What comes next? The Resurgence of Innovation Hubs for Business & Industry
What can you do today that you couldn’t do a year ago?
A few months ago, I shared a set of choices for boards and leadership teams to grow in an article addressing corporate growth and innovation. For those thinking about how to make new progress, the article you’re reading now deep dives into one of those options: innovation and technology hubs.
Innovation and technology hubs have the purpose to deliver differently on business priorities. The world’s top organisations have them because they enable a new level of outcomes to be delivered.
Here’s a summary of this article:
- Businesses are facing an unprecedented level of opportunity and change driven by customer preferences, societal agendas, talent shifts, and technology. New opportunities exist for companies to differentiate themselves and rethink, as visionaries, how things are done.
- By nature, businesses (and their boards and executives) wanting to significantly grow, shift their brand, and change their business models will strive for an approach outside of ‘business as usual’. As winners emerge in the next few years, their strategies will, in hindsight, be obvious.
- Collaboration will amplify in importance because many organisations are facing similar challenges and can bring value to each other in brand, assets, and shared investment.
- Innovation and technology hubs are designed with a specific vision, measures and a focus to fast-track the level of progress and innovation on priority initiatives. Resources are dedicated, the rules are different. Innovation hubs amplify brands and increase the level of self-belief that organisations have in what they can achieve, with follow-on benefits to the culture.
Let me explain, covering why there’s an increased interest in innovation and technology hubs, which companies are utilising them, and how to think through if one could help your business.
Fast change. New opportunities.
In addition to the full agenda of delivering on business imperatives, there’s a lot that’s new to think about. You can see it when scanning the covers of Time magazine; press photos of the year 2020; the daily Company Directors feed; and the movements to rethink gender, race, sustainability, and working from home.
Many of the world’s top companies are tech companies, influencing countries and politics. Each of these are like a weather pattern of change, each factor impacting the other.
Most of them have long been agendas in their own right, yet the wave of public opinion requiring businesses to make faster progress, show leadership, and be relevant, has accelerated exponentially. Even a single incident or person can quickly divert the expectations of a nation. Think Thunberg. Musk. Floyd.
Despite the challenges, it’s a unique and exciting time for businesses to step up, to authentically differentiate themselves, and seek growth. Innovation and technology hubs may be of interest when pursuing these opportunities such as:
- Most CEOs are expecting disruptors to come from outside of their industry. Today many industries are on the fault lines of transformation, making it a good time to respond to, expand, or engage in adjacent industries. Examples include retail, healthcare, education, and agriculture, and how to better add value with members and associations.
- Consumers, businesses, and governments are expediting technology adoption — accepting new practices and policies, and making it easier for new entrants in areas like education (online), payments (cashless), and health (telehealth), to name a few.
- Increasing sustainability and transparency, as customers and investors demand it, including the way we design, grow, and source products and services.
- Spotlighting diversity, inclusion, and new customer segments with the opportunity to employ, develop, collaborate with, and serve all of the community.
- Highlighting awareness of mental health and employee, customer, and community wellbeing.
- A greater level of community support for startups, and local and small businesses.
- Internationalism — the rethinking of supply chains — where people and goods come from, and commerce when borders are closed.
Why Companies Strive for New Ways to Make Impact
Looking at a priority business issue, we sometimes feel that there must be a different way to make progress. We don’t have time. We need it done. We can’t work harder.
The press release we want, won’t read like this:
We’re working hard, using our existing people in their existing environment, within existing processes, metrics and technology infrastructure, to completely disrupt how we approach and deliver on this important agenda for our business. This is a new era for us.
By nature, boards and leadership teams wanting to significantly grow, shift their brand, change their business models, and leverage technology are striving for an approach outside of their usual one.
For any agenda of importance, we should at least be asking ourselves for two options to deliver on programs or to connect more with the external market in order to lead or keep up; for example, one business-as-usual option, and one bolder option.
As Einstein once said, super-intelligence is:
“the ability to hold two opposing choices in mind at the same time, and consider them equally.”
It doesn’t matter what they are, just make one of the options a bolder one to compare to.
Collaborating with others has increasing appeal, because the brand and strengths of each party can be leveraged, the impact magnified, the time reduced, and the investment shared.
When collaborating, by nature, there is a new, deliberate work cadence, since the business-as-usual of neither applies, and there is a clearer, external, and mutual accountability to the project.
Why Innovation and Technology Hubs?
Innovation and technology hubs ignite impact based on a specific vision or program goal, such as growth, revenue, experience, or technology enablement.
Hubs have different rules to work, technologies, and tools. They focus on a priority agenda with internal functions ranging from:
- Uplifting the confidence, innovation, and technology capability in executives and teams.
- Scanning and assessing startups, technologies, investments, and disruptors.
- Engaging with startups to meet the business to showcase, co-create, mentor, incubate, or trial.
- Engaging with partners, customers, and industry to identify opportunities.
- Creating new assets, media, communications, roundtables, and events to invite collaboration to attract talent and to uplift the brand.
Innovation and technology hubs can be a powerful option because:
- There is a laser-like focus on getting the job done when something 10x is lifted externally into an innovation and tech hub.
- They make faster, more innovative outcomes possible than entirely in-house-managed projects, the success of which benefits brand, fuels organisation self-belief, and attracts new opportunities from across the market.
- There is a higher likelihood that projects with new technology, partners, and mandate go beyond product innovation and follow on into new experiences, business models, discovery channels, and segments such as subscription, social, and partnership incentives.
- The agendas we face are expansive, expensive, will be accelerated, and will have greater success with shared investment, cross-functional resources, and by working with a healthy disrespect for staying in the existing swim lanes of either company’s business units or organisation.
- Brands and companies have the opportunity to reposition by aggregating the credibility of each other and engaging smaller tech companies or startups as needed. Startups add to the momentum by being the provider of a missing part of the new proposition, i.e. needed and not just ‘engaged’.
13 Business Reasons to set up an Innovation Hub
Reasons to establish innovation hubs can include:
- Faster development of new products and exploring new business models that solve client challenges and drive company revenues. E.g. Walmart Labs, and the Treasury Wine Estates and YBF Ventures’ SquareGrape innovation hub.
- Be a working lab to collaborate with clients to solve their specific challenges. E.g. Statefarm’s Red Labs.
- Fast-track the change of existing strategy to a new business strategy. E.g. customer-centred, digital transformation.
- Respond to the threat of digital disruption and new competitors. E.g. Ikea Labs, Amazon Lab126, and Google Nest Labs.
- Demonstrate new products, capabilities, and future directions to existing and potential clients and business partners, increasing their trust and business. E.g. Coca-Cola’s KOlab.
- Foster partnerships with outside companies, memberships, associations, startups or universities and researchers. E.g. Stanford Connected Cars, Verizon 5G Labs, University of Melbourne’s Melbourne Connect and the NASA Center of Excellence for Innovation Collaboration.
- Explore and expedite learning on the potential of new technology or digital engagement outside of product development to solve client or business challenges in new ways. E.g. HP Labs and Walmart Global Tech Labs.
- Open a collaborative space closer to industry innovators and tech centres. E.g. regional geographies.
- Collaborate with customers to test, experiment, co-create and iterate new products. E.g. 7-Eleven Evolution Store.
- Attract talent by appealing to, engaging, recruiting, and retaining digitally-skilled new teams. E.g. the Lander & Rogers and YBF Ventures’ Law Tech Hub and Goldman Sachs’ GS Accelerate.
- Shifting the culture toward greater innovation, technology integration, and collaboration with internal and external groups. E.g. Starbucks Tryer Center.
- Create multiple innovation centres focused on different vertical and horizontal markets, geographies, or high-potential new technologies. E.g. AT&T Foundry with centres for consumer, enterprise, media, etc.
- Establish a significantly different virtual innovation hub to support business innovation with outside thinking, tools, and processes. E.g. Cisco’s Living Labs 48-hour CHILL sessions.
Innovation Hub Examples and Links
The world’s top companies have innovation and technology hubs, with more than 100+ examples across brands, regions and industries. The central premise is that however innovative companies are within their own walls, this capability is, by its nature, a capability beyond.
Below are some interesting examples:
Google is interesting because it separates out innovation from its core business in multiple ways, believing it’s the best way not to constrain ideas or resources. Examples of separate innovation vehicles include:
- Innovation Lab Google X, with a focus on self-driving cars and drone delivery to name a few.
- Independent ventures and dedicated innovation spaces for each initiative and a space to engage the marketplace (for example Calico for exploring age-related diseases, Fiber for super-fast and inclusive internet access, and Nest for smart home devices).
- Google Ventures is a separate approach via corporate venture capital fund investments made in the market.
Starbucks’ Tryer Center is a lab on the ground floor of Starbucks’ Seattle headquarters, looking like a functional store, run separately. The store set-up is on wheels so the innovation space is flexible and mobile. Founded in late 2018, the centre has produced more than 130 new projects, ranging from the ‘fail soup’ (a branded soup few people wanted), to a new Starbucks app with voice ordering. The one rule is each Tryer innovation gets implemented in 100 days or less. That way if a product tanks, the team can move on.
Other retail examples include:
- Walmart labs in multiple locations, consisting of constellations of hyper-focused mini-startups, each one specialising in different areas such as customer technology, supply chain, or analytics. This has reduced wait times, transaction times, and increased revenue.
- Coca-Cola’s KOlab where brand rules are relaxed, vendors and employees visit, drinks are created and paired with gourmet meals, and virtual reality stimulates marketing, store shelves, and customer interactions.
- Lowe’s Innovation Labs designs the future of 3D virtual replicas, 3D printing, and robotic exoskeletons that help employees lift heavy objects.
Verizon 5G Labs As 5G is rolled out, it ushers in a flood of new hardware and apps. Collaborating with academics, industry leaders, and cutting-edge startups, Verizon leaders dream up 5G use cases and capabilities. Since 2018, the Waltham-based lab, in particular, has focused on the strengths of the Boston-area tech scene: robotics, healthcare, and real-time enterprise solutions. This increases innovation and adoption across the ecosystem, and delivers faster time to market and new revenues through engagement in new industries and partner brands.
AT&T Foundry innovation centres are now established in six cities physically located across the world. The AT&T Foundry is a network of innovation centres where engineers, designers, developers, and business experts work from concepts to commercialisation for real-world solutions, many of which have business sponsorship and can be handed back to the business to deploy and scale. The centres look for real solutions that can add exponential value, and with every project they strive try to build positive connections. Each year, the Foundry and executives from AT&T, through the Foundry, engage with more than 500 startups.
Cisco Hyper Innovation Living Labs are a virtual innovation accelerator and process delivered across locations in 48-hour workshops. At each one, small groups of CEOs and VPs brainstorm products relevant to the Lab’s theme. By the end of the first day, teams begin prototyping their visions, working on concepts with engineers, marketers, and 3D printers. By the end of the second day, teams pitch their product to panels of executives at Cisco and partner companies. Typically, one or two of the five startups at each living lab session, goes to market.
GS Accelerate is a separate innovation incubator only for startups run by employees at Goldman Sachs. Though it’s a financial institution, around one third of the company’s workforce are engineers with game-changing ideas. The innovation hub accelerator is a win-win in both developing a steady stream of new technology and retaining team members who might otherwise depart to found their own startups.
Other financial service examples include:
- Capital One Labs, focussing on solving problems at the intersection of finance and technology.
- Statefarm’s RED Labs, working on client problems such as aerial images to assess land damages, climate change, blockchain products, and virtual reality-based training.
Establishing Innovation & Technology Hubs
It can be challenging to know what it is that you want in a hub, because innovation and hubs, can be ambiguous, and so can their value and results. To help clarify options, based on my experience and that of my colleagues at YBF, delivering them across the world, here are some of the key factors that may help you determine the value and scope of a hub. Refer below for some of our work in fintech, agtech, proptech, legaltech, and digital and entrepreneurship talent hubs in Silicon Valley such as the AT&T Foundry, and with universities.
Think through your priorities with the questions below, or print off and use a pen to circle what resonates.
Step 1: Understanding the ‘why’.
The most rewarding way to start is thinking about what’s important for you.
- Think about the purpose, vision, and subject.
- Sketch a timeframe for the hub such as whether it’s an event, program, or period such as 12 months, one to two years, etc.
- Decide the most important measures for success (for example cost, revenue, prototype, products, partners, trials, segment uptake, time to market, talent engaged, learning, and media).
- Draft a few bullet points of constraints — for example timeframe — to start seeing results, brand leeway, mandatory regulation or approvals, and geographic mandate.
Step 2: Who do you want to collaborate with?
Innovation and technology hubs are most powerful in this regard. It’s possible, but not advisable, to collaborate with all levels of stakeholders. Your outcomes may best be served by focussing on:
- Innovative startups or technology providers.
- Co-creating with customers or suppliers.
- Engaging with employees.
- Bringing together industry partners, associations, or basing it on regulatory shifts such as the consumer data right, GDPR, or open banking.
Step 3: What capabilities and functions should it perform?
Innovation hubs have the potential to do a number of things with a different weighting of focus on functions.
- Do you want it to educate executives and employees more widely?
- Do you want it to research the market for startups, emerging tech, and identify places to learn, engage, or compete?
- Do you want brand impact and to have a communication capability with media, news, podcasts, or events?
- Do you want a new external innovation network connected in? For example, venture capitalists, talent, and technology experts?
- How far do you want to go in delivery? Concepts and ideas, pilots and trials, financial models and supply chain, and/or launch?
Each of these will directly point to the functions to resource it with.
Step 4: How disruptive should it be?
(This is good to decide with both truth and humour).
- Is the mandate to fix or improve something?
- Accelerate a strategic concept?
- Disrupt the business (potentially 10x) and reimagine a service line or brand?
- Is there an emphasis on product, service, or business model innovation?
- Should the executives in the business be aligned or engaged or incentivised?
Step 5: What kind of delivery location?
Decide if the hub should be physical, virtual, digital, or both. This will assist with getting the right outcomes to support the desired outcomes, for example:
- If it’s physical, in one or more local locations, with visitors, branding, assets, demonstrations, and branding.
- If it’s virtual (and physical), for example set-up and designed for video conferencing, live screens, immersive experiences, and collaborative facilitation and tools, supported across one or more locations.
- If it’s digital, meaning all aspects are available for wider benefit and reusability across the business, such as dashboards, scanning reports and startup listings, photos, processes, workshop and experiment methods, innovation exercises, and playbooks.
These are just a few of the ways an innovation hub framework can be used to consider choices and find what resonates.
One of the most regularly raised concerns is how the business will respond internally. There are effective and proven ways to engage the business, handover, and transition the skills and learnings into the business.
These include executive sponsorship, communication, workshops, and visits through the hub, sharing of processes and tools used by the business, resourcing talent in the hub, and extending the capability of the hub with funding from the business, where the business has budget and resources but wants a new approach.
Once established, the hub operation will:
- Above: Stay on vision and focus on agreed, directionally-correct goals and measures.
- Input: Have criterion for how topics or requests from the business enter the hub.
- Within: Inspire and run people, data and technologies, agreements (NDAs, etc.), and assets.
- Output: Know the process flow for initiatives to exit the hub (i.e. IP, commercialisation, spinoffs, funding, sponsors, shared learnings, handover, and talent).
“The important thing is this, that we are able to sacrifice what we are, for what we could become.” — Charles de Bois
It’s an exciting time to be in business, to have vision, and to guide your company to take on the opportunities of deep importance to society and stakeholders, and all that technology has allowed us to reach.
Here’s hoping that companies will seize these extraordinary opportunities to grow. There’s so much new possible. As a leader, what will be your legacy?
Words by Kate Eriksson
Kate Eriksson is experienced internationally across startups, corporates and technologies having lived and worked in Australia, Sweden and Silicon Valley for companies such as Ericsson, AT&T and PwC. She is the founder of health tech company helloEd, and a member of YBF’s executive leadership team.
YBF is Australia’s largest technology and innovation hub, enabling startups and scaleups grow, corporates to innovate, and the Australian tech ecosystem to thrive. The YBF leadership team is internationally experienced working with corporate innovation and hubs including GE, Ericsson, PwC, AT&T, Wesfarmers and BP, across markets including USA, UK, The Netherlands and Australia. Their experience is both as corporate innovators and startup Founders.