Innovation hubs are separate entities set up by businesses to come up with ideas to improve how they operate, disrupt their markets or create new sources of competitive advantage.
An innovation hub is completely removed from the rest of the business. It has no day-to-day responsibilities other than the generation of innovation ideas and the testing and development of new processes, technologies, services, or solutions.
A separate business entity that focuses purely on innovation and developing ideas that could improve efficiency or differentiate a brand.
A continuous source of new ideas, and a culture of experimentation that can help you disrupt your market and gain competitive advantage.
Because innovation hubs are removed from the day-to-day operations of a business, often the ideas they generate aren’t well aligned with what the rest of the business really needs.
Many large companies have created innovation hubs to try to enable a continuous stream of innovation ideas. However, many have also closed those hubs within 12 months.
What is it?
An innovation hub is a standalone business unit, focused purely on the generation, testing, and development of innovation ideas. By stepping away from the day-to-day operations of the rest of the business, innovation hubs look at the business, its processes, its products and services, and even its customers in new ways.
The idea behind the hubs is that by dedicating a team to innovation, businesses can ensure a constant stream of new ideas, and use them to continuously improve business processes, experiences, and product and service offerings.
What’s in it for you?
Innovation is increasingly critical to business success. Today, regardless of the market you’re in, if you’re not actively trying to disrupt the status quo, it’s only a matter of time before you are disrupted by a competitor.
Innovation hubs keep businesses focused on disruption, and enable them to come up with fresh ideas, test them, and fail quickly where necessary to find the best, most valuable innovation ideas.
What are the trade-offs?
Creating a separate entity for innovation carries many risks. Firstly, because the entity is removed from the day-to-day operations of the rest of the business, there’s a risk that many of the ideas it generates won’t solve real challenges for the business or its customers.
Innovation hubs can also take away the power to innovate from other lines of business. As many businesses have seen, the most valuable innovation ideas often come directly from those closest to the areas they’ll be applied in — this means it’s crucial those people are given the means to share and develop their own innovative ideas.
There’s also a risk around the hub’s lack of direction. Simply being instructed to work on new innovation ideas can leave the hub without a clear path forward, leading to the development of off-the-wall ideas that fail to deliver value when applied in the context of the wider business.
How is it being used?
Numerous enterprises have built and experimented with innovation hubs, with mixed results. They’re most successful when they have a clear mission, involve internal and external collaborators, and are focused on solving real business and customer challenges.
However, without those things, many fail to deliver what businesses want to get from them. Since 2014, Microsoft, Disney, Target, Coca-Cola, British Airways, and The New York Times have either closed their innovation hubs or downsized them dramatically.
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