Five Traits of an Innovation-Savvy Board
In my five years of serving as a director and chairman in the boardroom, it’s clear to me that embedding an innovative mindset in an organization has never been more important than it is right now. Cutting-edge technology such as artificial intelligence, data analytics, cloud applications and robot process automation are helping drive exponential change in the business world. Organizations that embrace this innovative technology may have a better chance at capitalizing on opportunities.
You see innovation in the newcomers to the C-suite. Chief digital officer, chief data officer and chief automation officer are just a few of the emerging titles that are more common in today’s marketplace.
Given the incredibly rapid change, it’s often critical for organizations to become more proactive, seek opportunities for change, anticipate and identify potential disruptors, accept a degree of risk and potential short-term missteps without wavering in a commitment to long-term success.
Enter the board of directors. At many organizations, the board is responsible for looking three to five or even 20 years down the road. Directors are tasked with anticipating innovative technologies that could propel their organization to new heights, put the organization out of business, or cause change that falls somewhere in between.
From my perspective, boards at leading organizations typically have five traits that help them in the critical role of anticipating what comes next.
Diversity of thought: It’s important for boards to have an optimal mix of perspectives and expertise to address long-term change. This mix often requires a comprehensive look at the organization’s strategy. It should take into account risks, market opportunities, where the organization does business, who the organization’s clients are, and who the organization employs. A sophisticated, data-driven analytics tool that assesses both organization strategy and diversity could be a first step to creating the “optimal mix” in the boardroom.
Chief digital officer, chief data officer and chief automation officer are just a few of the emerging titles that are more common in today’s marketplace
A solid plan for succession: Effective boards look at succession as a process not a spur-of-the-moment decision. Boards should plan for expected turnover and unexpected departures to maintain an ideal composition. Effective boards look outside of the norm, specifically for candidates that can contribute to the overall mix of members. Increasingly, organizations are taking factors such as gender and race into account for their succession planning and recruitment processes, but that’s often not enough because it tends to identify like-minded people. The succession planning process should deliberately create seats for those who are truly different, even if the candidate has no prior board experience. When boards challenge their long-held ideas, they can expand their thinking and capitalize on innovation in the boardroom.
A focus on the future: Day-to-day operational issues can consume management. As important as immediate results are, losing focus on innovation can lead to disastrous results. The board can remind management of the bigger picture, ensuring that the organization thinks beyond six months or one year. When boards take the longer view, organizations can have a better chance at effectively managing threats and juxtaposing immediate risks and strategic intent to capitalize on emerging technologies.
A life-long learning mindset: It’s not enough for boards to be well-informed. That’s expected. To thrive amidst rapid change, a board should be curious, too. Directors who surface new ideas and ask “what if” questions of management can make an impact in serving the organization. And while it helps some organizations to have a technology expert on the board, it behooves directors to do all they can to stay abreast of current and emerging technologies. I had learning in mind when I led Deloitte’s board of directors on a day and half leadership development program at West Point. Our goal was to enhance the board’s ability to execute its role as advocates, stewards and guardians of our organization. Hearing from retired generals on making decisions in volatile, complex and ambiguous environments opened our minds to new thinking.
A healthy approach to failure: Boards at leading organizations stress the importance of “failing fast”—that is, trying something new and if it doesn’t work, acknowledge it quickly and learn from the mistakes to make a better, more informed choice in the future. In my view, an organization can’t be innovative without having the courage to fail and seeing failure as a learning opportunity. When professionals see executives and board members stepping outside of their comfort zone—and sometimes failing—they may feel more comfortable tackling issues with an innovative mindset and altering the status quo.
Depending on the organization, other steps a board could take to anticipate the future include appointing a technologist who has business experience, establishing a committee to focus on technology oversight, and inviting the chief information officer to board meetings on a regular basis.
A key is to be proactive and ensure innovation is part of the enterprise-wide culture.
In a world of exponential change, it’s up to the board of directors to challenge traditional assumptions and create a culture of experimentation. Organizations that take this approach can have a better chance at evolving and growing as the environment changes.
“Bridging the boardroom’s technology gap,” CIO Insider, Deloitte Insights. June 2017
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