For the past few weeks, I have been engaged in an interesting debate with colleagues about the role of innovation labs and startup accelerators in large companies. Most of the time people ask whether having an accelerator or a lab in their company is a good or bad idea. My response is it depends on whether the lab has been set up for the right reasons. In recent years, there have been a few companies that have been setting up corporate accelerators and innovation labs for networking and PR purposes only. In some circumstances, the budget for the accelerator actually comes from the marketing department!
An argument that is made in support of this practice is that an accelerator can raise the profile of the company as being innovative. This in turn helps the company to recruit better talent. Accelerators also raise the profile of lean startup methods within the company, especially with leadership at the executive level. This awareness and visibility is assumed to help with the future development of an innovation culture within the company. We cannot be totally dismissive. It is possible that labs and accelerators can empower people to innovate, especially if they are open for all staff to participate and the methods are democratized within the company.
However, in practice such democratization rarely ever happens. Most labs and accelerators are islands that are set up and managed separately from the main business. The products they create are often not adopted or taken to scale by the main company. The innovation culture argument also needs further discussion. When you dig deeper in that direction, you start to realize that setting up innovation labs or accelerators for PR purposes can actually be detrimental to the innovation culture that we are trying to create.
At the heart of this discussion are two important questions, what is innovation and what is innovation for? From a lean startup perspective, innovation is defined as the combination of creative ideas with sustainably profitable business models. This means that creative ideas by themselves cannot be viewed as successful innovation. Such a definition also helps us answer to the second question (i.e. what is innovation for?). The reason we encourage companies to innovate is because their long term survival depends on it. This is why they don’t just need cool new product ideas; they need those ideas to be commercially viable.
So a great innovation culture is one in which the majority of innovation projects are aimed at finding this commercial viability. All new ideas don’t need to have commercial viability at the beginning. But lean startup methods and tools can be used to search for a profitable business model. If an accelerator is set up for PR reasons only, such cultural practices will not emerge.
In fact, most of the startups selected for such accelerators are based on the ability of the company to use them to tell a great PR story, versus having real commercial potential. The lab itself will be designed to look like a creative startup space with canvases, whiteboards, sticky notes, bean bags and foosball tables. Such practices send an implicit message to employees that innovation is about the artifacts that startups use. The everyday grind and hard work involved in innovation best practice is hidden from them. So they learn nothing but innovation theater.
But wait, it gets worse. There is often an assumption that startups are great at innovation and using lean startup methods. In my experience, this is a myth. Most startup teams that I have met have no interest in lean startup methods or running experiments. They just want to build their product. You often have to drag them kicking and screaming out of the building to go and talk to their customers. Startups can be just as bad as large companies at innovation. This is made worse by the huge egos the “visionary founders” develop after being accepted into the accelerator. They begin to feel that they are there to save the large company from disruption. These attitudes irritate the leadership in the company, who are only happy to see these startups leave when the accelerator program is finished. When this happens, the accelerator can actually be a setback to the development of an innovation culture within the company.
Double Edged Sword
The idea that labs and accelerators create awareness and visibility may be true, but this is a double-edged sword. If your accelerator gains the attention of the executives in your company, you may celebrate this as a success at the beginning. However, you are actually in more trouble than you think! While the innovation theater may get you executive attention, it is only the substance of your work that will allow your lab or accelerator to survive long term. This is because executives will eventually ask the bottom line question: how much are we spending on this accelerator and how much return has it produced? And yes, you can claim you are still learning. But even that has a time limit. Eventually, the question will return; what have you learned and what have you produced for the company using those lessons?
Then there is the talent. It is true that if a company is regarded as innovative it can recruit the best talent. This is also double-edged sword. Great talent that is drawn by the potential to innovate, will want to innovate when they join the company. What they will find instead, is a culture that is the exact opposite of what they expected. If they are truly talented they will not hang around for long. And the word will soon be out on the street to stay away from your company.
What is most frustrating for me is the damage that all this does to corporate innovation and the lean startup movement. There is now some innovation fatigue among the executives I meet and work with. They all have stories about the money they have spent on innovation labs that created no real value for the company. The blame is put squarely on the lean startup method which is then regarded as inappropriate for large companies. It takes a lot to convince these leaders that there is real substance behind all the theater they have experienced.
Keeping It Real
We have to keep it real. Innovation is not about PR. Having PR as a goal does not create value for customers. We must have authentic goals for our labs and accelerators. Inauthentic goals can not create an authentic innovation culture. Corporate leaders are looking for real solutions to real challenges. If we bring them innovation theater and take their money, we are doing them a disservice. The reputational damage is something that takes a long time to recover from. My point of view is best summed up by Jairo H Venegas whose tweet I will paraphrase below:
[Innovation labs] should exist with a value creation purpose.
If not it is fake innovation and fake culture.
Better to try out a pilot with a real business issue.
A special thanks to some wonderful colleagues whose comments and advice informed the content in this article: Salim Virani, Brant Cooper, David J. Bland, Hugh Molotsi, Tristan Kromer, Matt Holt, Caroline Jarrett, Bob Jansen, Jess McMullin, Nick Stevens, Jos van Essen, Elizabeth Lumley, Andrea Hill, Thiyagarajan M., Chris Locke, Sophie Freiermuth and Jairo H Venegas.