What is an innovation lab and how do they work?

Organization, including fortune 500 companies have become more collaborative to accelerate innovation in their internal and external channels.PWC, Unilever, kimberly-clark, Microsoft, Infosys, American airlines and many more are on board ,why?

Because there’s so much we can draw out from collective wisdom

(They have a million ways to help you nail down what you want to achieve)

Labs are now commonplace across industries from retail, to telecoms and travel.

But what exactly is an innovation lab, and how do they work?

How to define an innovation lab?

The drawing below shows there are many ways to encourage innovation within a business.

Some of these involve a strategic and goal-focused unit, perhaps focused on a specific area like big data, tasked with creating anything from a new product or service to a new technology or business model.

Other innovation initiatives may not be physically co-located, they can be as radical as Google’s model of 20% ‘free’ time for workers to innovate, or simply involve setting up a group to collaborate with other industries, startups, or academia.

The challenges of setting up an innovation lab

Andra Sonea, systems architect, eloquently sums up some of the many questions that companies need to ask themselves in the course of creating an innovation lab.

I’ll paraphrase slightly as follows:

  • What roles should be filled?
  • What types of people make the best innovators?
  • Should you recruit from inside the company or look for fresh perspectives?
  • Do you define a governance framework from the beginning or let it evolve?
  • What projects will you prioritise?
  • How do you integrate with the rest of the organisation and not be perceived as outlaws?
  • Do you need dedicated infrastructure?
  • How can ideas be tested softly? Who are your actual clients?

The aims of the innovation lab

Whilst the goal of any innovation lab is ultimately to create new revenue streams or bolster existing ones by improving productivity or speed, there is much more to consider.

Many of the methods of encouraging innovation represent both means and an end. For example, a new culture of working may be beneficial for productivity, but in its own right can make for a happier workforce.

So, what are some of the common aims of the innovation lab?

Incubating a new culture

Many think of culture as the wishy washy side of both innovation and digital transformation.

Fixing broken windows (the idea of new office decor, relaxed dress code and seating, and Macs for all) can often be seen as an empty gesture – snacks can only make a company so much more enjoyable to work at.

However, these changes are an important step when combined with a focus on new ways of working – customer centric, data driven, tech-enabled.

Communication between a lab and other teams, often involving a cross-functional team, is important in instigating a ‘test, learn, iterate’ culture.

One of the challenges of the lab, as Sean Cornwell of Travelex states (though referring to broader digital transformation), is avoiding the cool kids in the corner syndrome.

Incubating culture is a fine balance and further down the line may ultimately hinge on hiring and firing.


Fairly obviously, this is a large part of what innovation labs promise. That can involve hackathons or day-long collaborative events.

Innovation labs may work on proposals submitted from across the business, even involving a competition element to reward teams or employees.

At the lighter end of the lab scale, hack spaces or CX demos can be created merely to demonstrate the latest tech in a particular industry and encourage staff or even clients to think big.

Open data

This isn’t always an aim of innovation labs, but opening up data for third parties to innovate can be a good method of early product development in certain industries.

Nesta, the British innovation charity, runs the Open Data Challenge with the Open Data Institute, which has spawned new digital products and boasts a five to tenfold ROI.

One such product built on open data is Movemaker, an ‘app for house hunters, which helps people living in social housing swap their properties’.

 There are many positives for opening Innovation Labs but these are only one element of innovation. I think key is combining the right mix of teams, a mix of technical expertise, business expertise and creativity and of course speed to market for new products. Hence alot of the great new innovations, like Hive, seem to be emerging from startups where everyone is encouraged to innovate.


Doctail Innovator


The Group Head of Innovation role and manage the Group Innovation Team @OILab

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