Digital Labs - digitalisation in the laboratory

Hothouses of digitalisation

Functions of Digital Labs

Concepts akin to Digital Labs were born as early as around the turn of the millennium, then known as “start-ups”. Many were no different from such a lab: flexible, quick, and agile, as Computerwoche (IDG) writes. However, contrary to a start-up, which predominantly pursues an individual business idea, a Digital Lab creates the creative framework needed to filter the most promising ideas out of the wealth of different concepts developed within and without the company and to put them to the test.  According to a study performed by Crisp Research AG, the functions of Digital Labs can be summarised chiefly as follows:

  • Development and design of new digital products, services, and business models
  • Use cases for optimising and digitalising internal processes using advanced IT and IoT solutions
  • Knowledge exchange with and access to start-ups, partners, and software developers
  • Identification of investment opportunities to accelerate entry into new digital growth markets

The Digital:Lab Berlin of Volkswagen Group offers some insight:

The Digital:Lab Berlin – digital transformation of Volkswagen Group

The Volkswagen Digital:Lab in Berlin forms part of the Volkswagen Group strategy for facing challenges of the digital transformation within the company. Data-driven services and business models will be continuously gaining influence in the future for both industry and society.

Typology of Digital Labs

In an article featured in the IT business magazine CIO, four different types of Digital Labs are being differentiated:

  • Innovation labs are internal labs of a company where creative spaces and structures are provisioned to internal employees.
  • Company builders are designed to form new start-ups and support them during their initial growth phases.
  • Accelerators offer programmes stretching over several months for which external entrepreneur teams can apply. These teams are then supported on almost every level of the process.
  • Incubators, lastly, take a stake in existing start-ups but are designed for long-term partnerships, contrary to accelerators.

Nearly half the 61 newly founded labs are internal innovation labs of a company, accelerators represent 34 percent. CIO gives “Rewe Digital“, which is a business unit of Rewe Group, as an example of an innovation lab. The Axel Springer publishing house, on the other hand, pursues an accelerator approach and provisions a programme to entrepreneurs and their teams to help start-ups evolve their business idea and achieve commercial viability. Deutsche Telekom was among the first businesses to set up a Digital Lab in the form of an incubator so as to enable the company to identify innovations and growth markets at an early stage and to break into new business areas. Related topics are the Internet of Things, mobile commerce, big data, or analytics.

The digital co-innovation labs as innovation hothouses

You don’t turn innovative overnight. Rather, it takes creativity, the willingness to experiment, and, in the end, finding the best solution to the problem. At the innovation hothouses of Telekom and T-Systems, the digital co-innovation labs, companies can realise their innovative ideas and concepts together with T-Systems and T-lab experts in the form of tangible projects. The digital co-innovation labs provide the perfect environment for this.

Digital Labs seen from a corporate culture and organisation perspective

The examples above already give an inkling that a Digital Lab must not be a static construct but instead has to come alive with the permanent changing of stakeholders and topics. Also, the introduction of Digital Labs shows that existing structures have proven too rigid for an innovative strategy. So, how can cumbersome organisational structures be brought in line with the flexibility of Digital Labs? In fact, it is precisely this apparent incompatibility of the two that is the dilemma for many companies: “On the one hand, employees, teams, and the organisation as a whole are supposed to react as quickly and flexibly as a start-up, but on the other hand, the customer demands the stability and predictability of a traditional enterprise”, Christian Piele writes on the Fraunhofer Institute for Industrial Engineering (IAO) blog. This problem and other issues of Digital Labs are succinctly discussed in an article on the Wirtschaftswoche magazine.

Solution approach: ambidextrous organisation

The solution seems to lie in the keyword “ambidextrous organisation“, which had been coined as early as 1976. Amongst other things, it refers to an organisation’s ability to simultaneously research (exploration) and optimise (exploitation) in order to remain adaptable for the long term. The specific implementation of this concept, however, varies greatly among the different organisations and their internal labs.

How to bring together start-up culture and stability

On the one hand, employees, teams, and the organisation as a whole are supposed to react as quickly and flexibly as a start-up, but on the other hand, the customer demands the stability and predictability of a traditional enterprise.

Christian Piele, Fraunhofer IAO

Samhammer AG – article contributed to “Digital Labs” topic

Digital Labs – the key to digital transformation?

Ambidextrous organisation within the enterprise

Dr Ulrich Schmid on the “Innovator’s Dilemma”