Innovation Lab: Everything You Need To Know And More

We’ve all heard of innovation labs and the great things that can come from initiatives such as Google’s X Research Center. But setting up a successful innovation lab is not as straight forward as it might seem..

Many unresolved questions remain on this subject, with executives and researchers alike discussing how closely they should be associated with the core business. Meanwhile others question the very effectiveness and legitimacy of innovation labs, apart from being an elaborate PR-stunt.

So besides the mandatory hoodies and Foosball tables, what makes up a successful innovation lab? What are the benefits and how are they best managed?

These questions will be tackled in our elaborate guide to innovation labs, offering you actionable advice on how you best set up your very own innovation lab, at any scale.

This post is divided into three sections:

  • What is an innovation lab?
  • How to set up an innovation lab that delivers
  • Inspirational examples

What is an Innovation Lab?

An innovation lab is a new kind of physical space that encourages the creation, development, and implementation of novel ideas. Such a space grows potential earning opportunities and relationships within an organization alike. An innovation lab can be referred to with many different titles such as idea lab, innovation center, creativity lab, makerspace, etc. However, the overall objective remains the same – to create new revenue streams or to boost existing ones.

Companies across industries from healthcare clinics to universities and banks are becoming more innovative. And more often than not, these centers have common aims. Firstly, they must attract talented staff with cutting-edge digital skills. The problem is that a savvy person would most likely not want to work for a business perceived as outdated. So, an innovation lab is created as an incentive for new employees. Most makerspaces aim at bringing together participants from many different industries. The phrase ‘diverse community’ is commonly used to describe their multidisciplinary approach. By engaging people with different professions and cultures, an idea lab fuels a type of collective creativity.

innovation lab

How to Set Up an Innovation Lab That Delivers

1. Create a flat organization with diverse talent

Another essential characteristic is that inside innovation centers, institutional power doesn’t apply. Idea labs are goal-oriented and rely on cross-collaboration to generate novel solutions. This means that everyone is treated as an equal partner. Forming a cross-sector, diverse team also enables other benefits to surface. Innovation labs employ a broad range of tools and methods to experiment and develop solutions. They simultaneously apply methodologies such as design thinking, idea management processes, open innovation, crowdsourcing and human-centric design. These tactics help the community ideate, guide discussions, and prototype. To encourage cross-collaboration a company can make use of an idea management platform. This is because such a software connects people and competencies across organizations, ensures transparency and feedback flows.

Additionally, the investment in an idea lab represents a way of developing in-house competencies. Instead of outsourcing to agencies, companies can foster that expertise internally. Although product development can be sped up with agile methods, creating new products and services doesn’t always produce an immediate return. That’s how an innovation lab becomes an environment that encourages long-term thinking. The issue is that large organizations usually don’t have the patience to wait. These companies expect fast returns. So if that is not the case, they lose interest and the innovation lab risks to become simply an activity to attract new talent.

Now we’ve covered what an innovation lab is and how it should function internally. But there’s more! Next, let’s talk about the real value of a creativity center.

2. An innovation lab isn’t a good PR move

Another reason to design a makerspace is to showcase the ‘cool stuff’ a company has recently produced. Theoretically, this can lead to stronger customer relations, through collaborations between the business and their customers in e.g. product development. This is believed to raise the innovation profile of a company, opening the business up and creating a true innovation culture. However, this is not always the case, hence setting up a lab just for telling a PR story can prove a disastrous decision. Some companies design creativity centers to look like a startup place: canvases, whiteboards, bean bags and foosball tables. For example, LEGO employed innovation as a strategy in 2000, adding many new products, and even an amusement park to its portfolio. Three years later, the company was almost going bankrupt. That is because they paid little attention to how innovation fits into their corporate goals.

With inauthentic goals, no real value will be created for the users. Innovation is more than creating cool ideas. Ideas need to have true commercial potential. To maintain a long-lasting innovation center, a real strategy must be employed. That strategy must be aligned with the overall strategic needs of the core business. That’s why it is crucial for the company to have strongly defined goals. Communicating these goals effectively will ensure that the idea lab discovers ways to achieve them. Innovation labs should be perceived as a separate thing, but rather as a tool that employs clear business objectives.

So learn from this – with no plan for what to work on and no ties to the core business units, many labs fail after just a couple of years. In the next section of this article, we’ll focus on different strategies that will ensure the innovation lab’s success.

innovation lab

3. Clarify your aims and capabilities

The first step in creating an innovation lab is to determine the need and to identify the current challenges or opportunities it could help approach. There are a variety of motivations for setting up a makerspace. But to achieve success, a team needs to be clear about its objectives and mission. Therefore, an initial focus must be set. This might be, for example, transforming the processes of the core business or creating novel solutions to solve specific issues. It is equally important to understand where to identify gaps in terms of skills, resources, methods, leadership and impact measurement.

Generally, it can be spoken of two different approaches that are likely to ensure the success of your operations. Innovation labs that are in close relationship to the core should be used for incremental innovation. On the other hand, labs that are distant or separate from the business should seek the creation of disruptive innovations. The best ones are usually conducting exploratory work to service the overall corporate strategy. For example, they might try to implement a digital solution in a paper-based company. By and large, the real success comes to innovation labs that follow a strategic imperative, rather than just creating a cool space. Such an idea lab fulfills a specific need within the organization.

A common pitfall occurs when these creativity centers are placed too close, or too far, from the core business. So there needs to be clarity regarding the focus and distance of the labs. When working on disruptive innovations, have the necessary funding and commitment to ensure a long enough runaway. In the case of adjacent innovations, take a step closer and provide company-unit support. A good tactic is to rotate leaders into the innovation lab. This process will enable the key business executives to bring their expertise to the table. By doing so, the leaders will get closer to the action and will encourage information sharing at company level.

To create a structured innovation strategy for your lab, you can take a look at Nesta’s guide. This is a practical introduction to establishing and running a new team or innovation lab. Similarly, you can employ an idea management platform. This can help you better understand what challenges you are facing and put your innovation lab’s input into a process. Meanwhile, such platforms ensure that your innovation lab is connected to the core business, without being too closely assimilated. But there’s much more to tell you! In the upcoming paragraphs, we’ll discuss the perfect recipe for creating your team.

4. Carefully design the team structure

Once you are clear on the aims of your team and what capabilities you can draw on, you can start to think about the design of the team. In creating your team, you’ll need to decide on the size, skillset, dynamic and culture of the staff, as well as specific recruitment and staff development strategies. Regarding the size of the team, narrow is a good place to start. Trying to be the next Amazon is going to lead to frustration. Instead, remember to:

  • Start with a focused approach.
  • Encourage a culture that praises good execution and enjoys a little competition.
  • Design a team that challenges itself through creative exercises.
  • Hire people with well-developed problem-solving skills.
  • Competition can create a sense of urgency and motivation that boosts the innovation efforts.

When choosing the participants for an innovation lab one could choose to form an in-house team or to bring in outside help. By employing an in-house team, a business is contributing to their cultural foundation and grows the capabilities of their employees. Other benefits of using company’s own human capital is a better work morale, increased engagement, and higher retention rates. But oversight can kill your idea lab. An only in-house team can be the subject of tunnel vision. Similarly, the risks can extend to the creation of ‘know-it-alls’ instead of continual learners. That is why it is necessary to invest in visits made by an external team. This outside help can study market trends, look at the technology used or developed. They can make sure there are no puzzle pieces missing from the internal team’s strategy. An external team brings along new perspectives inside the innovation lab. Diversity only contributes to growth.

Surely, a good team can work wonders. But without a person to translate enthusiasm and drive the participants, all can crumble down. That’s why it’s time to consider the importance of good leadership.

5. Focus on leadership skills

It’s equally important to think about the leadership of your makerspace. As in many other cases, an innovation lab’s success depends hugely on the relationships inside the company. A thriving creativity center is most likely run by someone who is trusted, respected and connected to the other people working there. In other cases, it might be a person who can build this kind of relationships fast.

After analyzing numerous innovation labs over the years, Scott Kirsner, co-founder of Innovation Leader, arrived at a conclusion that reinforces this argument. Kirsner found that having strong and personal connections between executives is a crucial criteria for success. This means that when it comes to choosing an innovation lab leader, people with experience at the company might be favored as opposed to a newcomer. An established employee has trust from different departments. These relationships can be leveraged in his/hers new innovation position. Equally, it can help prevent the ‘not-invented-here’ syndrome in the existing business. On the other hand, executives brought from the outside can encounter communication failures when trying to hand projects over.

6. Quantify success, recognize failure and fail fast

To measure the impact of both projects and team, an innovation lab should employ a data-driven mentality. Robust results are crucial in proving the success of the center. A leader must also apply achievable timescales in order to give the lab time to reach its goals. ‘Quick wins’ help to build a momentum and confidence, also from the mother organization. This means that it is desirable to demonstrate clear progress regarding some projects in a matter of weeks or months. But generally, the team should have long-term goals, reaching forward as much as two to three years.

As with any innovation venture, there is a big risk of failure. A situation that occurs too often is that creativity centers struggle with the concept of failing fast. A leader must build processes that will allow the innovation lab to be open when things don’t go according to plan. The team needs to stop approaches that are not working, as much as focusing on the ideas that work. Commonly, there are a lot of futile experiments that pave the way for a success story. Some elements will die and some will grow. This is a positive sign. It means that the idea lab’s assumption to knowledge ratio is improving and that, in the future, it will be better equipped for making the right decisions.

Keep in mind, great things will happen if both the leader and the team are prepared to pivot when needed. Next, we will discuss two very distinctive innovation labs and what puts them ahead of the game.

innovation lab

Get Inspired by the World’s Most Innovative Labs

1. Learn from Autodesk

Autodesk makes software that gives people the power to create anything. If you’ve ever used a smartphone, gazed at a towering skyscraper or watched a fascinating movie such as Avatar, chances are you’ve experienced what millions of users are doing with their software. At Pier 9 in San Francisco, California, Autodesk enables both employees and people from the outside to design various unusual things. This is a 35,000 square-foot creative center that aims to blend the virtual and physical world.

One of their projects was creating a 3D printer called Ember, that shows what can be done with 3D printing. As a result, the team at Pier 9 was able to produce a model of the entire Bay Area in San Francisco, approximately 115 city blocks. The innovation lab is not intended to showcase products, Autodesk has an Innovation Gallery at the corporate offices. The company perceives the lab as a crucial element for the long-term success within tech because the whole participants help Autodesk explore the software in unique ways and improve it.

The innovation lab at Pier 9 offers a way to develop a shared vision for the future within the industries they serve. Any person, company or institution that focuses on aerospace, automotive, engineering, robotics, machine learning is welcome. By creating this lab, Autodesk enables innovation. People can make more and better things, with less. Exploration is alive. The different pieces of software used to increase efficiency, performance, quality and create less negative impact on the environment.

2. MindLab – Another take on creativity centers

MindLab is one of the first public sector innovation labs in the world. Founded in Denmark in 2002, they are now celebrating 16 years of activity. Currently, the lab is part of three ministries (Education, Employment, and Business) and the Odense municipality. This remarkable collaboration is in itself an experiment. MindLab is using human-centered design as a way to identify problems and develop policy recommendations. They aim to encourage change in the daily behavior of citizens and to benefit the management processes used by national companies.

MindLab has a physical space, designed as a ‘neutral zone for inspiring creativity, innovation, and collaboration’. It hosts workshops, meeting spaces, and one small office for the permanent staff – around 7 employees. The team is composed of professional researchers, who work with public servants to develop new ideas and concepts. They address issues of productivity, service, and democracy. Additionally, the MindLab periodically engages with other employees from the sponsoring ministries. Together they undertake 7-10 projects each year.

The lab employs a process which consists of seven phases: project focus, user research, concept development, concept testing, and lastly, impact measurement. MindLab also provides advisory services to projects and maintains a network of academic contacts. One of their programs, helped businesses to find the right industry code for registrations. Their initiative demonstrated a 21:1 return on investment in savings for both the government and the said companies. Equally, the lab initiated experimental projects. For example, they used art installations to promote civil rights in taxation.


Innovation labs attract new talent and encourage the creation and implementation of new ideas. Businesses everywhere are trying to discover the key to making such makerspaces prosper. As discussed in this blog post, creativity centers should be built upon a clear strategy that resonates with that employed by the mother company. An innovation lab, shouldn’t fall too far or to close to the core business, and this is truly a hard point to ensure in real life.

Better still, an innovation lab should have a trustworthy leader that is respected all throughout the company. The team needs to be varied, bringing together people with different skills and professions, both from inside the company and out. Lastly, a data-driven mindset should be set in place. Participants must have the responsibility of measuring success or admitting to failure.

A company can encounter many pitfalls in trying to create an innovation lab. But the prospect of setting up a center where creativity flows and disruptive solutions are brought to life is enough to determine many to try. To help you in this lengthy and complicated journey, Ideanote has a proposal for you. With the use of an idea management software, you create a legitimate space for company problem-solving. Get a clear view of actionable insights coming from every corner of your business. Sign up today for free!

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