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What is the true value of ideas for the business transformation (BT) of the core business? This is what more and more leaders in corporate organizations are asking themselves.

Let’s be clear. If ideas do not make a sustainable contribution to the company’s value, EBITA or specific growth targets at least in the medium term … none at all.

What does not stand in the way of leaders today is the amount of options, ideas, and approaches to digitizing the business. The market for ideas feels like a reminiscent of a funfair of digital attractions, whose beneficial solutions are loudly praised. What we see is that BT is a quite complicated beast and what most leaders are challenged with is its‘ complexity – not ideas.

Figure 1, Which are the top 3 challenges on your projects?

The German Innovation Lab Bubble.

Source: and dos Santos GmbH 2019, survey among senior business transformation leaders from mid sized to global corporate organizations – mainly Europe, n=27

It’s only puzzling that many organisations, instead of solving the complexity of transformation, add more. Some just follow the latest hype, perhaps setting up an incubator, simply because that is what’s in vogue. Some make pilgrimages to Silicon Valley, hoping to find the holy grail of transformation for their business, while others push the issue of transformation away from themselves and start an external lab or new departments focused solely on business innovation (not a reproach).

Germany has seen an extreme increase in Innovation Labs over the last few years. Today, more than two-thirds of all DAX companies have one or more Digital Innovation Units, of which about half are Innovation Labs and 34% accelerators and 15% company builders (based on a study done by Capital and Infront, „Start-up companies in 2018“). Especially in Berlin, the labs of corporations and small to medium-sized businesses have mushroomed in recent years.

These Innovation Labs aim to culturally advance the digital transformation of the core business and inspire the entire company from management to employees for the digital transformation. They want to become more and more the external hubs for the creation of disruptive ideas. But the reorganization of the core business is less strongly in their focus (according to lab leaders, too).

Almost all share the aspiration of bringing exciting ideas and a new spirit to the parent company. Yet, this is often not what really drives the success of BT:

Figure 2, From your experience, which of these statements drive the success of business transformation projects in your company?

The German Innovation Lab Bubble.

Source: and dos Santos GmbH 2019, survey among senior business transformation leaders from mid sized to global corporate organizations – mainly Europe, n=27

So what is the value of all the Innovation Labs, Incubators, separate Innovation Teams, Accelerators, and so on? Applying the first-mentioned benchmark of transforming the core business, many of the existing approaches out there now become thin – very, very thin.

Separation to allow new things is important. Separation to create change does not work.

What is lacking today is clarity in order to identify the right solutions out of the wide range of possible choices, and sustainability in order to anchor the solutions in the company for a lasting impact.

How can successful transformation be accomplished in detail?

Besides the above mentioned research we have analyzed more than 60,000 project hours on business transformation, too and we have found that success is dependent on three simple things:

  • Identifying and focusing on the key drivers of the changing core business
  • Building immediacy and speed
  • Making transformation and innovation a part of your business’ DNA

This is something which isn’t core to the offer of labs these days. They work more as truffle pigs for ideas and epitomize new business models and ways of working. But what happens to the core business of the many traditional companies – especially those who invested in the labs? How do we ensure that these companies are among the winners of the next decades? It takes a sustainable transformation of their business.

So, have innovation labs arrived at the end of their lives? 

No, but they have to undergo a change similar to that of their customers. They have to transform, too. As seen in Figure 1, ideas are not the challenges when doing BT. Above all, it needs

a cultural change,

the access to resources,

strength in the implementation,

speed and

prioritization.

To be successful with BT innovation labs need to play a more strategic role in the process. They need to understand how to help the core business of their customers to

involve the top leadership

aligning the transformation with business strategy

drive a company-wide cultural support for transformation

define the core insights from the „new“ end-users

build bridges to new, external expertise

satisfying modern customer needs and

build new ways to increase existing customer loyalty.

(See Figure 2)

If the innovation labs succeed in making these new qualities of their offer, they will continue to play a strong future role in the business transformation process. If not we will see a big Lab Bubble bursting soon.

I am interested to hear your opinion.