In the wake of recent public criticism of stand alone innovation departments, James Wood puts forward a defence of business labs.

I recently came across a Bloomberg article about the new Google CFO, Ruth Porat, and her strict approach to finances – including a crackdown on the accounts of the ‘Google Moonshot factory’, Google X.

The article described the innovation arm of Google as “a ‘messy place’ that is leaking money” (it lost $3.5bn in 2015) and “something that clearly needs some constrictions” – Google, indeed, can no longer be a search company with a lot of side hobbies.

This crackdown on the free-for-all ‘innovation and wacky ideas’ hubs that spin off from a central business is a bit of a growing trend. Earlier this year Annette King, the new CEO of Ogilvy UK, shut down Ogilvy Labs (making all staff redundant) – a high profile story that increased the pressure of business and agency labs to justify their existence.

In light of this, and in reflection of what Earnest Labs has learned in the past year, I’d like to write a defence of having in-house resource dedicated to innovation – and maybe even get you thinking about taking the brave step to setting up your own labs function.

And in true 2016-content style, here are the five reasons I believe labs are important for agencies and businesses alike.

1. Innovation doesn’t magically happen. Businesses have been warned that disruption is lurking around the corner, but you need someone to keep prodding.

This was actually the key defence of the person who set up Ogilvy Labs. Marketers are constantly bombarded with articles, videos and talks about how the world is changing and how they need to keep up. But let’s be honest, it’s much easier to stick to the status quo and get on with things in the same way you’ve always done them.

We think labs should be a place that helps clients keep up with changing trends, and also gives them real implementable answers of how to change what they do now so they can be ahead of their competition tomorrow.

This year Earnest Labs have run a number of events for our clients to do just this. Our ‘Experiential Lab’ for example, showcased some of the newest and most exciting technologies for events, offering real, simple advice on how to implement them.

It’s all part of pushing ourselves forward, and being the pestering whisper in the ear of our colleagues and clients to keep thinking differently.

2. It’s important to create time for creative freedom so anyone can explore new ideas.

There’s certainly no harm in facing up to the fact that people within businesses can get bored or demotivated by working on the same jobs day in, day out.

We’ve found Earnest Labs to be a place where anyone at Earnest can take a bit of time to explore and develop any idea that pops into their head – whether it arrives while they’re in the pub or in the middle of a meeting.

It could be anything from simply writing about the scary future of fake news in light of tech developments, through to building new tools like ‘The Start-up Generator’ or ‘Bizspeaktionary’ just for a bit of fun.

The only requirement for an idea is that it has some relevance to what we do – but when you give people the freedom to open their minds and come up with their own ideas, it’s amazing how much will leak into the rest of the work you do.

3. Clients want case studies – if someone hasn’t already done it, doing it yourself to prove the case can work wonders.

With the number-crunchers breathing down marketers’ necks across the country, there’s more pressure than ever to prove your marketing plan’s going to work, before you’ve even launched the activity.

And fair enough, but when it comes to doing something different: how do you find the evidence that what you’re proposing is going to work?

Setting up a labs function should be all about running small experiments, with budget set aside to test and learn, looking at which new channels and technologies can be rolled out on a larger scale.

Over the last year, Earnest Labs has worked with clients to run ‘idea sprints’ – these are one-day collaborative workshops in which we come up with a number of experiments to run on a low budget. These give our clients some creative input, and the evidence and confidence they need to try something a little different.

4. It’s satisfying for everyone to create one big thing a year to really be proud of, something that’s yours to own.

Actually creating real-world products is a big part of what we do and what all labs should be doing.

Last year we created the app Event Wallet, using iBeacon technology to help events go paperless. This year our big project was Lunchbox – a contactless donation box that helps feed school children in developing countries around the world. In fact, we were lucky enough to scoop a ‘creative innovation’ gold award for Lunchbox at the DMAs.

Not only is this steep learning curve essential to gathering knowledge that can be passed on to the rest of the business and your clients, but the satisfaction (and bragging rights) of creating something from scratch that lives in the real world makes it all seem worth it.

5. It’s totally possible for you to make a real impact.

My final point is perfectly summed-up by what was undoubtedly my favourite article of the year, ‘State of the digital nation’:

“We are living in humanity’s most exciting age and it’s only going to get exponentially more so as technology and computing rapidly evolves. For those of us in the industry, as the most enabled, empowered, and creative generation ever seen, we have the opportunity to shape the future in some way. This is the real dent the universe territory. So please do something difficult. Please do something that has purpose… Sure, 100,000 things could go wrong before you achieve escape velocity and get into orbit. It’s undoubtedly hard, but so is anything worth doing.”

I couldn’t agree more.