Effective Design of Innovation Labs

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Effective Design of Innovation Labs
Andrea Boeri

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Andrea Boeri
• Executive summary
• Benefits, diffusion and pitfalls of innovation labs
• Innovation labs within the corporate innovation ecosystem
• What innovation labs can and cannot achieve
• The 7 dimensions to design an effective innovation lab
• Conclusions and bibliography
Index

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Andrea Boeri
• This short document present a few, preliminary – as the overall topic is fast evolving – findings about innovation
labs (otherwise called innovation centers, innovation factories, etc.). These findings are based both on the most
recent bibliography I could find (only 3 – out of 21 - sources I used date before 2016) and my direct experience
working with start-ups engaged in open innovation programs.
• Innovation labs are still a developing concept, indeed a fascinating one. The benefits they can provide are clear, and
they include accelerating the speed of innovation, providing new ideas, building deeper expertise in technologies new
or not previously mastered by a company, attracting talents, supporting a culture of innovation and risk taking. In
recognition of these benefits, the number of innovation labs is growing fast in the world. However, innovation labs
don’t always deliver as expected. When failures happen, they are usually driven by one or more of these reasons:
lack of maturity, insufficient alignment with the business, cultural isolation, inadequate people choices, lack of suitable
metrics, unclear growth mechanisms.
• Labs are just one of the key components of a corporate innovation ecosystem, which should include: the
innovation strategy and portfolio, the overall innovation governance, the innovation culture within the company, the
innovation processes and metrics in use company-wide, and (last but not least), the innovation tools, which actually
include innovation labs. Labs are an important component of the toolkit, they can positively the corporate innovation
culture and provide the preferred environment to test and implement innovation processes and metrics.
• The evidence so far shows that innovation labs can be very effective tools to achieve specific goals, like for example
the deepening of technological expertise outside the existing corporate domain, the attraction of talents who might
not be otherwise hired by the company, the faster adoption of innovation processes and tools, the launch of open
innovation programs. However, alone, they cannot create company-wide cultural support for innovation, or redirect
the corporate strategic priorities.
Executive summary

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Andrea Boeri
• We have identified 7 dimensions which should be considered to design an effective innovation lab:
1. Alignment: there should be strategic, cultural and organizational alignment between the innovation lab and
the global enterprise
2. Leadership: finding the right leaders for an innovation lab means looking for different profiles from traditional
managers, confident both with lack of structure and with structure and processes
3. People: staffing an innovation lab requires balance (between technology experts and business people), cross-
cultural proficiency (to integrate different cultures and age profiles), and fairness of rules
4. Metrics: first of all, objectives and communicated expectations should be realistic. Then, suitable metrics are
needed to measure the lab’s performance
5. Processes: the internal processes of an innovation lab should be modeled on those used by start-ups working
with effective venture capitalists
6. Network: an effective network building and management is required, both internally (toward the businesses
and the other leaders involved in innovation) and externally
7. Location: a suitable location helps attract talents, but the closeness to the business should be managed as
well.
Executive summary (cont’d)
• In a nutshell, innovation labs can provide the goods (and exceptional goods they may be), provided they are not
seen as “the” solution, but rather as (an important) part of the solution. They should also be considered as living
organisms, which thrives mostly on very human and often unpredictable motivations, behaviors, and interactions.

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Andrea Boeri
Index

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Andrea Boeri
• A physical co-
working space
plus some facilities
(e.g. 3D printers)
are made available
to internal “makers”
and innovation
teams
• It may also host
innovation
competitions and
trainings
Innovation labs are still a developing concept
Main types of innovation labs
Physical space
Innovation Center
Accelerator
Corporate Venturing
• A formal
organization is set up
to pursue new ideas
and innovations related
to technologies and/or
business models
• The center may also be
the pivot for open
innovation programs
involving start-ups
• The innovation center
is complemented by
(or functions also as)
an accelerator of
selected external
start-ups
• These start-ups may
also receive seed
stage investments
• The innovation center
is complemented by a
corporate
investment fund
which invest in early
and later stage high
potential start-ups
We refer here as
“innovation labs” to
either one of these
models (Innovation
Center or Innovation
Center + Accelerator)
The concept of “Innovation lab” is relatively new, although some famous examples (e.g. Xerox
PARC) have existed for decades. Not surprisingly, this concept is evolving, as many
companies around the world are constantly trying to fine tune it

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Andrea Boeri
Main benefits of innovation labs
Generating new ideas
• Innovation labs are sheltered contexts
where new ideas are actively encouraged
• The “Not Invented Here” syndrome is
avoided via strong collaboration ties with
the outside world
Accelerating the speed of
innovation
• The lab’s single focus is generating
innovation, with a technology and/or a
business model content (depending on
the lab’s mission width)
Building a deeper expertise in
new technologies
• This may be the case both for
emerging technologies (e.g. Artificial
Intelligence) or for technologies not
previously mastered by the company
Attracting talents
• The lab environment is closer to a start-
up’s than to a traditional corporate
environment, making it more attractive
for innovative profiles
• Location can help, too
Supporting a culture of
innovation and risk taking
• By establishing a successful track record,
the lab can function as an internal
beacon and “evangelist” for innovation
and intelligent risk taking
Innovation
lab

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Andrea Boeri
According to Capgemini, the number
of Innovation Labs (or Centers) in
the world has been growing at a
yearly rate above 30%
The number of innovation labs in the world is growing fast
In terms of geographical breakdown,
the U.S. retains top spot, but Asia
shows a better momentum than
Europe
Source: Capgemini (see Bibliography)

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Andrea Boeri
• Empirical evidences underline the fact that apparently innovation labs don’t always
deliver as expected. According to this literature, the main causes for innovation labs not
living up to expectations are:
Why innovation labs don’t always deliver as expected
(1)
Lack of maturity
Lack of suitable
metrics
Cultural isolation
Inadequate people
choices
• Being a relatively new concept, in several cases there hasn’t just been
the time to bring the innovation lab’s contribution up to speed
• The lab is seen as an alien entity by the rest of the
organizations (“where a bunch of twenty-somethings
sit in open spaces with espresso machines”)
• The staffing is not balanced between technology-
savvy external hires and business experts coming from
inside. A proper innovation leadership is missing
• There are no suitable metrics to measure and
monitor either the innovation processes and
intermediate results or the lab’s overall ROI
• There is no predefined and disciplined road map to
move from idea to test of problem-solution fit, to
test of product–market fit, to scale or fail
• The lab’s mission is unclear or not
properly aligned with the business strategies
and innovation priorities
In the next
pages we
will focus
on how to
overcome
these
pitfalls
Unclear growth
mechanisms
Insufficient alignment
with the business
(1) See Bibliography

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Andrea Boeri
Index

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Andrea Boeri
Labs are just one of the 5 key components of an innovation
ecosystem
4. Innovation
processes
and metrics
1. Innovation
strategy
and
portfolio
2. Innovation
governance
3. Innovation
culture
5. Innovation
tools
• Innovation
priorities
• Target balance
of strategic
portfolio (e.g
between
core
businesses,
adjacent
businesses,
transformational
ventures /
breakthroughs))
• Overall innovation
culture across
the company
• It may be
positively
impacted by a
successful
innovation lab
• Leadership roles involved in innovation
and mutual relationships (e.g. Chief
Innovation Officer, Head of R&D, CTO, …)
• Decision making related to innovation
• Agile innovation
management
• Idea development
path to innovation
• Specific metrics
• These processes
and metrics can be
first tested in the
innovation lab
• Innovation labs
• Company-wide tools
✓ Innovation
competitions and
hackathons
✓ Calls for ideas
✓ Innovation coaches
✓ …

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Andrea Boeri
How Stanley Black & Decker approach innovation EXAMPLE
Stanley Black & Decker innovation ecosystem Stanley Black & Decker is a consolidated company,
founded in the XIX century, which has always pursued
innovation. The corporate innovation ecosystem today
include:
• The STANLEY+Techstars Additive Manufacturing
Accelerator program, which selects start-ups from
around the world, with the goal of bringing
breakthrough manufacturing technologies to market
• The Digital Accelerator, to catalyze and support a
digital transformation across the global enterprise. In
2018, the Accelerator added new resources and
capabilities in artificial intelligence, robotics, IoT
• ELU (Exponential Learning Unit), in Silicon Valley,
focused on accelerating the development of disruptive,
breakthrough solutions and the rapid
commercialization of such innovations
• STANLEY Ventures, to bring outside innovation into
Stanley Black & Decker through strategic venture
capital investments. The company makes minority
investments, generally in exchange for technology
rights
• Advanced Analytics capabilities
• Manufactory 4.0, the center of excellence for
advanced manufacturing, to support the rapid world-
wide implementation of advanced manufacturing
Source: Stanley Black & Decker, Corporate Website

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Andrea Boeri
Index

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Andrea Boeri
• Provide a sheltered environment to
generate new ideas and accelerate the
speed of innovation
• Build a deeper expertise in technologies
new for the company
• Provide the launch pad to pursue
breakthrough and disruptive innovations
• Attract talents who might not be otherwise
hired by the company
• Act as an internal beacon and “evangelist”
for innovation and intelligent risk taking
• Better support “open innovation” programs
What innovation labs can and cannot achieve
The can They cannot
• Sustain basic research efforts
• Create alone company-wide cultural
support for innovation
• Redirect alone the corporate strategic
priorities
• They could, but probably they are not the
best environment to provide incremental
improvements of well known product
features (“traditional” R&D would be
better at that)

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Andrea Boeri
Index

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Andrea Boeri
The 7 dimensions to design an effective innovation lab
Innovation lab
1
2
3
5 4
The effectiveness of an innovation lab design relies on the careful design, consistent
blending, and dynamic nurturing of several key success factors, which we have
summarized here in 7 dimensions
6
7
Alignment
Leadership
People
MetricsProcesses
Network
Location

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Andrea Boeri
There should be strategic, cultural and organizational alignment
between the innovation lab and the global enterprise
• Strategic alignment. The business strategy, the overall innovation
strategy and the innovation lab mission should be aligned and
consistent. The lab’s mission should be clearly defined: giving a lab
“carte blanche” to (generically) innovate is usually a recipe for failure
Alignment1
culture should become consistent. Some cultural “dissonance” can be desirable in the short term, but
it should then be leveraged to transform the organizational culture, not surviving in isolation:
innovative firms are characterized by a company-wide cultural support for innovation. A degree of
“managed cultural compatibility” is therefore often needed, especially in risk averse, regulated and
traditionally less innovative industries (e.g. insurance), to pursue the final goal of cultural alignment
• Organizational alignment. To thrive, the innovation lab needs visibility (in terms of mission,
organizational positioning, and main working rules), and a clear and short reporting line to the top
leadership. Besides, there should be a clear overall governance of the innovation strategy and
programs, as well as a high involvement of the top leadership in the innovation effort. Finally, the lab
should be a beacon to help mobilize the entire company and harness collective creativity (through
open calls, idea competitions, trainings, small budget and time allocation to teams and individuals)
• Cultural alignment. Eventually, the lab’s value and the corporate

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Andrea Boeri
Leadership2
Finding the right leaders for an innovation lab means looking for different
profiles from traditional managers
Innovative leaders have a balance of
innovation and execution skills
Source: Jeff Dyer, Nathan Furr, Curtis Lefrand,
Innovation Capital: How to Compete - and Win - Like
the World’s Most Innovative Leaders, 2019
• They should be facilitators of fast and frugal
experiments, rather than decision makers
• Innovative leaders have a balance of innovation
and execution skills. They are comfortable
both with lack of structure and
unpredictability, which are typical of the
discovery phase, and with structure and
processes, which are required by delivery
• External competences may be needed (e.g.
single leaders to be hired or accelerators as
partners) to “jump start” the lab
• Leaders of an
innovation labs
should be strong
team players and
people-oriented
coaches

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Andrea Boeri
Staffing an innovation lab requires balance, cross-cultural
proficiency and fairness
• Balance. Staffing should balance technology experts (often
hired from outside) with business savvy people (often coming
from inside, including “old timers”). The relative ratio depends on
the lab’s mission and the technology being tackled, but no lab
should be 100% staffed with technology people without any
business representation, except in very special circumstances
People3
• Cross-cultural proficiency. Cross functional teams are strongly recommended, to increase
diversity of approaches. Besides, if both tech and business people are involved, probably there will
be cultural and age differences to be carefully managed and integrated. Further complexities are
added by multinational teams, especially if working mostly remotely
• Fairness. Rules for hiring, either from outside or internally should be clear and fair. The selection
of profiles base on specific competences and comfort with risk taking and hyper-volatile contexts
should be based on structured assessments. Besides, specific rules are needed to manage
onboarding of internal people (can their current managers oppose or even block the move?),
permanent vs. temporary assignments (with return to the business), etc.

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Andrea Boeri
First of all, objectives and communicated expectations should be
realistic. Then, suitable metrics (Key Performance Indicators) are
needed to “measure the unmeasurable”. These may include:
Metrics4
• Innovation process KPIs. Examples comprise:
✓ Number of ideas passed through the different development phases (e.g. from idea to test, from
test to scale, from scale to go-to-market via business integration or spin-off) vs. failures at
each stage
✓ Average Time-to–market of ideas successfully implemented
✓ Percentage of projects exceeding allocated budgets and timeframes
• Innovation impact KPIs. Examples comprise:
✓ Number of projects launched
✓ Percentage brought to completion vs. abandoned
✓ Revenues or cost reductions generated by projects brought
to completion vs. innovation budget
• Collaboration and culture KPIs. Examples comprise:
✓ Number of business units that have active projects
✓ Number of training session held for the business
✓ Percentage of employees involved in innovation events or activities

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Andrea Boeri
The internal processes of an innovation lab should be based on
customer insights, “start-up like” development path, staged
fund allocation
• Customer insights. Innovation efforts should be based on
direct insights from end users, or at least from customer serving
salesforce and front line staff
Processes5
• “Start-up like” development path. There should be disciplined internal processes, including:
✓ A “start-up like” phased approach: e.g. create ideas - test ideas - kill or scale ideas, using
agile innovation management techniques
✓ A set of possible outcomes: eventual integration with the existing business or spin-off (alone
or in partnership), or else explicit abandonment of the project
✓ A focus on rigorous control of project selection early in the innovation process, then a focus
on speeding up the go-to-market process
• Staged fund allocation. It is usually a good practice to start small and keep it cheap, but then the
budget should be rapidly increased if opportunities for scaling up are concrete

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Andrea Boeri
An effective network building and management is required, both
internally and externally
• Internal network management. The Head of the innovation
lab(s) – usually the Chief Innovation Officer, or the Innovation
Manager, depending on the company size and the number and
Network6
sizes of the innovation centers – should also be a diplomat and work to foster a culture of internal
collaboration with:
✓ The CEO / Executive Board and the Business Units
✓ The other leaders involved in innovation (e.g. Head of R&D, Chief Technology Officer,
Chief Digital Officer, etc., depending on the company size)
✓ The other corporate Departments which need to provide support (e.g. Legal, Compliance,
HR, etc.)
• External network management. The Head of the innovation lab(s) should foster strong ties and
a culture of collaboration with the outside world, especially if the lab functions also as an
accelerator of external start-ups or is in some way involved in “open innovation” programs
✓ Making open innovation work means overcoming several asymmetries and barriers, which
tend to naturally exist between corporates and start-ups

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Andrea Boeri
• Already in 2016, 52% of Forbes Global 500 were somehow working with startups in one way or
another, adopting “open innovation“ programs
• There are several possible models of open innovation, with different degrees of commitment both on
the established company and the start-up sides
More and more corporates are involved with start-ups
• To be effective, open innovation
require:
✓ Senior management
involvement and stewardship
✓ Rigorous assessment of start-
ups to be admitted
✓ Effective cross-cultural
contamination between the
company and the start-up
✓ Structured mechanisms to
drive the whole process
Different models of open innovation
Source (adapted): Alberto Onetti, Simona Bielli, Augustina Sol Eskenazi, Open
Innovation in Europe: A Snapshot of the SEP Europe’s Corporate Startup Stars
2017, Mind the Bridge & Nesta, 2017
(1)
(1) 500 Startups, Insead, #500Corporations: How do the Worlds Biggest Companies Deal with the Startup Revolution?, 2016
• These requirements are better
supported by the presence of an
innovation lab, already “tuned
in” to tackle these issues

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Andrea Boeri
Making open
innovation work
usually means
overcoming
several barriers
which tend to
naturally exist
between
corporates and
start-ups
Making open innovation work
Source: Christopher Haley, Simona Bielli, Siddharth Bannerjee, Scaling Together: Overcoming Barriers in Corporate-Startup
Collaborations, Nesta, 2016
Common barriers to cooperation between established
companies and start-ups

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Andrea Boeri
A suitable location helps attract talents, but the closeness to the business should be managed as well
• Creativity pools and talent attraction. Creativity tend to develops mostly in cities or close to them
(e.g. San Francisco and Silicon Valley), where “creative classes” like to live . Several world cities have
Location7
The World’s Top 20 Most Innovative Cities
Source: JLL, Innovation Geographies, 2019
taken the leadership on
innovation, often with a
deeper focus in a specific
technology (e.g. San
Francisco and Silicon Valley in
artificial intelligence, Israel –
which is a geographically
small, tightly connected State
- in cybersecurity, etc.)
• Closeness to the business.
If, say, one of your innovation
lab is in Silicon Valley and
your HQ is somewhere in
Europe, this physical distance
must be actively managed to
prevent cultural isolation
(1)
(1) Richard Florida, The Rise of the Creative Class. And How It's Transforming Work, Leisure and Everyday Life, 2002

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Index

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Andrea Boeri
In a nutshell, innovation labs can provide the goods (and exceptional goods they may be),
provided they are not seen as “the” solution, but rather as (an important) part of the solution.
They should also be considered as a living organisms, which thrives mostly on very human and
often unpredictable motivations, behaviors, and interactions. It all looks like a fascinating journey,
where we are still in the initial stage.
Thank you for your kind attention
Conclusions
I am an advisor and mentor, and a senior manager. I focus on open innovation, technology
transfer, strategy, and performance improvement. In my 34 years of international experience, I
have served as a partner in strategic consulting, and as a senior manager in a corporate
environment. In both roles (advisor or manager), I help large companies and start-ups innovate,
transform and grow.
You can find my LinkedIn profile at https://www.linkedin.com/in/andrea-boeri-6a33b124/
Andrea Boeri
Milan, August 20, 2019

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Andrea Boeri
• Simone Bhan Ahu, Disrupt-It-Yourself. Eight Ways to Hack a Better Business - Before the Competition Does, 2019
• Simone Bhan Ahu, Why Innovation Labs Fail, and How to Ensure Yours Doesn’t, Harvard Business Review, July 22, 2019
• Capgemini, The Spread of Innovation around the World: How Asia Now Rivals Silicon Valley as New Home to Global Innovation
Centers, 2016
• Capgemini, The Discipline of Innovation: Making Sure Your Innovation Center Actually Makes Your Organization More Innovative,
2017
• Jeff Dyer, Nathan Furr, The Innovator's Method. Bringing the Lean Start-up into Your Organization, 2014
• Jeff Dyer, Nathan Furr, Curtis Lefrand, Innovation Capital: How to Compete-and Win-Like the World’s Most Innovative Leaders, 2019
• Richard Florida, The Rise of the Creative Class. And How It's Transforming Work, Leisure and Everyday Life, 2002
• Nathan Furr, Kyle Nel, Thomas Zoega Ramsoy, Leading Transformation: How to Take Charge of Your Company's Future, 2018
• Christopher Haley, Simona Bielli, Siddharth Bannerjee, Scaling Together: Overcoming Barriers in Corporate-Startup Collaborations,
Nesta, 2016
• JLL, Innovation Geographies, 2019
• Saul Kaplan, The Business Model Innovation Factory: How to Stay Relevant When the World is Changing, 2012
• Stefano Mainetti, Fare Open Innovation in Italia: un percorso evolutivo in tre passi, 29 luglio 2019
• McKinsey & Company, Why you need a CTO - and how to make her successful, February 2018
• Alberto Onetti, Simona Bielli, Augustina Sol Eskenazi, Open Innovation in Europe: A Snapshot of the SEP Europe’s Corporate Startup
Stars 2017, Mind the Bridge & Nesta, 2017
• Gary P. Pisano, The Hard Truth About Innovative Cultures Creativity can be messy. It needs discipline and management, Harvard
Business Review, January - February 2019
• Greg Satell, The 4 Types of Innovation and the Problems They Solve, Harvard Business Review, June 21, 2017
• Stanley Black & Decker, Corporate Website
• strategy + business, The Global Innovation 1000. What the Top Innovators Get Right, Winter 2018
• Richard Turrin, Innovation Lab Excellence. Digital Transformation from Within, 2019
• Tendayi Viki, Dan Toma, Esther Gons, The Corporate Startup: How Established Companies Can Develop Successful Innovation
Ecosystems, 2017
• 500 Startups, Insead, #500Corporations: How do the Worlds Biggest Companies Deal with the Startup Revolution?, 2016
Bibliography

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