[Open question] Does the world need innovation teams?

TL; DR

I've asked whether all orgs must to innovate. (Short answer: Some don't.)

But a recent Wall Street Journal article took it one step further. It specifically asks: "Do corporations need innovation labs (and, by implication, innovation professionals)?"

In other words, do people like us matter?

The knee-jerk reaction would be to dismiss the question outright.

But as people who are supposed to be great at considering changes to organizations and "what would need to be true" for those changes to make sense, we should give it at least consider it.

My take: The article diagnoses the problems correctly. But the solutions that the interviewed innovation leaders suggest will just swing the pendulum toward a different problem.

They propose simplistic solutions that don't work either, or, more precisely, produce only one kind of outcome that typically isn't the purpose of innovation teams anyway.

What do the article and its interviewees suggest?

The article sketches a short history of corporate innovation, starting with the rise of innovation teams after the first .com companies (like Google and Amazon) made it to scale and impossible-to-ignore prominence.

It focuses on labs placed in Silicon Valley or similar tech hotspots.

Overall, it appears to cover recent history accurately. In fact, it's refreshingly specific and to the point. While it doesn't quote sources, it echoes a similar argument by Steve Blank, one of the godfathers of our craft, who pointed out the problem of "innovation theater" from Silicon Valley-based teams too.

It then frames the question of how to achieve good innovation results as a simple choice:

Either use separate teams or have employees innovate as part of their day job.

And it concludes that "the best ideas come from within the business." (Technically, the writer assigns that opinion to her interviewees. But by neither questioning it nor offering counter-examples, she implicitly makes it her own argument too.)

To support the claim, the article (generally correctly) points out problems with separate innovation teams.

There are problems related to the separation of those teams from daily operations:

• "[D]etached groups ... have to get buy-in from the [rest of the] company"
• "It's very difficult for any one single team to be the subject matter and the tech expert at the same time"
• "It's a very hard thing to ... keep the stand-alone model in tune with real business problems"
• "Colleagues in other parts of the business aren't always excited about the solutions [innovation teams bring]"
• "[L]abs tend to gravitate toward technologies that don't have a clear path to driving real business value, now or in the future .... When you have an innovation lab, you're only answering the FOMO [fear of missing out] question, meaning: Is this a sexy thing that we might be caught flat-footed if it moves forward without us?'"

Other problems relate to changes in the context for innovation work:

• "[S]tand-alone lab[s may be] no longer needed" because of new methods
• "[C]ompanies [should be] rethinking their labs as they prepare for the new wave of AI development."

Finally, the article points out a few benefits of doing innovation in the core of the org:

• "The best ideas come from within the business"
• "Innovation is like ethics. And it has to pervade the whole organization."

To its credit, the article also touches on a few benefits of separate innovation teams:

• [At Mastercard,] "dedicated teams do more direct applied research on new technologies, such as quantum computing"
• [At E&Y, the] "company gains a fivefold return on technologies developed in the labs--enough to keep them open"
• "There is definite value in companies setting aside resources to consider moonshot technologies 10 years into the future, albeit typically only in industries with long product development cycles such as aerospace" (Academic research backs this up, but actually expands it to more spaces for up to 8 years beyond normal timeframes in that space.)
• The people on innovation teams are also acknowledged to add value. Companies don't always lay off their innovation teams. Some simply repurpose the employees or entire teams, as Ford is quoted as having done.

No matter where an org lands, the article points out requirements for good work by labs teams:

• "[Work] to build better bridges with the rest of the company"
• "[P]osition new technologies something they need to survive in a changing world, rather than just a cool addition. People are sometimes more reactive to a stick than a carrot."

Is the argument well-crafted?

It has significant weaknesses. But not enough to dismiss it outright. "Consider it openly and thoughtfully," I'd say.

On the one hand, the people being interviewed certainly are professionals who should have the expertise to comment on it, spanning several industries and geographies. But on the other hand, some of them offer irrelevant or wrong points (e.g., the Walmart executive's claim that 2-pizza teams can replace innovation teams ... even though innovation teams work that way too; there are also issues with some of the points made by interviewees from CVS, Mastercard, E&Y, and Punks & Pinstripes). So the interviewees don't all live up to their credentials.

Also, on the one hand, the article only includes anecdotal, qualitative, "signal-"type data, without any supporting context or alternating signals, but then extrapolates it to a trend despite the weak support. Doing that would never have passed my muster if people on my team brought me research or trend work synthesized that way. But on the other hand, working with signal-type data takes nuanced assessments, not a bludgeon. And these signals echo both things that I see today and things that have happened before, with almost verbatim repetition of arguments, in some cases. The issues feel real and worth highlighting.

Finally, on the one hand, Steve Blank already pointed out the problems with corporate innovation labs in Silicon Valley 9 years ago, as mentioned. So this really isn't "news." Nor are even close to all innovation teams of that type. But on the other hand, it's also still a relevant problem. So, clearly, it still needs dealing with. (And the article is written in a section for CIOs. So it would make sense that it focuses on teams oriented toward tech and Silicon Valley.)

What's a better way?

Innovators must change their focus for uncertain times

We don't live in a period where many companies focus on "moonshot"/ "transformational" innovation, other than AI.

So innovation teams must offer value for the topics that are top-of-mind for their org, often ones that either are more incremental or are at least more short term-focused.

Some innovation professionals instinctively dismiss such a focus as inherently stupid by being prone to work that makes no progress for the org. But that's too narrow. Even a single panel of 10 thought leaders to which I listened produced enough ideas for meaningfully focusing on the here and now that it took me a whole essay to summarize them all.

AI won't fix the Acceptability/ Agreeability problem. Innovators should lend a hand for that

Marketers already trumpet their fully automated AI innovation solutions. They will create pretend-users whom your pretend-interviewers can interview to gain "insights," which more AI can then test Lean Startup style.

Impressive technical progress, surely. But even if it works as advertised, it misses gobs of critical work, especially everything related to the Acceptability/ Agreeability of solutions created that way. Put simply, a future executive conversation related to these ideas might be: "So why should we do this?" ... "Well, because the AI says so." (Yes, I'm simplifying a bit to make a point, but not much.)

So by all means consider whether AI solutions can help you on technical fronts. But by all you care about, don't forget that achieving "Desirability, Viability, and Feasibility" does not mean anyone will accept what you created.

Even today, before AI, it's perfectly rational for people to reject your work. In the age of AI, you and your team must doubly do that legwork of earning your org's buy-in to your findings!

Spend your time earning more credibility, not chasing more tools

Books, conferences, branded innovation toolkits, and the like are all good. They ensure that you are working in modern ways, not outdated ones.

But we are approaching a level of maturity in our craft where adding more tools has quickly-diminishing (or even negative) returns. Many innovation professionals already have a backlog of books they haven't read and tools they have not yet integrated into their team's method, let alone used enough to know if the tools add new value.

Psychology teaches us that it feels good to have tools. And yet, tools are not results.

Teams need a range of things beyond tools. Good luck is one. Timing is another. And of course, a focus on achieving greater Credibility is another one too and the whole point of my work here. So I won't go into that much more here. Just sayin'! 😄

What should I take away from the article?

At the end of the day, just truly, truly accept that you don't hold a monopoly on "good" innovation work at your org.

And independent of your self-perception of your team's worth, others may believe just as strongly that innovation work will improve if it is distributed around the company. If they have the ear of leaders, their view may prevail.

So my call to action is: Add value in a way that your org recognizes and needs today!

T.I.S.C.

Further reading

Bousquette, I. (2024, Apr. 10). Where Does the Best Innovation Happen? Not in Stand-Alone Labs, Some Companies Say. The Wall Street Journal, CIO Journal. https://www.wsj.com/articles/where-does-the-best-innovation-happen-not-in-stand-alone-labs-some-companies-say-e9b4cf0b

Disclosure

I have no affiliation with or insider knowledge about the innovation work of any of the companies cited in the WSJ article.

Credits

Photo credit: "Exposition éphémère du chat de l’artiste Philippe Geluck sur les Champs Élysées. - Le Chat bascule" by Pascal Bernardon on Unsplash