Innovation takes time \u2013 and money, and people and resources. That\u2019s why it\u2019s common for a company to focus on core business activities and not build an innovation lab \u2013 a specific building or department dedicated to working on prototypes and fleshing out ideas.\u00a0\nPart of the issue is that it can be difficult to justify and quantify the budget involved. Is it a skunkworks project that will consume resources but not deliver any value? Is it a purely a showcase for engineering prowess, or will the concepts produce real products? For many IT leaders, it\u2019s hard to overcome the stigma of an innovation lab as a financial drain.\u00a0\n\u201cInnovation labs are regularly knocked because they often don't have clearly defined links to specific business strategies or goals,\u201d says Charles King, an analyst with PUND-IT. \u201cBut that's also the basis of their appeal. In essence, innovation labs create a \u2018safe\u2019 space where an organization can explore unconventional, even radical ideas in hopes of inspiring changes or new opportunities that could enhance its business.\u201d\u00a0\nTo find out the best reasons for having an innovation lab, CIO.com checked in with three large companies that have built or are in the process of building an innovation lab.\n\n\n \n\n\n1. Lowe\u2019s Innovation Labs\u00a0\nThe well-known hardware chain runs an innovations lab (the plural on innovations is intentional) at their Mooresville, N.C. headquarters. It\u2019s intended to show how retailing will work in the future.\u00a0\nOne example: The lab designed and developed a 3D printer that will be used in the International Space Station. It created a robot, which operates in its\u00a0 San Jose Orchard Supply Hardware store, called OSHbot that greets customers (in English or Spanish) and performs product searches about 1,000 times every few weeks. A Holoroom is a virtual reality showcase that guides customers who are wearing VR goggles on how to do a home improvement project.\u00a0\n[Related: From bionics to 'magic,' MIT Media Lab celebrates 30 years of innovation]\u00a0\nKyle Nel, the executive director of Lowe\u2019s Innovation Labs, says that every company needs to evaluate the problems facing a business now and in the future. That\u2019s one of the reasons the company created the Holoroom. Not everyone understands how to install a new toilet or remove an old kitchen appliance, but VR can help educate new customers.\u00a0\nHe says the company always seeks to understand the narrative for why the innovation is even needed and what it will produce. \u201cIf it already existed it wouldn\u2019t be innovative,\u201d he says. \u201cIf you aren\u2019t facing challenges then you probably aren\u2019t innovating enough.\u201d\u00a0\nAnother key piece of advice is to find the right mix of employees to run the lab. That can be challenging because the staff will need a blend of technical skills and yet be comfortable with ambiguity. They\u2019ve had to work hard to find the right internal sponsors for the lab, and also to link the work they are doing with what will actually work in the store infrastructure.\u00a0\n\u201cHaving a group of folks focused on innovation can be far more effective but only if there is some kind of cross pollination otherwise you can have an independent group coming up with products that aren\u2019t implemented and processes in search of problems,\u201d says analyst Rob Enderle with Enderle Group. \u201cThere is a real art in balancing the group\u2019s independence with keeping it connected to the business. Too much connection and you don\u2019t get the innovation, too little and it becomes redundant.\u201d\n\n\n \n\n\n2. IBM Research - Austin\u00a0\nThere\u2019s no question IBM is one of the best examples of how to build and maintain an innovation lab. At its Austin, Texas facility, director Kevin Nowka can even take you a tour using a robot that lets you video conference with him and \u201cwalk\u201d around the lab. Some of their key innovations include early pilots of sensor networks for the Internet of Things, research on processor cores and an innovative email tool that lets you revise a message before its read.\u00a0\nNowka says it\u2019s important for any business to decide how they will fund the innovation lab, that it might not always be a revenue producer but will extend the capabilities of the company. He says you also have to identify \u201cthe customer\u201d of the lab, whether that is other businesses who will partner with you (as is the case with IBM) or an actual end-user.\u00a0\n\u201cAn innovation lab gives you the ability to test out and experience and experiment with new technologies and, more importantly, to find out how they will integrate with existing business processes or enhance them,\u201d says Nowka, explaining that this \u201cmad scientist\u201d approach is critical because you never know what might come out of a lab when you take highly disparate products \u2013 such as sensors and wireless networks \u2013 in the same environment.\u00a0\nHe says it\u2019s also important to identify the roles in a lab. You will need technical folks, but also people who can establish and build relationships with outside partners and \u201cplumber types\u201d who can run cables and do some of the physical work involved. He says building an innovation lab is like creating a jigsaw puzzle, but it\u2019s often hard to know which pieces you need.\u00a0\nThey key, he says, is to understand the scope \u2013 is it intended as a proof-of-concept for upper management, is it more for partners and customers to experiment, or is it more about creating something brand new? PUND-IT\u2019s King mentioned how quantify this is important because you have to know the outcome of the lab and what it will produce before ever building one.\u00a0\n[Related: Accenture invests in artificial intelligence R&D]\u00a0\n\u201cResearch needs to stay in touch with production without having it interfere too much with real innovation, which often isn't pretty in its early stages,\u201d says Roger Kay, an analyst with Endpoint Technologies Associates who covers IT trends. \u201cThe housing problem is a balance between having research and production mingle freely and randomly, which sounds like a good thing, and letting researchers pursue their projects independently. The messaging, subliminal or otherwise, coming from production can be pretty distracting.\u201d\n\n\n \n\n\n3. Autodesk Pier 9\u00a0\nThis 35,000-square-foot creative workshop located in San Francisco is intended to blend the virtual software created at Autodesk with the physical world, says Greg Eden, the vice president of brand and communication. One of the projects involved creating a 3D printer called Ember as a way to show what is possible with 3D printing. They produced a model of the entire downtown San Francisco area (or 115 city blocks).\u00a0\nOne of the most interesting differences with Autodesk\u2019s Pier 9 is that it is not intended as a showcase for products. Eden says they already have \u201cshowrooms\u201d at their corporate offices, so the 3D printer project was not intended as a way to see how their software works. He says it\u2019s critical to the long-term success for any company within tech or outside of tech.\u00a0\n\u201cWe can all list off the companies that have created amazing products and then managed their slow decline with dot releases after dot releases, making small incremental steps,\u201d he says. \u201cThese spaces unlock the creativity for us but also for customers and the wider community\u201d\u00a0\nInterestingly, Eden says it is important for a company building an innovation lab to make sure they do not underestimate the value. Autodesk has been surprised by the interest in their facilities and are currently building new labs in Toronto and Boston.\u00a0\nWhere you locate the lab is also key. Pier 9 is located close to Silicon Valley and downtown, and it\u2019s easily accessible by light rail. Their Toronto lab will be close to the University of Toronto, and their Boston facility is in an emerging tech center (the new home of the GE headquarters).