Disruptive Innovation Labs foster disruptive innovations—high-risk, high-return breakthroughs that often start at the bottom of a market but eventually displace established competitors.

What Disruptive Innovation Labs do:

Disruptive innovations require different time frames, processes, performance metrics, people and skills than incremental (or “sustaining”) innovations. The evidence shows that Disruptive Innovation Labs work better when separated from core business operations. Primary benefits of separation include:

• The ability to acquire and retain exceptional talent
• Specialized facilities
• Freedom to challenge conventional wisdom
• Reduced bureaucracy and increased flexibility
• More entrepreneurial cultures and incentives

Companies use Disruptive Innovation Labs to:

Research also shows that Disruptive Innovation Labs benefit from “soft integration” methods, such as social integration of senior teams, job rotations, collaborative planning, shared knowledge networks, and cross-functional teams and task forces. These methods help to focus the lab’s efforts on real-world problems. They also reduce confl ict, leverage existing assets and economies of scale, and encourage adoption and deployment of breakthroughs.

Most management teams aspire to innovation “ambidexterity”—the ability to fully exploit existing assets while simultaneously exploring new capabilities required for future success. Disruptive Innovation Labs push organizations beyond incremental improvements. They are often deployed in three situations:

• When companies face new forms of competition that are stealing market share or reducing profitability
• When traditional innovation methods are failing to deliver required results
• When management senses that the organization is growing complacent and needs concrete examples of bold innovations to raise its vision and transform the culture

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Selected references

Belfiore, Michael. The Department of Mad Scientists: How DARPAIs Remaking Our World, from the Internet to Artificial Limbs. Harper Perennial, 2010.

Ben Mahmoud-Jouini, Sihem, Florence Charue-Duboc, and François Fourcade. “Multilevel Integration of Exploration Units: Beyond the Ambidextrous Organization.” Academy of Management Annual Meeting Proceedings, 2007.

Christensen, Clayton M. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business Review Press, 2013.

Christensen, Clayton M. The Innovator’s Solution: Creating and Sustaining Successful Growth. Harvard Business Review Press, 2013.

Cosgrave, Ellie, Kate Arbuthnot, and Theo Tryfonas. “Living Labs, Innovation Districts and Information Marketplaces: A Systems Approach for Smart Cities.” Procedia Computer Science, vol. 16, 2013, pp. 668–677.

Crow, Michael, and Barry Bozeman. Limited by Design: R&D Laboratories in the U.S. National Innovation System. Columbia University Press, 1998.

Drucker, Peter. Innovation and Entrepreneurship. Routledge, 2014.

Gertner, Jon. The Idea Factory: Bell Labs and the Great Age of American Innovation. Penguin, 2013.

Isaacson, Walter. The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution. Simon & Schuster, 2014.

Jansen, Justin J. P., Michiel P. Tempelaar, Frans A. J. van den Bosch, and Henk W. Volberda. “Structural Differentiation and Ambidexterity: The Mediating Role of Integration Mechanisms.” Organization Science, 20 (4), pp. 797–811.

Johnson, Steven. How We Got to Now: Six Innovations That Made the Modern World. Riverhead Hardcover, 2014.

Keeley, Larry, Helen Walters, Ryan Pikkel, and Brian Quinn. Ten Types of Innovation: The Discipline of Building Breakthroughs. Wiley, 2013.

Schmidt, Eric, and Jonathan Rosenberg. How Google Works. Grand Central Publishing, 2014.

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