Governance vs. Innovation

Innovation and governance are complementary to achieve premium business results.

Governance is steering. It isn’t just about putting restrictions on what you can do. Governance refers to the rules, practices, and processes by which an organization is directed and controlled. It ensures accountability, transparency, and compliance, safeguarding the organization's integrity and sustainability. 

Innovation, on the other hand, involves introducing new ideas, methods, or products to improve efficiency, productivity, or competitive advantage. Governance and innovation are two critical concepts for organizational success, yet they often present conflicting priorities. 

Striking a Balance: The challenge lies in balancing governance and innovation. Overly strict governance can stifle creativity and experimentation, hindering innovation. Conversely, a lack of governance can lead to chaos, inefficiency, and increased risk.  Organizations that successfully innovate typically exhibit the following characteristics:

-Leadership Sponsorship: Top management supports innovation and provides leadership in this area

-Incentive system: Individuals who generate fresh ideas or "push & pull" for innovation are rewarded.

-Dedicated resources The organization dedicates resources specifically to innovation rather than expecting it to happen as a matter of course.

-Diverse workforce: The organization has a diverse workforce and welcomes ideas from outside the mainstream.

-Agile governance: Strong governance is not for controlling or limiting the innovation potential of organizations, but to streamline business resource alignment and process optimization.

Framework Approach: Organizations must avoid superficial commitments to trendy solutions and instead focus on empirical observation and testing to evaluate the usefulness of new ideas. Effective governance should support and encourage innovation by providing a clear framework for experimentation and risk-taking. This involves setting clear boundaries, establishing ethical guidelines, and ensuring accountability while fostering a culture of creativity and learning. 

Innovation and governance are complementary to achieve premium business results. The leverage point is to let innovation shine via the effective governance discipline, but not adding too much complexity.

Posted in: GRC,Innovation