A highly innovative board leadership team should have a good blend of various innovator roles such as idea generators, innovation facilitator, navigator, practitioner, or evaluator, providing invaluable advice to management for improving innovation capabilities and make a significant contribution to accelerate company performance.
In the ever-changing modern society, innovation is “creating value by solving simple or complex problems creatively.” People are increasingly emphasizing on the importance of innovation to the long-term survival of enterprises. Innovation is one of the long-term strategies of forward-looking companies.
Even if the company is performing well at the moment, more senior executives should be assigned to increase innovation performance. The board oversees strategy, so BoDs need to pay more attention to innovation management as well as management innovation. Today, due to the complex and ever-changing economic environment, innovation management needs to take higher risks in the strategic value chain; including investment management, information management, or talent management, etc. Innovation advocacy at the board level is critical to improving the success of an organization’s overall innovation management.
Innovation governance Q&A: Innovation is the formation and implementation of novel ideas to generate business value. Innovation is a state of mind and management process that thinks and solves problems from a unique perspective, discovers optimization solutions, and chooses the best feasible method to solve existing or emerging business problems. Relevant board innovation questions include:
• Fundamentally, leadership is about the future and direction—how to guide businesses and society in the right direction. How can boards develop the right policies to integrate innovation into all levels of company management?
• How can an insightful board help companies oversee innovation strategies, design and drive an innovation culture?
• How to build a first-class leadership team? What are the biggest innovation management gaps and “blind spots” in corporate strategic decision-making?
• How does the board set the tone for encouraging innovation and humanizing business transformation? How does the company’s board of directors play a key role in guiding corporate digitalization, integration, and globalization?
• What are the most effective leadership practices for achieving innovation goals, and how is innovation performance evaluated?
From the boardroom to frontline customer service employees, innovation should be the focus to keep your business ahead of the competition. Commitment from the top is important to the success of any change or innovation. As one of the key leadership pillars, the company’s board of directors should set the tone for practicing open leadership, encouraging innovation and advocating for change, providing space for dialogue and debate on digital innovation, paying attention to innovation dynamics, deepening a common understanding of urgent problems, and accelerate the cultivation of innovation capabilities.
From the perspective of corporate board composition, build a diverse team with cognitive differences, they can learn from each other’s strengths, evaluate innovation strategies, and successfully bridge innovation gaps. Asking thought-provoking questions and brainstorming fresh ideas can help to verify the corporate board’s deep and comprehensive thinking on specific issues; avoid groupthink and blind spots in decision-making, and set the tone for establishing an innovation culture.
Identify innovation bottlenecks and optimize innovation process: Innovation does not happen by accident, but a systematic process. Companies can use limited resources to obtain the best possible returns to meet the expectations of many shareholders. Therefore, innovation needs to be a hot topic in digital boardrooms, in which the main barriers to innovation are rigidity, lack of flexibility, static processes or bureaucracy. Different types of innovation should be managed through tailored processes. Directors can provide insight on how to break out of stereotypes, when to change old rules, and when to create new ones. Striking the right balance between the ideation and execution parts of the innovation process is critical. Develop guidelines for innovation management and manage innovation. Most companies fail at innovation execution because they do not have optimized processes and do not understand the connections required to work horizontally across departments. They also lack the necessary tools to develop and test new models, products and businesses.
There are many kinds of innovation bottlenecks, such as idea bottlenecks, process bottlenecks, resource bottlenecks, innovation execution bottlenecks, and talent bottlenecks. Board oversight of innovation management helps to evaluate innovation strategy, which is an important part of corporate strategy. By relying less on a single function and relying more on cross-functional collaboration and continuous improvement, companies can execute innovation more effectively. It helps enterprise management identify innovation management bottlenecks, optimize processes, reduce innovation implementation risks, and systematically expand innovation effects.
Innovation capability & performance evaluation: Innovation is critical to a company’s prospects and cannot be delegated carte blanche to management without board oversight. The corporate board of directors is responsible for monitoring innovation management performance, and strengthening management innovation. An innovation management system includes policies, structures and programs that innovation managers can use to drive innovation, improve work efficiency and the innovation capacity of enterprises. Management innovation includes leadership innovation, communication innovation, cultural innovation, process innovation and other elements.
Innovation management oversight by the corporate board can help to reduce the risk of introducing innovations to the market, establish clear proof of concepts before investments are launched and scaled, connect innovation strategy and innovation culture, and ensure that innovations are supported by management and stakeholders. Assessing the corporate board’s innovation management performance is also critical to improving the success of innovation management.
The problem is that most innovation management initiatives are unsuccessful. Key performance indicators that measure business success tend to be primarily financial in nature. The leading indicators of successful innovation are not financial indicators. The key to evaluating a company’s innovation performance is to correctly measure the multi-dimensional enterprise value they generate directly or indirectly; the share of profits or revenues generated by an innovation. Of course, it is not easy to define how much value innovation generates, but it can be roughly estimated: new products, improved services, internal process innovation, cost savings brought about, long-term value of talent training, etc.
Boards of directors can make significant contributions to improving corporate innovation capabilities. Innovation management oversight from the board can help to reduce the risks of bringing innovations to market, establish clear proof of concept before investments are launched and scaled, and ensure innovations are supported by management and various stakeholders. A highly innovative board leadership team should have a good blend of various innovation roles such as thought leader, innovation facilitator, navigator, practitioner, or evaluator, providing valuable advice to management to improve innovation capabilities and make a significant contribution to accelerate company performance.