Big Company Innovation Labs Won’t Work

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.

 

*Sawyer, Group Genius: The Creative Power of Collaboration.

Tinkering Toward Innovation

In this weekend’s Wall Street Journal,* Alex Foege is critical of “tinkering time”. My ears perked up, because this is a common practice at some of the most innovative companies. It means you give each employee a small percentage of each week to dedicate to their own pet projects. W. L. Gore gives each worker 10 percent of each week; Google gives everyone 20 percent; 3M, where the practice started back in 1948, gives 15 percent. In recent years, Apple started its own program called Blue Sky, and LinkedIn announced its “Incubator” program.

I advocate such programs in my keynotes and workshops, and in my 2007 book Group Genius: The Creative Power of Collaboration. I recommend tinkering time as a solution to the innovation paradox: The main task of a company is to keep generating revenue from profitable business lines. You need to do this at as low a cost as possible, sell to the largest possible market, and charge the most the market will bear. The paradox is that this sort of focus is pretty much the exact opposite of how innovation happens. So why not devote a portion of the company’s energy to innovation, while continuing to focus the majority of the resources on proven money makers?

Back in the 1950s and 1960s, the traditional way a company invested in the future was to create a separate organizational unit called “research and development” or R&D. The R&D staff spent 100 percent of their time on innovation; everybody else spent 100 percent of their time taking care of existing business. But the well-documented problem with this model is the “hand-off” problem: taking an innovative new idea from R&D and handing it over to the rest of the organization. All too often, the organization can’t manage the transition and good ideas fail to be implemented. The most famous example is Xerox, which created a legendary R&D group in Palo Alto called the Palo Alto Research Center or PARC. In the 1970s, PARC developed most of the technologies that we associate with personal computing today: windows and mouse user interface, laser printer, networking, pull down menus, etc. (The Apple Macintosh was famously inspired by Xerox’s innovations.) And yet, Xerox failed the “hand off” and never made any money from its innovations.

Many innovation managers now believe that the “tinkering time” philosophy can avoid the hand off problem, by embedding innovation throughout the organization rather than way off in a separate campus.

So why is Alec Foege critical? He argues that it rarely works. (Even as he cites famous examples of new products that emerged from tinkering time, like gmail at Google.) He claims that employees find it “terrifying” and that truly innovative people are completely different from the kind of people companies like to hire. Real tinkerers are “dilettantes, free-form creative types motivated more by their own curiosity than by the bottom line”. He points out that if you are “ordered to tinker” then where’s the passion?

This isn’t what I’ve seen when I visit places like Gore and Google. I see people who are very passionate about their 10 percent project. They don’t seem terrified to me. That’s because failure is welcomed as a step toward later success. And it’s easy to come up with a long list of successful new products and services that emerged from tinkering time…so I’m puzzled that Foege would say “it rarely works.”

Here’s his proposed solution:  tinkerers should profit more from their innovations than the company does; companies should avoid aimlessness and instead demand creativity within clear goals. Well, we already know what will happen if companies do that. If tinkerers profit from their ideas, then people become possessive and selfish and collaboration dies. If companies provide clear goals, then you’ll never get a surprising, disruptive new idea.

I still plan to read Foege’s new book, The Tinkerers: The Amateurs, DIYers, and Inventors Who Make American Great. I’m just a bit more optimistic that it IS possible to foster tinkering within a company; you don’t have to be a loner in a garage to be innovative.

*Alec Foege, “The trouble with tinkering time.” Wall Street Journal, Jan 19-20, 2013, page C3.