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Global Case Studies in Innovation Governance: An Australian and U.S. Perspective
December 27, 2020
On January 27, Dr. Michael Hartmann welcomed Kee Wong, Chair, The Australian Institute of Directors Innovation Committee (Australia) and Bob Zukis, Conference Board ESG Fellow & Founder and CEO, Digital Directors Network and Professor, USC Marshall School of Business (USA) to The McMaster Collaboratorium to talk about how board directors and board associations are seeking to educate and prepare board directors for asking the right questions, and understanding the answers around digital innovation and its risks.
Industries are moving quickly toward digital business models, and the gap in the boardroom was becoming more pronounced pre-COVID. The pandemic has pushed that move, consumer behaviour has changed, and directors have had to accelerate their understanding of digital innovation.
There is a common theme around the world with how boardrooms are sitting with innovation. The number of directors with a comfortable understanding of technology and innovation sits around 3%. The majority of board members in an Australian survey stated that innovation was not or rarely on the agenda.
The pandemic has shown an amazing ability to iterate among businesses, to succeed during strange times. Directors are much more in the trenches with management to manage this crisis and board meeting frequency has increased. This makes for a more collaborative working environment, but as the dynamic shifts in these relationships there are questions about how the traditional models and methods will work in the future.
The business of business has always been innovation. Competitive markets have always produced innovative solutions. The pandemic has been part of an overall systemic failure – in healthcare, in business, in politics, in society – that is impacting everything.
Post-pandemic, the core focus should be on examining old systems, the risks and failures, and the opportunity for change and to design systems that are more reliable and resilient.
Innovation has a long-tail value of incremental solutions and changes that can add up to a stronger business. A new demand for corporate boards is to lead and advise more actively, as opposed to monitoring performance.
The bar for accountability is being raised for boards. As business value is created and delivered digitally, boards have to learn how to protect that value. As a result, directors face a new standard around ‘Duty of Care’ around cybersecurity and data protection.
Directors can no longer claim ignorance on these issues. The skills and capabilities of corporate boards need to expand – you can’t govern what you don’t understand. There is a huge need for director skills and competency for the digital economy.
Every director needs to be comfortable with technology and innovation, without it, they will have a blindspot when creating strategy for the near and long term. Education is no longer a nice to have – it’s necessary.
Existing boards can adapt to the digital realities of their evolving businesses, but to do so will require sustained education and better relationships with technology executives. While the board slowly refreshes, existing directors must put aside any bias they hold toward the technology experts in their company.
Innovation needs to become part of the organization’s DNA – everyone needs to participate in that culture. Technology and cybersecurity committees should be considered by boards of directors.
The future of work has changed for good. The new normal needs to be prepared and directors need to ensure their organizations are prepared. The board needs to think differently and let go of pre-COVID metrics.
Digital businesses will remain and systemic risk will continue. The value of digital business systems has been proven through the pandemic response. There is a new understanding that boards need to better manage the systemic issues in the world and demonstrate credibility.
Innovation is expanded by diversity. The new way of working allows companies to be more global, attracting more diverse talent into their organizations. Traditional barriers need to be broken.
The boardroom remains a critical part of successful organizations. Digital success (and failure) begins with the board of directors.
Technology is now the core for every business. In the past, companies would look at the business and then see where technology could fit in to augment performance. Now, technology is the centre and companies need to see where the business processes can augment innovation.
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Tags: Innovation