Companies are throwing out conventional work practices and opting for a more playful culture to help them come up with the next big thing.

Children are often taught that the opposite of play is work. But for Stuart Brown, psychiatrist and clinical researcher, the opposite of play is something closer to boredom, or even depression. Brown began considering the importance of play decades ago while studying murderers and felony drunk drivers, noticing its absence throughout their lives. Later he found that highly creative people consider play an essential ingredient of success and well-being.

As recently as 15 years ago, few in the corporate world were willing to entertain the idea that play could be profitable. But in an age when technology is destabilising and reconfiguring entire industries, the half-life of business models is short, and younger workers change jobs frequently, managers are looking for any way to innovate and retain talent.

“The science indicates that, when playfulness is a part of the ethic of an organisation, whether it’s a family or General Motors, it increases efficiency, competitiveness and productivity, and lessens attrition,” Brown says. “It works. It’s a slow cultural shift that is occurring in some places more than others.”

The corporate sector has been on the slow side of this trend. Managers committed to delivering efficiently on established business models worry about rocking the boat. But a new solution is emerging as a compromise between the anything-goes start-up mentality and the day-to-day numbers grind: the internal innovation lab.

Companies have been creating separate departments with different rules for innovation since the 1940s, when aerospace company Lockheed established a secret incubator in a circus tent next to a plastics factory in Burbank, California. The result, the P-80 Shooting Star jet fighter, went on to see extensive service in Korea – and the experiment also added a word to the vocabulary of innovation. The fumes from the plastics gave rise to the nickname Skunk Works, a term now adopted to refer to outside-the-box innovation groups in general, such as the Google X lab and the early division of Apple that developed the Macintosh computer.

Managers often pay lip service to the idea of play and innovation, perhaps buying a football table that ends up gathering dust as workers race to hit deadlines. But play is at the heart of the new innovation labs. Innovation researcher Bruce Nussbaum compares them to the idea of the “magic circle”, a space described by Dutch cultural theorist Johan Huizinga in his influential 1938 work Homo Ludens. “All play moves and has its being within a playground marked off beforehand either materially or ideally,” Huizinga writes. “The arena, the card-table, the magic circle, the temple, the stage … All are temporary worlds within the ordinary world, dedicated to the performance of an act apart.”

Eli Stefanski is chief market maker at the Business Innovation Factory, a platform for developing new business models based in Providence, Rhode Island. She prefers the term “connected adjacency” to describe these new models. A connected adjacency is a group that has access to capabilities across an entire organization but has a different reporting structure to other teams, often answering directly to the CEO. At their best, these groups combine the freedom of start-up culture with the resources of a large company, making it much easier to develop new business models and scale them up rapidly.

Companies that embrace these connected adjacencies avoid many of the pitfalls that come from attempting to create a “culture of innovation”, Stefanski says. “You can’t actually have everybody within an organisation innovating,” she explains. “Unless you carve out that space and enable them to play with the capabilities they have, the capabilities on the horizon, different trends and how things are working in other sectors, then you’re not going to generate the type of breakthrough innovations that will really transform your business.”

Similar principles guide M&S Digital Labs, the innovation division of British high street retailer Marks & Spencer. “We all have start-up backgrounds and we bring that mentality to the Lab,” says Hemal Kuntawala, a product owner working in the division. Having access to capabilities of the entire company also offers the Digital Labs team a different perspective on the business, and one that perhaps tracks the mindset of today’s omni-channel shopper more closely than, say, the perspective of a career employee in the clothing division. “Because we act across M&S, we’re able to join dots and patternmatch between areas, taking a theory or practice from one part of the business and experimenting with applying it to a completely different part,” Kuntawala explains.

One example of an innovation produced by the lab since it was created in February 2013 is the Style Board, an online social tool that allows consumers to create pinboards of womenswear products in the style of a magazine editorial. The experience makes customers more likely to mix and match across the the different brands sold through M&S, and the result was traffic that converted to purchases at rates 36% higher than other traffic on the M&S website. Another recent innovation was Cook With M&S, an app with recipe content e-commerce experience for men’s formal shirts.

With its slick design and intriguing reference to a project in “stealth mode”, the website for M&S Digital Labs also illustrates another reason for the rise of the innovation lab. Innovation is cool, especially for the entrepreneurial millennial generation. Although these labs may cloak particular projects in secrecy, their existence is anything but hidden. Companies such as Google and Nike let journalists and industry analysts in on a slow drip of tantalizing details from their innovation divisions, reinforcing their image as cutting-edge players in the market. Forrester Research analyst Sarah Rotman Epps has referred to a “halo of innovation” that gathers around a brand, adhering especially to products with their origins in innovation labs.

While online shoe and clothing company Zappos is known as one of the original e-commerce success stories, it does not necessarily possess a halo of innovation. is looking a bit stale these days, but, in contrast, the Zappos Labs site positions the company as a forward-looking place to work. Tasked with integrating a more intimate and social online shopping experience with one of the world’s largest shoe stores, the Zappos Labs team has created products including Glance, a curated feed of Zappos products, and Zappos Now, a digital magazine for the iPad. The site touts the division’s playful culture, mentioning “team trips to fabulous Las Vegas” and the in-office cinema “affectionately referred to as ‘Peepshow’”. The site clearly conveys the dual nature of innovation labs as a response to the changing way we live and shop, and as a pitch to attract and retain creative talent.

Although in-house innovation labs are most closely associated with digital output, some brands also employ them to create new physical products. At the Levi’s Innovation Lab in San Francisco, the clicking of keyboards is joined by the hum of industrial sewing machines and the faint smell of smoke as lasers burn the colour away from experimental denim products. The company has engaged digital creatives and fashion professionals, but also people who work with their hands. The original January 2013 announcement of the new lab called for painters, woodworkers, landscapers and even baristas to join its ranks.

This points to another role for such labs: attracting employees from beyond the typical hiring pool, and, especially, engaging with the creativity and resources of the independent maker movement that has exploded in the last decade along with cultural interest in craft, small-batch production, and artisanal processes. In its short history, Levi’s Innovation Lab has created Revel, the company’s first major womenswear release since 2010, and Wellthread, a sustainable line of garments for men released under the Dockers brand. Revel takes advantage of “liquid shaping technology” to produce figure-flattering cuts, while Wellthread reinforces buttonholes, pockets and other points of strain with a newly developed long-staple yarn.

There’s no simple formula for establishing an open-ended, playful approach to innovation, and in fact, setting up too many parameters undermines the spontaneity that such processes are meant to generate. It’s not as simple as “gamifying” the process of innovation, which merely establishes a different kind of external structure. “When play is authentic, it comes from intrinsic motivation,” Stuart Brown explains. “It’s emotionally satisfying.”

That hasn’t prevented some companies from creating products meant to promote these practices. Lego markets a product called Serious Play that is designed to help professionals think more creatively through visualisation and storytelling. The product differs little from the familiar children’s blocks, except that it is backed up by academic studies and testimonials to its effectiveness. But creating a playful environment can be much simpler than this. Design consulting firm Ideo created toys called Finger Blasters that staff can launch across the room, in the process shifting to a more childlike and playful frame of mind. Zappos Labs is outfitted with more grown-up toys such as 3D printers, Google Glass and Leap Motion.

Special innovation divisions have moved from the top-secret skunkworks of the past to the playful labs of today, which are firmly integrated with companies’ outward-facing images and missions. The general tendency toward more transparency and a broader circle of collaborators seems clear. The Business Innovation Factory in Providence is already working with “experience labs” that gather partners from both the public and private sectors to innovate around sectors including education and healthcare. “These labs become the connected adjacents for the larger institutions,” Eli Stefanski explains, “and then the institutions can benefit from seeing all the experimentation that’s going on in the platform.”

Innovation divisions will become more numerous as more and more managers realise the importance of play. Stuart Brown believes that play is gradually becoming more widely valued, beginning with parenting and spreading more broadly through society. Play, he believes has evolutionary value, and has been retained to help humans survive as a species. It now seems to be evolving further, into an effective way to address business challenges – and into business strategies that are fun and exciting for employees and consumers alike.

Originally published in Protein Journal. Illustration by Kuo Cheng Liao.