Inside the Hatchery, the Innovation Lab at AARP

By Scott Kirsner |  May 1, 2017

As part of our next Field Study learning expedition, we’ll visit the Hatchery, the innovation lab at AARP. AARP is not only one of the largest nonprofits in the country, but it’s also one of the biggest insurers and magazine publishers. We talked about what happens at the Hatchery with Andy Miller, the SVP for Innovation and Product Development at AARP.

What is the Hatchery?

The Hatchery is really meant to be four things. At the highest level, it’s a physical manifestation of AARP’s commitment to innovation. It’s hard to see innovation. We also work on our own ideas internally. Right now, we have three companies running that we are staffing and growing. Within the Hatchery, we’re not trying to do evolutionary stuff. We’re looking for big new businesses we can create. I’m at a mutual fund company today talking with them about being a partner on something new and potentially disruptive.

We also have what we’re calling the Hatchery accelerator, where other startups work here, or we provide virtual support. We’re going to pilot that in the second half of this year, with four to five companies [from outside AARP.] But already, we work with other accelerators like MassChallenge, and a University of North Carolina program that’s coming online – the UNC Digital Health Innovation Sprint – and we run other challenges for startups.

The third thing is creating a culture of innovation, so we use the Hatchery to do training in human-centered design methodologies. We call it i6, which includes insights, ideation, and four other “i’s” that represent the process. If you’re someone who goes through a sort of uber-training process, you can get the designation of being a champion. Those are the people who get called in when the business unit wants to do an innovation project that needs more horsepower. We want to empower the champions and the entire company to be everyday innovators in aging.

The fourth thing – and we’re not really mature in this yet – is how do we help develop the Washington, D.C. ecosystem. We’re offering our space up to different organizations to hold events. Our marquee event right now is the D.C. Virtual Reality Meetup group, which happens the first Monday of every month. We also host Harvard and Stanford alumni – we’ll do innovation and entrepreneurial exercises with them. And the Hatchery and AARP are going to be sponsors of Tech Week this fall in D.C.

What are the big themes you’re focused on?

The themes are driven by our social mission. The big three are health, wealth, and self. But within health, we really focus on caregiving. Under wealth, we focus on savings and planning, work and jobs. Self is really around personal fulfillment.

What methodologies or approaches do you use?

For projects that are internal startups – things that my team is focused on – we will often start with research around one of our issue areas to try and get to a few different ideas. Once we have a few different directions, we’ll do co-creation sessions immediately with who we think is the audience for those ideas. We brought in a whole bunch of women recently from different socioeconomic strata and ethnicities, in the 50-80 age range. We start consumer first, always. We then build a “comic strip.” I don’t even want to say paper prototype. It’s just a storyboard. We’ll go back to that same cohort and get validation of the concept. Then we’ll go back and pick one of the three or four ideas and we’ll build.

We do that very much in a collaborative manner with the customer. What we try not to do is get too wrapped up in IDEO-ish process. While there’s a place for those things, it lends itself more to our work with the employee base, because they’re not entrepreneurs. The folks working on these projects I have, they’ve been entrepreneurs. They do it innately. Whereas when we’re creating these everyday innovators in aging – they have day jobs. You want to give them a more sequential process, with Step 1, 2, and 3.

We have an advantage, because we’re not a for-profit tech company. We have lots of advocacy work going on. We get the voice of the customer from everywhere. We have people in every state who are advocating on some issue for our audience. We have constant feedback on what’s happening in our segment, which is very interesting and unique. Sometimes it’s too much information. You have to focus, because there’s so much research and data available.

What are the pressures?

The innovation group is being tasked to figure out, how do we stay in our social mission lane but drive revenue, and revenue diversification? Our business model is membership, and licensing or royalty revenue from partnerships. How do we create products and services that aren’t as tied to [product categories like] insurance, travel, or care-giving. [One of the things we’ve been developing is our] Care Box product, for people newly diagnosed with a disease. We’re piloting it right now. We started with heart health, diabetes, and arthritis. We’re working with a large hospital chain and insurer as partners.

You look at what is happening with the economics of the demographic. Ten thousand people turn 65 every day. The transfer of wealth is greater than anything we’ve ever seen. Yet when you build product [as a startup] today, most people build for millennials. We had a gerontologist at an event recently showing the distribution of wealth in the U.S. Millennials are broke – they don’t have any money. And technology adoption is a myth – in the 50-75 age group, technology adoption is the same as any other cohort. We have to be the voice to help people understand that everybody needs to disrupt aging, all the time.

If you’re a startup, you shouldn’t just build for Millennials, you should build for all. We talk about the longevity economy – this market is the single largest market in the history of the world, and if you’re ignoring it, you’re leaving money on the table. We’re working with Local Motors and IBM Watson, because older people’s biggest fear is having their keys taken away. We said, “Let’s take this autonomous bus stuff, and we should be in the middle of it talking about how this becomes part of the public transportation system.”

We have the same resource constraints as any company doing innovation. We’re trying to build this product development muscle and work on building our own stuff, and you don’t necessarily have enough resources. That is the same as in a for-profit business.