Boards must have members whose expertise can assist management through the disruptive days and years ahead. Now is the time for corporate governance to more clearly assert itself.
How technologically savvy is your board of directors? How many directors have the necessary knowledge to evaluate your company's technology strategy or approach to cybersecurity? And, as we move into a new era of cognitive automation, how many directors understand your company's approach to innovation?
Now is an ideal time for visionary boards to establish standing committees that focus on innovation and technology, both from the standpoint of what their companies are doing today, and looking ahead three to five years and even further into the future. It's hard to believe that in 2016, when technology has never been more important in corporate affairs, or a more disruptive force in the economy, that we even have to ask such questions. Yet, despite this growing importance, most Fortune 500 companies do not have standing board committees with responsibility for innovation and technology oversight.
These concerns were top-of-mind for many directors from across the globe who participated in the WCD (WomenCorporateDirectors) Americas Institute in Atlanta last fall.
"The board should be looking at a company and asking itself: Are initiatives praised? Are they celebrated? Are failures embraced?" observed Giannella Alvarez, chief executive officer of Harmless Harvest and a director of Domtar Corp. "Is the innovation ecosystem comprised of internal and external stakeholders? Do we involve our employees in innovation? Do we involve our suppliers? Do we involve academia? Do we involve start-ups?"
Boards need to be aware that the corporate culture is what will make the company open to new business models. As a result, boards must drive a culture that fosters innovation, even when it has the potential to disrupt the corporate status quo.
Finding the right balance
Another challenge I see for boards today is helping their companies find the right balance between innovation and risk. It's important for companies to have a balanced innovation portfolio that includes incremental innovations where you're tweaking existing products. The portfolio should also include more disruptive innovations, ones with a longer return on investment and more risk.
Though I would argue that the innovation and technology committee should be one committee, there is the risk component of technology that...