Video: Innovation Studios: the Engines of Enterprise Experimentation

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Innovation Studios: the Engines of Enterprise Experimentation

Gold

Thursday, May 14, 2015 • Enterprise UX 2015

Jeff Gothelf

Author

Summary

In this talk, Jeff Gothelf addresses the challenges large enterprises face in pursuing disruptive innovation, distinguishing it from sustaining innovation. He critiques common corporate approaches such as hackathons and innovation labs, citing examples like Nordstrom and AOL where such efforts failed to produce lasting impact due to misaligned incentives, lack of strategic focus, and poor integration with core business teams. Jeff highlights the importance of embracing innovation as a corporate value rather than a siloed activity. He shares insights into Adobe’s Kickbox initiative as a better but still limited approach due to its part-time nature and lack of strategic direction. Ultimately, Jeff advocates for the creation of innovation studios—dedicated, cross-functional teams led by entrepreneurial leaders, funded independently, and aligned with corporate strategy and outcomes. These studios foster ownership, transparency, and patience, working on strategic ideas with a time horizon of 18 months to three years. When an idea succeeds, the founding team carries it forward as a new business unit or spinout, maintaining momentum and equity stake, which incentivizes genuine risk-taking and entrepreneurship within the enterprise. This model leads to cultural improvements across the company and better integration of disruptive innovation with sustaining innovation efforts. Jeff rounds out the talk by offering to share further insights from his upcoming book coauthored with Josh.

Key Insights

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Large enterprises confuse innovation as a magic spice, but it requires cultural and structural changes to be effective.
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Disruptive innovation is distinct from sustaining innovation; it involves creating new business lines leveraging core capabilities, not just improving existing products.
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Hackathons fail to drive true disruptive innovation because they are short-term and lack incentives for follow-through.
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Innovation labs often fail due to poor alignment with corporate strategy and difficult handoffs to product teams, as demonstrated by Nordstrom's lab closure.
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Corporate-wide innovation programs like Adobe’s Kickbox foster experimentation but struggle with strategic focus and are treated as side projects.
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Disruptive innovation initiatives struggle within enterprises due to risk-averse cultures, calcified decision-making, and incentive structures focused on shipping features.
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An innovation studio model, with dedicated funding, long-term horizons, strategic alignment, and entrepreneurial teams, offers a viable path for enterprise disruptive innovation.
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Innovation studios require strong leadership resembling startup CEOs, cross-functional teams, and a culture valuing humility, transparency, and risk-taking.
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Successful disruptive ideas are spun out as new business lines with the original team retaining ownership and equity to maintain motivation and continuity.
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Public transparency on progress and failures in innovation studios helps embed learnings and culture into the greater organization, improving sustaining innovation too.

Notable Quotes

"These are all attempts by large companies to figure out new ways to deliver their products or services or to create new businesses outside of what they’re currently working on."

"Everyone wants some. It’s interesting. I work a lot with large organizations. What I hear all the time is this word innovation as if it’s like a spice that you can sprinkle on your current activities and suddenly magical new things come out."

"Disruptive innovation is when you create a whole new line of business based on a set of internal assets that you leverage."

"Hackathons don’t work as a model for disruptive innovation because they’re a temporary event, a finite time box that doesn’t change culture or process."

"Innovation labs rarely align with corporate strategy and handoffs to product teams are tricky, which usually kills ideas."

"Adobe’s Kickbox is great as a professional development tool, but it’s not strategic or a reliable driver of new business lines."

"Disruptive innovation doesn’t happen overnight. You have to practice, learn, fail, and continue to experiment over a long time."

"The innovation studio is led by an entrepreneurial person who runs multiple teams working on strategic ideas driven by corporate leadership."

"The team that creates a winning idea leaves the studio with the project and owns equity in the new business to keep dedication and momentum."

"Everything the innovation studio does has to be transparent and public — wins, failures, and learnings alike — to benefit the entire organization."

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