Igniting Innovation: Rekindling the Boardroom Spark
As the global strategic environment evolves, boards that embrace intentional leadership and engagement are poised to make a significant impact on their organisations. Read on to know more:
Disruptions of recent years, exacerbated by the COVID-19 pandemic, supply chain issues, cyber threats, and rapid technological advancements, have propelled the role of boards in overseeing and enabling innovation to the forefront. Forward-thinking boards today are redefining their approach to innovation oversight and identifying key strategies for success.
Embracing Diversity
Leading boards recognise that the success of innovation oversight hinges on the diversity of perspectives around the boardroom table. The traditional model of boards, often composed of individuals with similar backgrounds and experiences, is evolving. Boards are actively seeking directors with varied backgrounds, spanning different generations, industries, and demographic dimensions. The realisation that a mix of skills and experiences is essential for effective innovation oversight is prompting boards to conduct annual reviews of skills and experiences. This departure from traditional practices signifies a commitment to adaptability and responsiveness to emerging trends.
To facilitate the inclusion of diverse perspectives, some boards are creating standing technology committees, reflecting the growing importance of technology in innovation. These committees, responsible for overseeing innovation, represent a shift towards a more proactive approach. Moreover, the expansion of the risk committee’s role to include potential disruptors and unintended consequences broadens the board’s purview, enhancing its ability to anticipate challenges.
However, diversity goes beyond mere representation; it requires creating avenues for diverse voices to actively contribute to discussions and decisions. Boards are exploring committee structures and assignments to ensure meaningful participation, acknowledging that a range of perspectives is crucial for effective innovation oversight.
Trend consciousness
It is imperative for boards today to have a comprehensive understanding of both external trends and internal innovation efforts. Recognising the limitations of relying solely on management for information, boards are taking proactive steps to educate themselves. Directors are attending conferences, workshops, and engaging in online learning to stay abreast of emerging trends and technologies.
Boards must gain hands-on experience with emerging technologies, emphasising the importance of directors interacting directly with startups, researchers, and other experts. By doing so, boards can develop an outside-in understanding of trends and compare it to the company’s inside-out focus. This approach fosters transparency, trust, and a deeper appreciation of the company’s innovation landscape.
Additionally, there is a need for increased access to and understanding of internal innovation investments. Boards are seeking briefings from innovation leaders, participating in research and development (R&D) lab programs, and engaging with joint development partners. By actively involving themselves in these initiatives, directors can better grasp the focus, risks, and necessary investments in innovation.
Provocative Debate through Collegiality
While collegiality is traditionally valued in boardrooms, an overemphasis on consensus can hinder healthy debate, particularly in the context of innovation. Boards must cultivate an environment that encourages constructive disagreement to challenge assumptions and explore new ideas. Embedding debate into director education can foster collaborative criticism and help uncover hidden but strongly held assumptions.
Various practices, such as premortems, appointing rotating “contrarians,” and leveraging frameworks like parallel thinking, are recommended to promote active, robust debate. By embracing future-back thinking, boards can explore potential disruptions and their implications for current strategy and investments. The goal is to avoid the pitfalls of groupthink and encourage directors to voice positive and negative viewpoints and provocative questions.
Building Agility into Decision-making
Recognising the inadequacy of traditional board decision-making cadences is key – and building agility into the board’s processes is the solution. The accelerated pace of change requires boards to identify opportunities for faster recognition of new innovations, disruptions, and decision-making. Rather than radically altering board cadences, forward-thinking boards seek ways to streamline work and integrate discussions of cutting-edge issues within existing processes.
The establishment of early warning systems for potential disruptions can work wonders, especially in employing triggers that identify emerging disruptive patterns. Boards are encouraged to work collaboratively with management in tracking critical assumptions and revisiting the firm’s strategic position when necessary. Additionally, boards are revising traditional strategy planning structures to incorporate dynamic processes that consider the now, next, and beyond horizons.This approach allows for flexibility and quick responses to impactful changes.
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Today, the imperative for boards to evolve their approach to innovation oversight to drive long-term value and growth is primary. By embracing diversity of perspectives, gaining visibility into external trends and internal capabilities, redefining collegiality to include provocative debate, and building agility into decision processes, boards can navigate the challenges of the modern business landscape.
The transformation outlined above represents a proactive response to the accelerating pace of change and the need for boards to stay ahead of emerging trends. As the strategic environment evolves, boards that embrace intentional leadership and engagement are poised to make a significant impact on their organisations. The questions posed serve as a guide for boards to assess their current practices and chart a course towards a more innovative and adaptive future. As innovation and technology emerge as top priorities for boards, those who seize the opportunity to lead in this arena will contribute to the sustained success and resilience of their organisations.
Acknowledgment: Inputs based, in part, on a recent study by Ernst & Young
