Creativity research* has shown that all companies benefit from very similar innovation strategies, whether they’re technology companies or not. We mostly hear about software and Internet-based startups these days; and most incubator spaces (sometimes called “innovation labs”) are filled with smartphone apps and web developers.
Other industries are setting up innovation labs, and they almost always get built in San Francisco’s Bay Area. There’s nothing new here: back in the 1970s, Xerox, the copier company based in Rochester New York, decided to open its innovation lab in Palo Alto. Today’s Wall Street Journal lists a few of the companies who’ve created spaces in the Bay Area: Lowe’s, Home Depot, Target, Walgreens, Sears, Visa.
I predict these efforts won’t work very well. We already know why, from the legendary failure of Xerox PARC. Back in the 1970s, developers at Xerox PARC invented the first windows-and-mouse computer, the first laser printer, and the first network to link computers (the Ethernet). It was called Smalltalk, and it was at decades ahead of its time. Both Microsoft and Apple based their windows operating systems on what came out of Xerox PARC. But the executives back in Rochester thought they were a bunch of crazy hippies and they said “Hey, we’re a copier company, why are you guys wasting your time on this stuff?” The book Fumbling the Future pretty much says the same thing that I say in my book Group Genius, and today’s Wall Street Journal identifies the key problem: if you create a separate R&D group, to keep the innovative people from being constrained by the traditional company culture, you also isolate the rest of the company from innovation. The labs are just too far removed; different organizational cultures develop; the innovation group just can’t communicate with the rest of the company.
Nordstrom, one of the earliest companies to build an innovation lab (in 2010) found this out. They’ve now shrunk their lab dramatically, and instead have spread innovators throughout the company. Another example: Amazon’s Silicon Valley innovation center failed to meet expectations.
I explain why in Group Genius: For successful innovation, you have to spread a culture of creativity throughout the organization. Creating a separate innovation lab doesn’t work. It’s just a trendy name for what used to be called the R&D group. We learned that didn’t work back in the 1970s and 1980s. Calling it an “innovation lab” doesn’t make any difference in the underlying dynamics of innovation.