How Nike and big brands structure internal innovation labs
Innovation can’t survive under the metrics of optimization, so companies need a deliberate way to protect it. In this clip from You’re Not the Audience, Parliament Creative Director Calvin Ross Carl walks through the two main options: building an internal division, like Google X, Lockheed Martin’s Skunk Works, Nike Innovation, and Nike’s Valiant Labs incubator, or hiring outside experts. He explains why either path ultimately depends on leadership with conviction and vision, and why meeting-heavy cultures are their own optimization problem. It’s from the You’re Not the Audience episode on best practices and innovation, How Best Practices Kill Innovation.
Watch the full episode
Outline
Summary
Calvin Ross Carl lays out two ways a company can set itself up for innovation: create an internal division or bring in outside perspectives. Large companies often reach a scale where they spin off innovation labs or startup incubators, because the innovation side of a business can’t survive under the metrics of optimization.
Nike is his main example. Nike Innovation is protected from the rest of the organization and responsible for bringing new ideas to market over multiyear timelines, and Calvin describes visiting a room where every active project was printed and pinned up. Nike’s Valiant Labs went further, running tiny startups inside the company, including a shoe subscription for kids built by former Parliament team members.
Not every organization has the funds or conviction for that kind of separation, which is where agencies like Parliament or firms like IDEO come in. Outside experts can deliver big leaps, but only if leadership is ready to accept new ideas instead of retreating once the rubber hits the road.
Highlights
Companies can innovate through an internal division or through outside perspectives.
Innovation labs exist because new ideas can’t survive optimization metrics.
Nike tracks every innovation project visually in one room.
Valiant Labs ran small startups inside Nike to limit risk and free up ideas.
Both paths require leadership with conviction and vision.
Key insights
Separation protects new ideas
Peeling innovation off into its own org lets it work on timelines and risks that the core business would never tolerate.
Failed experiments still pay off
Even when a Valiant Labs venture shut down, its learnings could be worked back into other parts of Nike’s business.
Outside help needs inside readiness
Clients often ask to be totally different, then look for ways to minimize risk once real change arrives. Organizational clarity determines whether outside ideas survive.
Meetings are an optimization trap
Being visible in meetings feels measurable, while weeks of making toward a breakthrough doesn’t, so talented people get bogged down instead of creating.
Detailed analysis
The clip contrasts two kinds of progress. An internal division like Nike Innovation produces steady, incremental gains over years, while hiring outside experts tends to produce big leaps. Each has a cost: internal labs require funding and a specific belief system, and outside work requires an organization that can absorb dramatic change.
Calvin’s through line is that structure alone isn’t enough. Innovation has to go beyond org charts and optimization, and when a client lacks confidence, the agency’s job is often to bring the conviction and vision with it.
Conclusion
Whether a company builds its own lab or brings in outside help, innovation only takes hold when leaders protect it and commit to it. Without that, even the best new ideas get pulled back toward safety.
Transcript
So that then asks: how do you start setting up an organization or a brand for innovation internally? There are generally a couple of ways you can set up a company for innovation and get them on the right track. You create an internal division, whether that’s truly a different org or some other rules that guide innovation in your company, or you hire outside perspectives. That’s where a company like Parliament comes in.
So the first one is how you create an internal division and why you do it. A lot of big companies, at some point when they get to a scale, know they need to keep that innovation aspect of their business going. So they end up creating innovation labs or startup incubators. And I think this is a thing that a lot of companies should try, even on a smaller scale if possible. The reason you create a completely separate innovation lab or startup incubator within a company is that it peels it off into a separate little org, because that innovation side can’t really survive under the metrics of optimization.
And you see companies do this all the time. Google X was, or is, Google’s R&D innovation department. You’ve got Nike Innovation. Nike has a whole separate part of the company that is just focused on innovation. You’ve got crazy ones like Skunk Works from—what’s it called?—Lockheed Martin. Not necessarily a great company, but they created Skunk Works. They did insane things there. But Nike is a really good example for this in general, because they have this whole part of their organization that is all about innovation. It’s literally called Nike Innovation, and it’s protected within the org from all of the other stuff going on, and it’s then just responsible for creating new ideas and bringing them to the market over a multiyear process.
I’ve been lucky enough to be in the Nike Innovation room. I hope they still have this room there. It’s incredible. It’s a giant room where every single project they’re working on is just printed out on a sheet of paper with a quick little summary of it, so they can track all of them visually in one space. I’d be impressed if they still have this, but it is one of the coolest rooms to ever go into, because it’s all right there in person and you can see what part of the process it’s in, how many more years it will take until that innovation is even ready. That might be new fabrics, new types of shoes, completely different crazy inventions. So it’s every little piece that counts as an innovation there.
But Nike’s interesting because they’ve also started these incubator projects. One is called Valiant Labs. I don’t know how much Valiant Labs is still around. I hope it is. They’ve done cool things. Valiant Labs was this part of Nike where they actually run a ton of tiny little startups inside the company, funded by the larger org, but they’re essentially run as completely separate companies. One reason is to mitigate risk coming back on the larger org, and the other one is so they can just be free to create insane ideas. Some folks that used to work at Parliament worked at Valiant Labs, and they made a product that was basically a subscription service for shoes for kids. The idea was that kids grow out of shoes so quickly. They’d send you a pair of shoes, you’d send it back as soon as your kid grew out of those, and then they would send you another pair. Awesome idea. I think they ended up maybe closing that down, but then what they do is take all the learnings from that and work it into other parts of the business and say, “Okay, can we learn something from this?” So it’s a great way to actually set up your company for having some kind of innovative aspect in it.
Okay, so the other aspect of this: you can either create an internal division or you can bring in outside perspectives, and that’s where a company like us comes in, where Parliament comes in. Not all orgs can create that really clear separation within. They might not have the funds. They might not have the vision or conviction to do so. It takes a specific belief system to create those kinds of divisions. So not everyone can do that, but that’s why they come to people like us for brand work, or that’s why you hired IDEO to do your product design and systems thinking and things like that, because you just can’t do it.
I think that is a good way to do it. It still doesn’t necessarily imbue your whole company with that, but that’s how you can do a lot of innovation. When we’re talking about creating that internal division, if you’re a brand like Nike, you’re getting a good incremental rise through that time. But when you do the kind of hiring an outside expert, you get these big leaps that end up happening.
And the challenge with that is it becomes a really big leadership and, like I mentioned earlier, organizational clarity challenge, because you hire these outside experts to come in and bring new ideas to you, and your business is not set up in a way to fully accept those types of new ideas. That’s when you get the kind of situations where a client keeps saying, “Yeah, we want to be totally different. We want to do this.” But then once the rubber hits the road, they’re like, “How do we take a step back? How do we minimize risk?” You see that always. So that’s really one of the biggest things: all of this focusing on innovation at a company, whether it’s through hiring others or creating your own internal division, requires leadership that has conviction and vision for the company. It has to go beyond org charts and optimization. And I think that’s the challenge for branding folks: our job then is to step in often and bring that conviction and vision with us, to bring that confidence that they might be lacking.
Brian says, “One issue in big orgs is that a company will hire really talented people, but they spend all their time in meetings, not creating.” Yes, that is also an optimization problem. Yeah, absolutely. We’ve probably all been in jobs where you spend a huge part of your day in meetings talking about the work that you’re supposed to be doing, and yeah, it’s rough. I’ve definitely been there. And it is absolutely an optimization problem, because for a lot of people, it’s scary if you just need to go work on and make things for weeks on end. That’s immeasurable, the effect you’re getting out of it, until you get that one breakthrough on a thing. But if you’re in a bunch of meetings every day and you’re getting your face seen around regularly, there’s this hidden little optimization puzzle that’s happening there, where it’s like, okay, I’m seeing this person’s face a lot, they must be doing lots of work. It’s definitely got that aspect to it. But you’re too bogged down in meetings to really make any big change. So that’s a tough place to be.