Innovation labs offer significant value to the companies that use them: not just the development of new technologies and processes that define the terms of a business’s future profitability, but also essential updates that keep a business vital in a constantly changing world.
In fact, the world is changing so fast – thanks to disruptions from ML, AI, blockchain, IoT, 5G, quantum computing, and other technologies – that opting out of innovation lab-style thinking and operating is a recipe for failure. This isn’t a new development. Innovation has always been the arbiter of success – just look at the Fortune 500 from 20 years ago: Sears, MCI, Circuit City, and Eastman Kodak all had a spot.
These companies didn’t merely lose market share to competitors, they capsized because they didn’t adjust their business models as the world changed around them. (Read more: “How Digital Disruptors Are Changing Private Equity.”)
So what’s a mid-market company competing with heavy hitters and nimble startups to do? Adopt innovation as a standard way of operating – with or without the physical lab. Here’s how.
Know you want to start innovating right now? Get in touch.
Invest a Little, Learn a Lot
In the classic innovation lab setup, a company either pours money into an internal lab or enters into an expensive consulting engagement with the purpose of… well, that’s one of the problems. The goals of innovation lab engagements are often poorly defined, which is why as many as 90 percent don’t end up increasing revenue or generating growth.
That’s not a viable model for mid-market companies. But neither, as we’ve noted, is abstaining from innovation altogether.
That’s why we’ve adapted the innovation lab model to work for mid-market firms. Our approach is based on four principles:
By reframing innovation as a non-negotiable part of operating a business and taking away the high barrier to entry posed by the standard innovation lab model, these principles offer a path to innovation that works for mid-market firms.
In practice, we’ve seen these principles yield a variety of valuable outcomes: a board-ready proof of concept for what had been a nebulous idea, a definitive answer about whether a new idea will work (plus several others to try), education for entire teams about how to replicate the process of innovation, and more.
Key to each of these outcomes – and to the innovation model more broadly – is accepting that failure will be part of the innovation process.
Build Failure into Your Margins
Failure is not fun. It can be painful. But it is an essential component of the innovation process.
The former Fortune 500 companies we mentioned earlier are great examples of why: when a company continues to do the same things it’s always done in the same ways it’s always done them, it dooms itself.
Think of it this way: you’re looking for your keys on your way out the door. They’re not where you usually keep them. But that’s their place. They should be there. You look in a few other places (not there), but you keep going back to the hook by the door where they ought to be. And they keep not being there. Keep this up long enough, and you’ll miss whatever event you were trying to get out of the house for.
That’s similar to the situation that many businesses find themselves in today. They’ve always made money doing one thing, possibly in one way. But all of a sudden, they realize they’re making less money than they used to. At this point, they have a choice: they can try to cut expenses to keep profits steady or they can accept that the world has changed and that their business model must therefore also change.
The latter is obviously the smarter move for the long term.
But it’s also the harder one. Because just as you may not find your keys in the first several places you look, you may not find a new business model that yields positive ROI in the first few efforts you make.
You might fail a few times – and that’s okay.
The key is to fail fast (a phrase you’ve probably heard) and to learn from your failures.
For example, we’re partnering with Adare SEC, an integrated communications provider, to create an inbound digital mail solution called Digital Mailroom.
At the start of our engagement, Adare SEC needed approval to fund the Digital Mailroom product, but didn’t have anything beyond the idea to present. We worked with them to run a two-week experiment that led to a proof of concept that got approval.
While the experiment illustrated that their core idea would work, it also revealed that several key components they’d hoped to include would be far too complex to manage. Those elements failed – but Adare SEC learned before attempting them at scale tanked the project.
Today, Digital Mailroom accelerates the processing of everyday customer communications by intelligently orchestrating individual customer touchpoints across multiple channels, ensuring that critical information reaches decision makers fast.
This allows key users to quickly perform relevant actions before the information is securely archived. The result is dynamic process efficiency and an improved experience for the end customer.
Andrew Herd, Chief Digital & Information Officer at Adare SEC, comments: “Too often, businesses attempt to build new capabilities around existing, inefficient business processes, ultimately causing projects to fail. Really, these businesses need to reengineer legacy processes, but this can be seen as too complex and expensive. Apexon is driving further innovation into our Digital Mailroom suite, creating a workflow that provides clients with a clear path towards process reengineering, cost efficiencies, and better outcomes for their end customers.”
A key takeaway from Adare’s experience: accept that innovation practices will sometimes lead to failure. They will reveal that the ideas you’re excited about don’t work. That will hurt. But it will save you lots of money. And if you’re paying attention, it will also reveal new ideas to test.
That leads directly to another key to success: run multiple experiments, on an ongoing basis, so that the failures don’t matter. Investing $1 million in 50 small projects makes financial sense when even a single one of them yields a $1 billion innovation.
Mastering that part of the equation, of course, is easier when you can work with people experienced in this process.
Stand on the Shoulders of Giants
Adopting innovation as a way of doing things requires expertise in three areas:
Typically, in mid-market firms, the third item comes from someone internal. The first two often come from a third party. To be a viable partner for mid-market firms, that third party should be prepared to launch an engagement without a massive upfront investment – and to turn any level of investment into valuable, actionable insights for your company.
In an ideal world, the third party can also provide boots-on-the-ground staff to help an organization spin up an innovative new product or process and to train internal staff in the skills necessary to take it over down the line.
That’s exactly our approach at Apexon. Our experienced team guides our clients through the innovation processes that lead to the discoveries that keep the business relevant and profitable in a changing economy. We have team members who happily serve as high-level consultants defining strategy and those who can supplement existing teams to familiarize them with new ways of operating.
At the center of our innovation engagements is deep collaboration with internal experts who know their business and industry intimately.
With Innovation, Virtually Anything Is Possible – And it Doesn’t Cost What You Think
What’s holding your organization back from taking the leap toward adopting innovation processes? If you’re like most of the firms we work with, it’s a hesitancy to take that first step.
We’re here to urge you: don’t wait any longer.
Yes, pivoting toward innovation-first processes can be uncomfortable. It requires you to move away from what’s familiar and try new things and fail and learn from those failures. Those are not fun at first.
But that lingering dread you’re feeling? That fear that you can’t keep up with the competition and you can’t do any more with any less because your teams are already underwater with work? That can go away. The first step is reaching out to us for a conversation. That part is painless! And it can lead to a whole new world of stability, growth, and (most of all) innovation. All you have to do is schedule a call. We can’t wait to hear from you.