A lust for labs

By Milo Yiannopoulos on July 30th, 2012

A year ago this week, Google, poster child of corporate innovation, announced plans to close its much lauded Google Labs. There was general consternation. Google’s incubation chamber for conducting experiments in consumer products spawned Google Maps, Reader and Goggles – as well as a host of other, less successful projects. But, despite Google’s decision to “concentrate on core products”, 12 months on labs are enjoying a new wave of popularity and investment.

For example, earlier this month, Mind Candy, the UK startup behind Moshi Monsters, announced their acquisition of games studio Origami Blue to fuel a research and development environment called Candy Labs. “Some of the new concepts will be acquired from third parties, but most ideas will originate in-house,” said chief executive Michael Acton Smith. “We have lots of ideas bubbling away and can’t wait to see the new visions come to life.” But if the labs environment was not a top priority for Google, why are so many others setting them up?

Arguably, the first high-tech lab of this kind was old Ma Bell’s in New Jersey, where famous early innovations such as the transistor helped shape the development of the tech and communications landscape we know today. But Bell’s Lab was largely a secret affair, with the intellectual property and inventions it produced being fiercely protected from rivals – which is why Google’s wide-open approach shocked the corporate R&D world.

The gist of Google Labs was to simply “air ideas” that were part-baked: beta products whose value nobody yet knew. Putting these highly sophisticated beta products out into the wild seemed like a clever and logical thing to do. The lab also provided hugely positive secondary public relations benefits and made Google the talking point of corporates and agencies everywhere. Accordingly, the company’s share price continued to rise.

Now, businesses outside the technology industry, such as Nordstrom, the department store chain, are getting in on the act. Nordstrom Labs are a highly visible, agile team operating in and around Nordstrom’s stores, developing experimental products, sometimes literally in front of customers’ eyes. So far, there isn’t much evidence that the ideas the team are working on are going on to become mainstream products.

But the digital arm of the UK’s leading supermarket, tesco.com, have taken a different approach to embracing the experimental, setting up an innovation team and staging hackathons in the UK and in India, where much of their digital work is outsourced.

Angela Maurer, tesco.com‘s head of innovation, explains: “The only real barrier to innovation in any large company is time – people fitting it in around the day job. We wanted to foster a more innovative culture. We set up our hackathons to get employees engaged and shape the future of the company. We had 30 people at the UK hackathon and in India last month there were 130 people, across 40 teams.

Maurer has evidently been listening to noises from the start-up community, using them to inform her strategy at Tesco.”Some people look into what changes they can make inside their current model, she says. “We help them creatively think of ways to solve problems without those constraints. And we embrace fail fast. As we get going, I’m hoping there’s more we fail fast in and evolve!”

Tesco are not the only big British brand embracing labs. The Sun newspaper were reportedly running a digital product lab out of a “secret” building in London’s Clerkenwell last autumn. One group rumoured to be involved in the venture was Fluxx, a product and service innovation startup based near St Paul’s.

Fluxx wouldn’t confirm whether or not they were responsible, but “experience partner” Paul Dawson told The Kernel: “In our first 12 months, we’ve had a major bank, two national newspapers and an insurance company asking us to help them set up labs of one kind or another. We’ve conducted experiments based on lean startup ideologies, using the concept of a minimum viable product to test whether or not an idea will actually be adopted.

“This means that customers use or see a real product rather than be asked their opinion of something.”

It was this method that helped DropBox founder Drew Houston get his proposal noticed. The MIT graduate made a preview video of his product, asking people to sign up to the beta programme. After no luck getting initial investment, Houston recounted: “It drove hundreds of thousands of people to the website. Our beta waiting list went from 5,000 people to 75,000 people literally overnight. It totally blew us away.”

The result was that he raised more than $250 million of investment because what he had was proof, not speculation. But big business’s typical approach to new products is still to make multi-million dollar investments and bringing each product to market over many years. Market research will help them mitigate failure, but, according to Fluxx, this is still no more than opinion, and not the evidence of an MVP.

Dawson added: “We’ve been operating with one of the UK’s high street banks and released a product to over 7,000 customers in just a few weeks – and the acceptance of it by customers was around 80 per cent.” Whatever that product was, you can bet the bank have a much better idea now of how much to invest in it after the lab has done its job. Equally you can see how relieved they would be if it was a total failure that they hadn’t committed that multi-million investment.

Whether in highly-visible open environments or behind closed doors, snivelling boffins in white coats are back: and they’re coming to a retailer, bank or newspaper near you, driven by the success of the technology industry’s embrace of the lab.