You can read about good samples of digital business innovations driven by digital labs but there are also critical voices about the success of digital business transformations & innovations evolving from these protected areas. On the other hand there are samples for failed in-house digital business transformations.

The german magazine Capital shared a ranking of german digital labs  where 6 key  factors have been identified that decide about the success of digital labs. They can be summarized as the typical areas of success or failure on any business co-operations. Digital labs have more success when they have strong support from the group´s top management and strategic business targets, when they have a clear and defined scope and when there exists open and explicit communication between the digital lab and the group.

A key message of the Capital interviews is though that even digital labs that have been founded a while ago could not prove yet that they could earn money with it.

Let´s have a closer look at the pros and cons of both main transformation concepts: the digital lab and the in-house transformation approach.

Digital (Media) Labs are interdisciplinary companies/collectives with the main focus on testing innovative, transformational ideas separate from your daily business.

Pro´s:

• Lean, agile structures; good testing ground
• Less complex to change approach
• Reduced risk to lose reputation

Con´s

• Isolated test environment
• Lacks proof of concept in live environment
• “Cool folks in the corner that have nothing to do with my company” syndrome
  

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In-house digital business transformation is driving transformation organically from within the organization.

Pro´s

• Holistic test in real environment
• Allows profound conclusion on feasibility
• Leverages internal expertise & insight
• Upskilling for alpha users during piloting/sprints
• “they are part of us”
• Use learning effects

Con´s:

• Negative impact through failure in live environment

Of course the right approach to embrace transformation is unique & depends on the actual needs of a company. A B2B company has different needs then a company acting in a B2C environment.

Based on my experience I have a clear preference for the in-house transformation approach. Intrinsic  transformation might be more complex to achieve but it is organically grown from within the company. It is involving existing employees who ultimately need to drive “their” company´s successful digital business transformation. Mapping the real environment of a company that needs to be transformed in a seperate instance is difficult. Small but significant aspects can be overseen that decide on success or failure of a transformation.

A successful digital business transformation requires fundamental change within a company, that needs to be organically driven. New concepts like building digital twins offer chances for modeling and testing. They could mitigate negative aspects of in-house transformation.