Saturday, August 27, 2016

“Digitizing Boardroom” Book Introduction Chapter 4: An Innovative Board

Modern BoDs are innovators who can break down the old rules, and build new rules to inspire businesses stepping into the new chapter of digital innovation.

Corporate boards play a crucial role in providing strategy oversights and make sound judgments and assurance of corporate actions within a framework of practical knowledge. Innovation is one of the most important ingredients of the business strategy, which role should BoDs play in both management innovation and innovation management? Or the first step first, how to innovate the boardroom?

Innovation is absolutely a mindset: Boards as top leadership teams should participate or even lead in the area of both innovation management and management innovation. Although the major responsibility of Board is for practicing governance, which doesn’t mean to stifle innovation, on the opposite, it means to set principles and build the right framework for managing innovation in an effective way. An innovative board brings the outliers’ fresh eyes, out-of-box thinking, and a tremendous set of skills and experience mix to create new value, and contribute to both innovation management and innovation governance.

Innovation should be embedded in every aspect of the organization, including strategy: Innovation is what leads to differentiation. There are many ways to differentiate, and therefore, there are many ways to build innovation into a corporate strategy. Boards oversee strategy, and therefore, boards need to pay more attention to innovation. A good strategy will include where the company plans to focus its innovation efforts such as product performance, cost-effectiveness, speed, business model, etc., and how this links to the rest of the corporate goals and action plan must be put in place to achieve the innovation goals. The board should ask how the enterprise measures innovation and how it compares to the “Best in Class” performance and be sure the measurement is accurate from the eyes of the customers and their constituencies. 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.

Innovation needs a certain level of guidelines and rules: Digital brings both unprecedented opportunities and risks to the businesses today. Every innovation pursuit has risks in it, and every risk has opportunities in it, Therefore, it is important to set guidelines for managing innovation risks in a structural way. BoDs can make the proper policies to encourage innovation, as well as manage risks. It requires acknowledgment, involvement, and commitment. The principles and guidelines help to further frame processes, measures, and control.  

Innovation is too important to leave solely in the hands of the management team without any oversight or guidance. Innovation Governance needs to advocate, steer, and sustain innovation. Digital directorship must be extremely visionary, mindful, creative, empathetic, generous, conscious, passionate, and humble. Modern BoDs are also innovators who can break down the old rules, and build new rules to inspire businesses to step into the new chapter of innovation blossoms.

"Digitizing Boardroom" Book Chapter 8 A Culture Savvy Board Introduction
"Digitizing Boardroom" Book Chapter 7 A "Talent Master" Board Introduction
"Digitizing Boardroom" Book Chapter 6 A "Governance Champion" Board Introduction
"Digitizing Boardroom" Book Chapter 5 An IT-Friendly Board Introduction
"Digitizing Boardroom" Book Chapter 4 An Innovative Board Introduction
"Digitizing Boardroom" Book Chapter 3 A Performance-driven Board Introduction


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