Transforming The Future
Today’s C-suite executives must balance a need for new structures, processes and mindsets with a responsibility to guard against undue and often-unforeseen risks. I would argue that board
directors must also be actively engaged with management in this balancing act mindful of course of each party’s respective roles.
The importance of placing the topic of innovation high on the board agenda with a particular focus on “digital” is not lost on many directors even if current board practices lag behind best
intentions. A McKinsey survey of corporate directors indicated that more than 50% of respondents said their boards should have a forward-looking view of technology’s impact on their business yet less than 30% reported having such a discussion.
For companies where innovation is most critical, the board should ensure that innovation is viewed more as a creator of strategic opportunity than as an operational expenditure — this was appropriate where the majority of innovation issues were IT-related and concentrated in back-office operations that could put the company at risk if they failed.
Today’s innovation-savvy boards certainly review and discuss the company’s innovation risks but they also set specific innovation goals with management and expect management to report on innovation performance. These boards also recognize the value of having the topic of innovation as a regular full board agenda item, review and discuss the company’s innovation strategy with the CEO, and take innovation into account when appointing new leaders.
Companies seeking to place digital at the core of their strategy will need board directors capable of challenging the critical assumptions and actions of top management. The board will also need to know when to work in tandem with management to put in place the resources, talent and tone at the top needed to operationalize an enterprise-wide, innovation agenda.
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