Innovation Labs Don't Fail Because Of Bad Ideas. They Fail Because Of Bad Handoffs.

You ever watch a relay race where the runner drops the baton?

It's brutal. The whole thing falls apart. Not because the runners weren't fast. Not because the technique was wrong. But because the moment where one person was supposed to hand something to another—that moment failed.

I recently talked to Bud Caddell, who founded a company called Nobl after spending years as an innovation consultant doing the exact thing that most companies do wrong. He'd create the innovation lab, hire the smart people, build the prototypes, pitch the big ideas, get buy-in from the CEO. Everything would look amazing.

And then... nothing would happen.

The ideas would disappear. The prototypes would collect dust. The energy would evaporate. And he'd be left asking: "Why did we spend all that money for absolutely nothing to change?"

It took him almost a decade of failure to realize something that sounds obvious once you hear it: Innovation isn't about coming up with the next great idea. Almost every organization already has plenty of people who can do that. Innovation is about taking an idea from the edge of the organization, where people are experimenting with things that don't have business models yet, and moving it into the actual business, where it has to survive real-world constraints.

That handoff. That's where everything fails.

The Architecture of Failure

Here's how most organizations set up innovation. You have people at the edge—the lab, the innovation team, the special skunkworks group. Their job is to explore. To experiment. To think about the future.

You have people in the middle—the product teams, the operational leaders. Their job is to keep the lights on. To optimize what you're doing today. To make sure this quarter's numbers are good.

And then... there's nothing in between. No one whose actual job is to take what the explorers learned and figure out how to make it real inside the existing business.

So what happens is predictable: The lab develops something cool. They get excited about it. They pitch it to the core business.

And the core business says: "That's interesting, but we have seventeen initiatives already in flight. Our best people are fully allocated. We don't have budget for this. Also, our incentives are tied to next quarter's results, not someday's possibilities."

And the idea dies.

This isn't because the business leaders are innovation-hating villains. It's because they're incentivized to do exactly what kills innovation.

They're being measured on the things that exist today. They have more work than they can possibly fit into their day. They have three bosses breathing down their neck. And now this person from the innovation team is asking them to take on more work, with no guaranteed payoff, and eat into their holiday budget to do it.

Of course they say no.

Bud realized something that transformed how he worked: What every institutional innovation program gets wrong is not the exploration phase. Companies can do that. What they get wrong is assuming the core business will somehow magically adopt the innovations if they're good enough.

They won't. Not unless you give them a reason that aligns with their actual priorities.

The Missing Piece

So Bud started building what he calls a "scale team." Not explorers. Not optimizers. Scalers.

These are people whose actual job is to take an innovation that came from the lab and figure out: Is this a real commercial opportunity? Can we integrate it with our existing systems? Who is our first customer? What does the business model actually look like? And crucially—how do we make it attractive enough that the busy, incentivized leaders of the core business actually want to adopt it?

These aren't innovation people. They're not explorers. They're the opposite, actually. They understand how organizations work. They understand politics. They understand how to integrate with systems. They understand incentives.

And their job is to be the bridge. To translate what the lab learned into something the core business can actually digest.

Bud describes it as a relay race. The explorers run their leg. They hand the baton to the scalers. The scalers run their leg and hand it to the core business, which runs the optimization leg.

But if you don't have scalers? If you try to just hand something directly from the lab to the operational core? The baton gets dropped.

Why This Matters More Than You Think

The thing that shocked Bud, after all his years in consulting, was realizing that startups also struggle with scaling. Like, you'd think the problem is unique to corporations—that bureaucracy and incentives kill innovation.

But no. Scaling is just hard. Period.

In startups, it's "How do we find more than our first five customers?" "How do we build a business model?" "How do we not run out of money?"

In corporations, it's "How do we integrate this with existing systems?" "How do we deal with the fact that three different departments think they own this?" "How do we change the incentives so people actually want to work on this?"

Different problems, same core challenge: Taking something that works in a constrained environment and making it work in the real world.

Corporations think they're insulated from this because they have resources. They think having a big budget solves the problem.

It doesn't. In fact, it sometimes makes things worse.

Because people in the core business see the innovation team burning through money with no clear revenue, and they get defensive. They protect their territory. They say things like "Not invented here" and quietly kill ideas by refusing to resource them.

Which, when you think about it, is rational from their perspective. They're being measured on quarterly results. They're protecting their budget. They're doing their job.

The Uncomfortable Truth About Risk

Here's where it gets philosophical, and where most organizations really get it wrong.

Innovation is risky. The lab should be failing constantly. You should be running lots of experiments, killing most of them, and only pushing forward with the promising ones.

But here's what happens: Organizations say they embrace failure. What they actually mean is: "We embrace failure as long as it doesn't cost money or hurt anyone's feelings."

Real failure tolerance means you run an experiment, it completely bombs, you learn something valuable, and the person who led it doesn't get punished.

Most organizations can't do this. Because failure gets politicized. Someone's career gets hurt. Resources get cut. Suddenly the whole organization is optimizing to avoid failure instead of optimizing to learn quickly.

Bud told me about this brutal example. They were trying to get a client to use machine learning to optimize their advertising. They brought all the data. They showed the results. They'd already run the experiments and had winners.

The client listened for ten minutes, then said: "But I like blue cars."

And the whole thing got thrown out. Not because the logic was flawed. But because one person's personal preference overrode the data.

Which is when Bud realized: You can't solve this with better data or better pitches. The problem is the people in positions of power aren't willing to risk being wrong.

Why Scale Teams Are The Answer (And Why Most Organizations Won't Build One)

The reason Bud's approach works is that scale teams are staffed by people who understand how organizations actually work. Not innovation consultants. Not academic researchers. People who've spent time in operational roles and understand the constraints.

They can sit in a room with a product manager who has three bosses and a backlog the size of a small country. And instead of saying "This is the future, you have to do this," they say: "Here's how this actually helps you hit your goals. Here's how we resource it without blowing up your other work. Here's the political reality and how we navigate it."

They're not interested in being right. They're interested in making the handoff work.

But most organizations can't get past the idea that innovation happens in the lab and then somehow magically diffuses into the business. It doesn't work that way. It never has.

The organizations that actually scale innovation aren't the ones with the smartest labs. They're the ones who put actual resources and actual people into making the handoff work.

Which means admitting that the problem isn't ideas. It's integration. It's politics. It's incentives. It's all the messy human stuff that innovation consultants don't want to talk about because it's less sexy than disruption.

What This Means For You

If you're running an innovation function in a big organization and wondering why nothing ever ships, stop. You probably already know the answer. You can build something great in the lab. The problem is what happens after.

So build yourself a scale function. Hire people who understand how your organization works, not people who are idealistic about disruption. Give them the job of making the handoff work.

If you're someone in the core business being asked to take on innovation work you don't have time for, stop pretending you're the problem. You're not. The problem is that nobody's done the work to integrate this into how you're actually measured and resourced. Until they do, you're right to deprioritize it.

And if you're one of the explorers in the lab wondering why your brilliant ideas never see the light of day, now you know. It's not because they weren't good enough. It's because there's a broken handoff in the relay race.

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Want the Full Story?

Bud wrote an article called "What Every Institutional Innovation Program Gets Wrong" that has become almost a manifesto for how companies should actually think about innovation. And if you want to hear him talk about how to build scale teams, why organizations keep making the same mistake, and what the real success metrics are for innovation, listen to the full conversation on The School of Innovation podcast.

Because here's the thing about innovation programs: They don't fail because of bad ideas or bad people or bad luck. They fail because nobody designed the system for the actual work of making ideas real.

And until you do that, all the explorers and laboratories and innovation budgets in the world aren't going to change a fucking thing.