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The Board’s Role in Innovation: A Strategic Approach

Embracing Innovation: A Guide for Board Directors

Innovation is a strategic imperative in today’s business world. As an experienced board director, I’ve observed firsthand how advancements in technology and evolving customer expectations are reshaping entire sectors. Organisations that fail to embrace innovation run the risk of becoming obsolete, while those that foster a culture of innovation unlock new avenues for growth and success.

At its core, innovation is the art of creating value by offering unique solutions to significant problems. It’s not just about developing new products or services; it’s about finding novel ways to boost efficiency, enhance customer satisfaction, and stimulate growth. It involves thinking differently and challenging the norm. As board directors, we must understand that innovation is a mindset, a culture that needs to be ingrained in our organisations’ DNA. Innovation is a competitive advantage, and boards should move from being largely reactive to pre-emptive. [1]

Embrace Different Experiences

A board of directors should embrace a diverse array of skills and experiences [2], extending beyond financial acumen to include expertise in innovation, sustainability, climate change, technology, cybersecurity, marketing, and HR for example. This broader knowledge and experience empower board members to steer and supervise the execution of innovative strategies, fostering a culture that promotes creative problem-solving and progressive approaches. With a sound understanding of innovation processes and methodologies, board members can effectively steer their organisations towards continual improvement and growth. Therefore, by advocating diversity in board skills and experiences, including innovation, board directors can ensure their organisations are well-prepared to adapt and prosper amidst future challenges.

Role of the Board

An effective innovation strategy transcends mere future predictions; it’s about turning that vision into reality. This requires cultivating an innovative culture, aligning innovation initiatives with strategic goals, and ensuring they contribute to overarching business objectives. It requires a clear strategy that serves as an organisational roadmap, outlining goals, methods to achieve those goals, and metrics to gauge success. 

Crafting an impactful innovation strategy extends beyond mere foresight; it involves transforming that vision into tangible results. To achieve this, organisations must nurture an innovative culture, align innovation initiatives with strategic goals, and ensure they contribute to overarching business objectives. A clear strategy acts as a roadmap, defining specific goals, outlining methods to achieve them, and establishing metrics for measuring progress. Without a well-defined innovation strategy, organisations risk squandering resources on uncoordinated efforts and overlooking potential growth opportunities. 

“Balancing the board’s legal power and management’s executive power is not easy, but for innovation discussions to happen, neither side can dominate. Boards need to build a strong partnership with management and a sense of shared ownership of the innovation strategy.“ [3]

Our role as board directors goes beyond observing; we are integral contributors on the innovation journey. Our responsibilities encompass steering the organisation toward strategic goals and overseeing the innovation strategy. However, our involvement extends beyond passive approval and supervision. As active participants and sponsors of innovation, we champion creativity within the organisation. We advocate for essential resources, foster a culture that values innovation, and actively engage with challenges and opportunities. This enables us to make informed decisions and provide effective guidance.

Board Oversight

One of our duties involves oversight of the innovation strategy, from strategic planning to execution. We must understand the challenges, and monitor progress. Regular reporting through board papers is essential to track milestones and assess project status. Evaluating outcomes objectively – both successes and setbacks – guides our strategy. We need to ask the right questions and provide guidance based on our expertise, shaping decisions, and steering the strategy toward success. Holding management accountable ensures alignment with strategic goals. 

Conclusion

The board’s role in an organisation’s innovation strategy is not just important, but essential. We bring a unique perspective and a wealth of experience that can add significant value to the innovation process. To do so effectively, we need to be more than overseers; we need to be active participants and sponsors of innovation. Being a sponsor of innovation means being an advocate for change and a catalyst for progress. It involves fostering an innovative culture and leading by example. As board directors, we have the power to influence the organisation’s direction and shape its future.

About Gary Morgan: Gary Morgan is an experienced board director, chief executive, consultant, and corporate advisor with extensive experience in strategy, innovation, and growth across various sectors including health tech, aged care, agtech, information security, and research. He is a Fellow at the Governance Institute of Australia and serves on the Griffith University Industry Advisory Board for the ICT School. He is also Entrepreneur in Residence at The Allied Health Academy. Gary has co-authored papers and reports published in entrepreneurship and medical journals.

Acknowledgment: I would like to thank Dr Vanda Fortunato for her invaluable input and feedback. This article was crafted with the assistance of AI technology.

References:

1. “Three lessons to drive boardroom innovation”. https://www.aicd.com.au/innovative-technology/disruptive-innovation/sustainable-technology/three-lessons-to-drive-boardroom-innovation.html

2. “How boards can sharpen their focus on innovation”. https://www.ey.com/en_us/board-matters/how-board-oversight-of-innovation-is-evolving

3. “The Board’s New Innovation Imperative”. https://hbr.org/2017/11/the-boards-new-innovation-imperative

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