended digital solution before moving to a ‘productionised pilot’ deployment.
Pilots - A Pilot helps to confirm full technical and business use ‘in the field’ with a subset of users. A Pilot allows for a quick rollback with reduced business impact and, if all success criteria have been met, allows for progression to full-scale production.
