Thoughts on innovation

Gull in La Jolla - doesn't have much to do with innovation but I like how brazen the little guy is

The last decade saw a lot of companies invest in ‘labs’: customer facing arms of the organization that aim to drive innovation in the hosting organization (and perhaps demonstrate to investors and customers alike that the company is ‘innovative’). It seems if you’re a big corporate, you probably have a lab - here’s a few I was either aware of or found with a quick search:

Notable by absence are the companies many think of as innovative. There’s no clear customer facing Apple, Microsoft, Amazon or Google labs. Netflix and Facebook both have dedicated sites but their content (and domain names) are much more aligned to academic research than customers.

Before digging into what that might be, it’s helpful to remind ourselves of the what we mean by innovation. I like the Doblin model for this: Doblin innovation model Image adapted from Doblin

The Doblin model reminds us that innovation isn’t a single dimension. It’s not just the features of a product, but how you create, package and deliver. For instance, the Apple iPhone Upgrade Program delivers numerous benefits to the customer and Apple by making the iPhone a subscription product and disintermediating the carriers. That’s innovative - for years carriers had a strong grip on customers - yet the functionality of the phone changes not one bit.

Further, innovation ≠ invention. Rather, they feed off each other. Innovation is the act of taking existing inventions and combining them in new ways. In expanding the boundaries of markets, services and products innovation drives the need for invention.

So why don’t the innovative companies have labs? Well, they do (and maybe call them R&D) but see no need to position them with customers. After all, Apple spent $18.75bn on R&D in 2020, Amazon $40.42bn. Why the lack of customer facing ‘lab’:

  1. Stakeholders (investors, employees, customers) need no convincing that the company is innovative
  2. Innovation is part of the DNA of the organization, embedded at all levels, so there is little need to catalyze internally
  3. A more (but not wholly) consumer facing organizational orientation perhaps reduces the need to foster partnerships through a separate labs group.

Ultimately I believe true sustaining innovation stems from the culture and values of the company, not a bolted on lab. It’s how innovative behavior by all is rewarded. That’s what the innovative companies demonstrate. The risks of a lab are clear

None of this means you shouldn’t invest in R&D. There’s clearly a role for groups with a tight research mandate to move core capabilitie forward. But an innovation lab? No thanks.

While a lab makes it easy to count what you’re spending on innovation wouldn’t you prefer it to be part and parcel of everyone’s role?

Featured image: Gull in La Jolla, CA - doesn’t have much to do with innovation but I like how brazen the little guy is