An innovative Board set a Tone for Culture of Innovation.
There are different types of boards around, some Boards are "working Boards" and have to provide hands-on advice, information, and oversight; other Boards have a more strategic purpose in advising the corporate oversight.
Many Boards are often stuck with a view of the rear mirror mindset, looking at the past quarter results, supervising the audit, and reviewing a budget of the coming months. Does Board overall spend enough time on planning for the future -that means dealing with innovation choices?
First and foremost, the board must be able to understand, advise, and vote on any material innovation, whether technology-driven, or not: The role of board directors and executives in the drive for innovation is to take a long view on corporate strategic planning, innovation needs to be the key element in strategy, and BoD challenges the organization to consider three tiers of planning: 1) short-term (managing today’s business profitably), 2) medium-term (evaluating how to extend or grow the core business within a 3-5 year timeline), and 3) explore innovation and opportunities for transformational business directions for the long-term viability of the business (look at investment scenarios which can dramatically and positively distinguish the success of the organization for decades to come.). BoD as monitors and mentors are a devoted team aligning corporate strategy with shareholder expectations.
The Board of Director’s role is to set the boundaries: Some may call it the risk appetite and risk tolerance levels, and innovation has risks because it comes with the cost and unsure outcomes. There are many parts to creativity, innovative and inventive practices that all should be viewed from a risk-based approach to the strategic interest and mission of the company. So what could be seen as a fair determinant is to view innovation as risk and to assess the risk based on projections of success and to approve/disapprove based on the board's comfort level, and to guide senior management team to formulate the strategy? The C-levels must then present the strategy to the BoD for approval before implementing it.
The Boards of Directors are 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 future of the company. The effective board brings together such tremendous skills and experience mix that there are bound to be board members whose ideas could feed into new value creation. Imagine how the companies could change if each Board Director felt his/her mission was to expand the value to the existing or to new customers, with new ideas, new products/services; or the new structures. Innovation is one of the keys to the success of an organization. Smart companies are reaching beyond the borders of their organizations to find innovation.
Boards should understand that innovation is not one individual's or even a department's responsibility. It is a cultural issue: It falls into the hands of leadership to enable, manage and lead with guidelines, systems and processes to achieve desired results. Lessons learned and incidents clearly show that most organizations are not well equipped to create and maintain multiple cultures (innovation, ethics, safety, compliance, strategic, global, etc.) and end up with a bunch of silos. Once Boards are aware of how an innovative culture can be important to the overall health of an organization, they should be asking the "right" questions, offering insights, and encouraging participation at the top. On one hand, don't see the Board as interfering, but as supporting and encouraging, and holding the company accountable for sustained innovation performance; on the other hand, boards must be careful how far they become involved in the day-to-day business of the organization.
One important role the board must play in making sure management reports on whether and how material 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.
Ideally, an innovative board sets the right tone for the culture of innovation. Accountability and oversight are all part of the game changes that boards must address. And the Board clearly has a role to play in all the major essential elements of making an enterprise successful that must include innovation.
Read more about Modern Board
0 comments:
Post a Comment