Innovation is not just a competitive edge—it’s a survival mechanism. According to Zerone Consulting, 80% of the executives believe their business is vulnerable to disruption, while 84% affirm innovation’s role in driving business growth.
For mature brands, maintaining relevance in a rapidly evolving market often means turning inward. Internal innovation labs have emerged as strategic hubs for experimentation, creativity, and disruption, enabling legacy companies to reinvent themselves while leveraging their scale and resources.
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The Strategic Need
Mature brands face unique challenges. Unlike startups, they carry the weight of legacy operations, existing customer expectations, and established market positions. While these elements provide stability, they can also stifle agility. Internal innovation labs are the answer to this paradox. These labs function as incubators for new ideas, creating an environment detached from the bureaucratic constraints of the parent company. For instance, Alphabet’s “moonshot factory,” X, focuses on radical innovation by tackling massive problems with groundbreaking solutions, such as Waymo’s autonomous vehicles.
However, according to the Harvard Business Review, 90% of the innovation labs fail to deliver on their promise. Only a few of these innovations are fit to deliver on their promise. These innovation labs have developed a deep understanding of the pivotal importance of unmet customer needs. For instance, Lowe’s Innovation Labs employs a narrative-driven approach, using market trends and customer feedback to generate actionable insights. By weaving science fiction narratives into strategic planning, Lowe’s creates compelling solutions that resonate with customers and executives.
Apart from this, they have a diverse talent pool. Labs often hire individuals with backgrounds in anthropology, design, and data science in addition to traditional roles. Alongside this, Iterative processes like design sprints and prototyping are central. Cisco’s Hyper Innovation Living Labs (CHILL) exemplifies this by hosting 48-hour workshops where teams brainstorm and prototype solutions in real time, culminating in market-ready products.
Innovation Labs Are Indispensable
For mature brands, the cost of complacency is high. Innovation labs provide a structured yet flexible framework for exploring new business models, technologies, and customer experiences. They enable companies to disrupt themselves before external forces do.
In a world where the pace of change is accelerating, the ability to experiment, fail, and learn quickly is invaluable. Whether through pioneering technologies, enhancing customer engagement, or streamlining operations, internal innovation labs are redefining how legacy brands stay ahead of the curve.
Reinventing Legacy Through Innovation
Companies like Nike have merged creativity with commerce. Their S23NYC studio revolutionised its SNKRS app, which became a dynamic platform for sneaker enthusiasts. By gamifying app interactions and introducing features like unlocking exclusive products through in-app performance, Nike has blended digital engagement with retail, driving significant growth in its digital business.
Similarly, Walmart Labs’ innovations have helped them immensely in reducing transaction times. According to Builtin, Walmart Labs reduced transaction times by 75% by improving operational efficiency while enhancing customer experience. These advancements scale rapidly, benefiting from Walmart’s massive infrastructure.
Obstacle & The Way
Despite their potential, innovation labs face several obstacles. For instance, they may become soiled if they are not integrated into the company’s core business. Innovation labs often operate independently to foster creativity and rapid experimentation. However, this detachment can lead to misalignment with the parent company’s overall goals.
Projects may fail to scale or integrate into the core business, rendering them isolated initiatives rather than transformative solutions. This makes leadership alignment a crucial factor. Regular involvement of senior executives ensures that lab projects align with strategic priorities. For example, PepsiCo’s labs use cross-functional teams to bridge innovation and operational divisions.
Further, many businesses fail to attract individuals who thrive in high-risk, experimental environments. These labs thrive on out-of-the-box thinking and require a workforce comfortable with ambiguity, experimentation, and potential failure. However, companies can follow branding strategies to attract people passionate about innovation and may seek talent through hackathons, incubator partnerships, and more.
Another major hurdle faced by innovation labs is financial metrics. Traditional financial metrics, such as revenue or profit, may not apply to innovation labs in the short term. Labs often focus on exploratory and experimental projects, which may take years to yield tangible results.
Companies can overcome this obstacle by focusing on scalable outputs. Rather than immediate profits, labs measure their success through prototypes developed, patents filed, or pilot programs implemented.
The Strategic Edge of Internal Labs
By embracing internal innovation labs, mature brands are rewriting the playbook on disruption. These strategic hubs foster creativity and ensure that established companies remain dynamic and relevant in an increasingly competitive market.
