Does your company need an innovation lab?

Does your company need an innovation lab?

Innovation takes time – and money, and people and resources. That’s why it’s common for a company to focus on core business activities and not build an innovation lab – a specific building or department dedicated to working on prototypes and fleshing out ideas.

Part of the issue is that it can be difficult to justify and quantify the budget involved. Is it a skunkworks project that will consume resources but not deliver any value? Is it a purely a showcase for engineering prowess, or will the concepts produce real products? For many IT leaders, it’s hard to overcome the stigma of an innovation lab as a financial drain.

“Innovation labs are regularly knocked because they often don't have clearly defined links to specific business strategies or goals,” says Charles King, an analyst with PUND-IT. “But that's also the basis of their appeal. In essence, innovation labs create a ‘safe’ space where an organization can explore unconventional, even radical ideas in hopes of inspiring changes or new opportunities that could enhance its business.”

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To find out the best reasons for having an innovation lab, CIO.com checked in with three large companies that have built or are in the process of building an innovation lab.

The well-known hardware chain runs an innovations lab (the plural on innovations is intentional) at their Mooresville, N.C. headquarters. It’s intended to show how retailing will work in the future.

One example: The lab designed and developed a 3D printer that will be used in the International Space Station. It created a robot, which operates in its  San Jose Orchard Supply Hardware store, called OSHbot that greets customers (in English or Spanish) and performs product searches about 1,000 times every few weeks. A Holoroom is a virtual reality showcase that guides customers who are wearing VR goggles on how to do a home improvement project.

Kyle Nel, the executive director of Lowe’s Innovation Labs, says that every company needs to evaluate the problems facing a business now and in the future. That’s one of the reasons the company created the Holoroom. Not everyone understands how to install a new toilet or remove an old kitchen appliance, but VR can help educate new customers.

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He says the company always seeks to understand the narrative for why the innovation is even needed and what it will produce. “If it already existed it wouldn’t be innovative,” he says. “If you aren’t facing challenges then you probably aren’t innovating enough.”

Another key piece of advice is to find the right mix of employees to run the lab. That can be challenging because the staff will need a blend of technical skills and yet be comfortable with ambiguity. They’ve had to work hard to find the right internal sponsors for the lab, and also to link the work they are doing with what will actually work in the store infrastructure.

“Having a group of folks focused on innovation can be far more effective but only if there is some kind of cross pollination otherwise you can have an independent group coming up with products that aren’t implemented and processes in search of problems,” says analyst Rob Enderle with Enderle Group. “There is a real art in balancing the group’s independence with keeping it connected to the business. Too much connection and you don’t get the innovation, too little and it becomes redundant.”

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There’s no question IBM is one of the best examples of how to build and maintain an innovation lab. At its Austin, Texas facility, director Kevin Nowka can even take you a tour using a robot that lets you video conference with him and “walk” around the lab.;

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