For innovation to thrive in a company, it must be prioritized at every level.
It’s not uncommon for corporate boards to lack strong expertise in the areas of innovation and technology.
Taking an innovation project from idea through execution is challenging, and there can be obstacles at several places along the journey. When there is company-wide buy-in for an innovation project however, these challenges can be overcome more easily, and there is far less chance for the project to go uncompleted.
Getting middle and upper management on board with innovation takes effort, but what about those at the very top? It turns out, getting buy-in from the board of directors can be particularly vexing due to the typical board makeup, their strengths, and their skills gaps.
Boards Don’t Prioritize Innovation
A 2015-2016 study by researchers at the Harvard Business School found that boards don’t prioritize innovation. The top three issues boards focus on have to do with hiring top talent, dealing with regulations, and facing global competitive threats. Innovation ranks fifth.
Why is this the case? The top focus areas of corporate boards are important, after all, but how issues are prioritized appears to be affected by the makeup of the typical board of directors. Board members are often older, and they are less likely to come from a technology background. Unless they deliberately carve out time during board meetings to talk about innovation, it is likely to be an afterthought.
Boards Admit They’re Not “Good At” Innovation
Board members are fairly forthcoming about their own lack of technology and innovation focus. They recognize that they are good at things like staying current on the state of the company and understanding regulatory compliance. But technology and innovation rank low: numbers 17 and 18 on the ranked list of governance activities at which boards claim to be good.
The fact that boards recognize that there is a technology and innovation skills gap at the top can be seen as positive. Recognizing a skills gap is the first step to addressing it.
Boards that recognize innovation skills gaps at the top can address those gaps and improve their positioning for innovation.
Long-Term View Necessary
To better support innovation in their companies, boards of directors will have to adopt a long-term view and be willing in some cases to sacrifice short-term gains in favor of the longer-term gains associated with innovation. Additionally, it is good practice to specifically designate a portion of each board meeting for the discussion of technology and innovation to help bring them into the everyday conversation and remind board members why those topics matter.
The makeup of the board can also help promote buy-in of innovation projects. In general, a board that is more diverse in terms of professional background and age is likelier to pay attention to trends like the rise of innovation and disruption. Transformative disruption can arise from within a company just as easily as without, as long as support for innovation extends throughout every level of leadership.
Demonstrating ROI of Innovation
If you treat the impact of innovation as immeasurable, you can miss out on a lot of opportunities. Demonstrating ROI on innovation projects may not be straightforward, but you can reframe the question of ROI in several ways, such as asking the following key questions:
- How big is the potential market?
- What drives revenue and expenses?
- Can we determine a unit profit model?
- Is it scalable?
Getting the board of directors to sit up and take notice of innovation will require that you demonstrate ROI for innovation projects. This, plus an increased awareness of the importance of innovation and of innovation backgrounds on the board of directors, can go a long way in gaining buy-in for innovation projects. Want to know more about how innovation is changing business at every level? Download our disruptive innovation infographic and share it with your colleagues.