The BoDs play the significant role in both Management Innovation and Innovation Management.
The primary role of the Director is to provide strategy oversight, setting governance principles, and making the judgment on and assurance of corporate action within a framework of practical knowledge. If they do their jobs right, the executives and management team can do their jobs in a well-orchestrated fashion as well. Innovation is one of the crucial components of the corporate strategy, which role the BoD should play in both management innovation and innovation management? Or the first step first, how to innovate Boardroom?
BoDs should participate, or even lead in the area of innovation from outliers’ viewpoint: The Board of Directors is interactive change agents that represent the organization, stockholders, and senior management. No longer are boards sitting in a room and just voting on various policies, it is one of the requirements of the Board members to participate, or even lead, in constantly suggesting areas of innovation since their vistas are likely to be wider, and also because the Board should be highly accountable for strategies for the future of the company. The first thing board members need to do, is to have or gain the experience and expertise to know with some certainty how the business of the corporation is conducted. Then the board should exercise the traditional board roles from the perspective of that knowledge. There should be expert reviews of strategy; finance; executive team selection, succession and performance; and a thorough assessment of corporate risk and opportunity. Although the major responsibility of Board is for practicing governance, which doesn’t mean to stifle innovation, on the opposite, it means to set the principles to build the right framework for managing innovations in a more effective way.
The Boardroom should set the culture tone for Management Innovation as well. Management innovation means to accelerate innovation at the multitude of levels, to create the space for dialogue and debate about why it is important for their organization, developing a common understanding of it, creating the necessity and motivation for it. It also needs to align innovation strategy with key ingredients of management innovation, such as the development of an innovative culture or business eco-system, which requires grounding in values, culture, behaviors, systems and artifacts as well as collaboration with key stakeholders. So, without management innovation, companies tend to renovate rather than innovate, making innovations in other areas like culture, technology, service, etc. move very slow. The effective board brings together such tremendous set of skills and experience mix that there are bound to be board members whose ideas could feed into new value creation. The innovative input to that process is just one of the things that a board will do while seeking to become a part of the corporation's competitive advantage. Imagine how the companies could change if each Board Director felt his/her mission is to expand the value to the existing or new customers, with new ideas, new products/services; or the new structures. Innovation is one of the keys to the success of any organization. Smart companies are reaching beyond the borders of their organizations to find innovation.
The Boardroom also needs to oversee Innovation Management as well: One important role the Board must play in making sure management reports on whether and how investments in innovation are yielding forecast results. Whether it is a major IT project, launching a product, or reshaping culture, assuring excellence in predicting and tracking results falls in the domain of anyone with fiduciary responsibility. Failures may happen, opportunities may be missed, but diligence is always mandatory. The board should ask how the enterprise measures innovations and how it compares to Best in Class performance and be sure the measurements are accurate from the eyes of the customers and their constituencies. Innovation is too important to leave solely in the hands of the management team without any oversight or guidance. Some describe the chairman of the board as "the conductor of the orchestra." Obviously, the chairman must be capable of running a purposeful and productive meeting, that includes attracting a cross section of excellent thought leaders and industry experts, which then should result in good governance, best practice, and strategy guidance for both innovation and operation at the journey of business transformation.
Innovation is an important component of business strategy. The board has to have a good understanding of the organization's strategic direction and its strategic alternatives. It is important for boards to take a proactive approach that set the tone for management innovation, also reviews the innovation management progress, and benchmarks on the delegated goals. The board's delegated strategic goals to the management team should be the main topic at every Board meeting, and it is important for a Board to assertively monitor progress in innovation which is usually the most important differentiator to build a successful digital master and an industrial business leader.