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How to Set Up an Innovation Lab at Your Office
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How to Set Up an Innovation Lab at Your Office

February 07, 2019
Innovation Lab

It’s no secret that the rapidly evolving technological landscape has transformed our traditional notions of what it takes to establish a successful and sustainable business. The glorification of startup culture has prompted many companies, in the modern age, to adopt a more innovative approach to their business models as an effective way to stand out and counterbalance the uncertainty and instability in a globally-competitive marketplace.

With this in mind, it comes as no surprise to find that a recent 2017 Capgemini Consulting report found that 38 percent of the world’s top 200 companies have set up innovation labs for the purpose of cultivating new and exciting ideas to continue to grow and establish their brand’s value and industry presence.

If you’re interested in learning more about innovation labs and how your business can work toward implementing an effective strategy for innovation, then look no further.

What is an innovation lab?

In short, an innovation lab can come in the form of a program, initiative and/or physical space created by companies where the primary focus is to ‘foster creative collaboration and ideation’. Innovation labs can be set up internally within an office, using pre-existing resources and employees, or externally with the use of outside resources, recruits or business partners—or, it can be comprised of a combination of the two.

Leading businesses across all industry sectors are beginning to see the value of setting up innovation lab frameworks in order to achieve their strategic goals.

Johnson & Johnson’s JLABS program was created with the purpose of being a ‘life science incubator,’ put in place to help entrepreneurs and businesses within the pharmaceutical, medical device, consumer and health tech industries discover and develop ‘breakthrough solutions in the healthcare sector’.

Walmart Labs develops ‘industry-changing innovations’ in order to enhance the retail experience of its consumers.

Some companies create innovation lab programs to introduce new products and/or services into the marketplace. Others do so in order to forge strategic partnerships or test novel technologies. Some companies may start an innovation lab to create new business models or brainstorm ways to redesign the customer experience. The explicit purpose for these programs will naturally vary from business to business.

Any company, regardless of size, can benefit from establishing an innovation lab in order to achieve a strategic goal.

Steps to establishing an innovation lab for your business:

1. Define your objectives.

Companies with innovation labs that are effective and generate value to the business benefit from these programs because they’ve defined clear and concise objectives for their innovation initiatives. What are your specific goals? Are you looking to leverage new technologies or forge strategic partnerships and alliances in or outside of your industry?

Perhaps your focus is to diversify your offerings on products or services, identify novel opportunities to tap into new markets or place your company at the forefront of innovation in your industry. Establish and document well-defined and measurable objectives from the start in order to ensure you maintain focus throughout the process and are able to achieve a sustainable, long-term advantage.

2. Develop a strategy.

Companies with innovation labs that are successful develop effective strategies that tightly align their innovative efforts with the core fundamentals of their business. A solid strategy shows dedication to a set of “coherent, mutually reinforcing policies or behaviors” which are directed at attaining a certain goal.

Ask yourself, what actionable tactics can your company take in order to meet your innovation objectives? What resources do you have available to support the implementation of these tactics? What is your timeline? Answering questions like these will be essential while creating an effective game plan. Strategies help to provide focus, direction and facilitate alignment—without one, you run the risk of sabotaging your efforts from the very beginning.  


‍3. Establish metrics.

Innovation initiatives are successfully implemented when their objectives, tactics for meeting those objectives and metrics of measurements are crystal clear. Develop a system of metrics so that you’re able to systematically conduct both a qualitative and/or quantitative analysis of the innovation process, its progress and potential ROI along the way.

For example, Harvard Business Review noted that ‘revenue generated by new products’ is one of the most common metrics utilized by innovation executives. Well-defined metrics are the key to ensuring continued progress toward your strategic goals.

4. Prepare a budget and identify potential funding opportunities.

Preparing a budget is another essential process that requires close examination.

Identifying the costs associated with setting up your innovative lab and figuring out the financial resources your company is able to reasonably expend to support its implementation is going to be a key determining factor in its success.

Are you planning on establishing the lab within the confines of your office or do you plan on outsourcing the initiative and partnering with other companies or teams externally?

Do your calculations show that you’re going to need to pursue additional funding opportunities? Are you going to focus on corporate funding or individual sponsors for the initiative?

Some companies may find that innovation ties in more closely to a specific unit of the business (i.e. marketing) and choose to pull funding from that individual group’s budget.

When Allstate decided to set up an innovation initiative to differentiate themselves in the marketplace, they chose to establish a formal Innovation Council for evaluating the company’s initiatives and allocating funding toward them.

The process of allocating a budget, and identifying any potential need for additional sources for funding, will vary greatly from one business to another.

‍5. Focus on diversity when it comes to recruitment.

Whether recruiting internally or externally, you will need to put a strong focus on diversity in order to foster an environment ideal for innovation. You may find that a combination of current employees and external recruits is ideal for your particular innovation initiative. After all, current employees will have a more innate knowledge of your company’s customer base, and external recruits have a strong potential for bringing in fresh viewpoints and new skills.

CIO magazine suggests that a good innovation team is recruited for both ‘passion and cognitive diversity, rather than just skill’.  Remember, the goal of an innovation lab is to foster creative, out-of-the-box thinking and—as a result—recruiting a diverse team with broad and varying backgrounds will be the most effective method to achieve this.


Companies in every sector and of every size are beginning to see the necessity of establishing outposts that focus on innovation as a tool for long-term sustainability. Innovation labs aren’t just a shiny new trend—they’re powerful, strategic initiatives that your business can use to help stay ahead of an ever-evolving, highly competitive landscape.

Written by:

Kait Hobson
Workplace Innovation