Nice: a user-centred, open-innovation ecosystem. But how?
When entering the area of innovation there seems to be no single best way to do it. All over the business landscape we see companies with traditional R&D departments, skunk projects, incubators, venture capital-departments and so on. I would like to introduce you to what they call a ‘living lab’. Embraced by firms like WalMart and McDonalds, but also IBM and the Santander Group. So what is it?
A user-centred, open-innovation ecosystem, often operating in a territorial context (e.g. city, agglomeration, region), integrating concurrent research and innovation processes, within a public-private-people partnership.
That sounds awesome, but how do you set this up? As said, there seems to be no Holy Grail. Vijay Govindarajan and Chris Trimble came to a similar conclusion while writing ‘The other side of Innovation: solving the Execution Challenge’, in which they stated that having employees dedicate a fixed amount of time to innovation, handing out bonuses for innovation or having a ‘playbook’ for innovation seems to encourage incremental innovation more than disruptive ones. However they did find that companies need to build so called ‘innovation machines’, which should embody a clear set of rules:
- Attract people from outside the company, and doing so without constraints, makes them hire rule breakers instead of perfect stereotype employees
- Be free of some of the metrics that dominate the rest of the corporation. Though so called ‘skunk works’, small autonomous units, should be avoided.
- Maintain integration with the rest of the company, incorporating e.g. some staff to allow them to tap in to other company resources and departments.
- Create dedicated management rules: generic company management rules might not be applied, e.g. accountability should be on the amount of lessons learned or ideas generated instead of budget control.
If you truly want to start innovating from within, the general thought has to change from innovation = ideas towards innovation = ideas + leader + team + plan. In which we identify that the disruptive innovations come from the best ideas, but need to be managed by someone who steps up and drives the execution continuously. Next to a leader you will need the right project team, which will enable you to actively develop and improve the (business) plan.
Still, if you have these innovative machines, why choose a living lab instead of your ‘regular’ R&D department? Living labs have proven to be a more ‘hands-on’ approach to development. They aim to involve users earlier in the process allowing them to search for deeper customer needs and discover new user cases. It bridges the gap between technologic development and the development of services and products, through the participation of all relevant stakeholders (companies, governments, research institutions and citizens). Meanwhile given them an easy understanding of the social and economic consequences of the introduction of innovative products and/or services.
And it might be for these reasons that we have seen increased corporate activity throughout the years in the area of this innovation machine. And though, as stated earlier, the Holy Grail is yet to be found (question remains, is there such a lab setting?). Mr. Pallot found that specifically living labs should be based on four other principles: co-creation, exploration, experimentation and evaluation.
- Co-creation should be aimed at bringing together different points of view, sustaining ideation (e.g. new scenarios, concepts and related artefacts).
- Exploration requires stakeholders to exploring the product or service usages and behaviors in live (or virtual) environments.
- Experimentation on a large(r) scale should be implemented to collect data that could be analyzed later on during evaluation.
- Evaluation of the ideas looks at various dimensions (socio-ergonomic, socio-cognitive and socio-economic) that should be addressed. In each, observations should be made on the potential of adoption of the newly found concepts.
Besides these four principles, living labs should be a place of open innovation. It relies on the assumption that companies cannot rely solely on their own R&D because knowledge is so widely spread.
Well, there you have the methodology. But if you want it to be effective, who should you incorporate. Most of the time you see a combination of the earlier mentioned four different stakeholders, including end users, corporates, educational/knowledge institutions and the (local) government. But what do they gain? End users often want to influence the development of products they use themselves, while companies try to make their road to innovation shorter by directly receiving feedback and thus creating a product that satisfies customer needs. Often theory is not put into practice, and that is why institutions that focus on the gathering of knowledge are often heavily involved in these labs. While governments often gain the same knowledge, they try to use this knowledge to cut costs. To see if there are any innovations out here that might make executing public services more efficiently. What do you think should be the objective of a so-called living lab?
Govindarajan, V. and Trimble, C. (2010). The Other Side of Innovation: Solving the Execution Challenge. Harvard Business Review.
Pallot, M. (2009). The Living Lab Approach: A User Centred Open Innovation Ecosystem. Webergence Blog.
Technology Innovation Management Review (2012). September 2012: Living Labs. Carleton University