COVID as Catalyst: How the Pandemic Put Change on the Agenda
“Innovation proliferates in a crisis.” Those were the words of Julian Birkinshaw, Professor of Strategy and Entrepreneurship at London Business School, speaking in Diligent and Board Agenda’s recent ‘Innovation in Times of Crisis’ webinar’. For boards, the ongoing COVID-19 pandemic has certainly acted as a catalyst in terms of accelerating technological adaptation and implementing new practices. Organisations that found their efficiencies and structures stymied by the enforced transition to remote work have had to find new solutions rapidly.
To operate as close to business-as-usual as possible, boards have sought out innovative technological solutions to meet new governance demands, uncovering an array of benefits in the process. Whether it’s increased efficiencies, smoother remote working practices, enhanced security or better crisis response, boards have realised that there are significant gains to be made when an innovative approach to governance is undertaken.
Ultimately, innovation is at the core of company performance, and it’s the board’s job to set the tone. Those that don’t face a real danger of being left behind. Here are three areas in which the board can focus:
1. Digitising and securing board processes
2. Harnessing data in the boardroom
3. Focusing on board composition
If a company is to succeed, then its success is engineered from the top down. Innovation starts with the board itself. They hold responsibility for setting the tone for the organisation as a whole. If the board is not examining its own practices and not looking for better, more efficient and more process-driven solutions to routine tasks, then there’s every chance that such a laissez-faire approach to innovation and forward-thinking will permeate the rest of the business too. As Board Agenda’s Managing Editor Gavin Hicks noted in the recent Diligent/Board Agenda webinar: “Companies that innovate succeed. Those that don’t often fail.”
A good board is one which leads by example – remaining open to new solutions, embracing those that work, and analysing the successes and failures of those that don’t.
Digitising and Securing Board Processes
The board is responsible for setting the tone at the top when it comes to corporate culture – not just in the way that it oversees that culture, but also in the attitude, dynamics and culture of the board itself. A board that innovates its own processes will be able to support transformation, strategy and risk mitigation more strongly throughout the whole organisation.
Similarly, in a business landscape where the threat of data breaches and cyberattacks are ever-present, a proactive board will realise how valuable the information they discuss, share and analyse is – as well as how dangerous it can be in the wrong hands. By taking steps to keep that information secure, the board sends a valuable message to the rest of the organisation: We take our responsibilities as the custodians of sensitive data seriously, and we will protect it.
Harnessing Data in the Boardroom
The success of any business is determined as much by an awareness of what goes on outside of it as inside. Keeping up with the news, activities and data that matter to your organisation is fundamental to its ongoing strength. A board cannot innovate if it does not know where change is happening now, and where it may happen in the future.
Boards can no longer follow the old model of quarterly updates being provided to them. In today’s digital age, there is every chance that the information provided will be old news before it even hits the table. A good board will have its nose right up against the glass – forecasting trends, looking ahead and challenging management. Innovation comes from being up to speed, and being up to speed means having access to the right data at the right time.
The issue many boards face is not a paucity of information, but a surplus of it. An inability to accurately sift through the sheer volume of news may well mean that blind spots occur in several areas:
- Unspotted trends and missed opportunities
- Unnecessary risks
- Public relations liabilities
- Homogeneous boards
- Missed regulatory changes
- Surprises from competitors
But when it comes to gathering market and competitive intelligence, a digital governance solution can help. Governance software enables your company to consolidate market research and competitor insights, allowing the board to cut through the noise and engage in a strategy geared towards success in the years ahead.
Focusing on Board Composition
Boards have come to realise just how important it is to have the right people in the boardroom for watershed events. As Kieran Moynihan, Managing Partner at advisory firm Board Excellence, noted in a recent webinar: “As a result of the [COVID-19] crisis some boards are starting to change their composition – bringing in specialist sector heavyweights and jettisoning generalist non-executives. As a result of the crisis, we’re starting to see what boards will look like in the future.”
Future success depends not just on being aware of the challenges that lie ahead, but on an awareness of whether the board has the right skillsets to match those challenges. For many reasons, boards have traditionally drawn from a narrow pool of potential candidates, but modern governance tools provide access to a vast database of potential appointees who would previously not have been on the radar.
Board refreshment is critical to the ongoing encouragement of innovation, and boards need to be open to non-traditional skillsets that may open avenues which had previously appeared closed (or were not even visible at all.) A board set up for success will be one that draws from a diverse array of cultures and backgrounds and will be a more accurate representation of the world today (as well as the company it serves).
If a firm is to be truly innovative, then it should foster inclusive and entrepreneurial leadership at all levels. Encouraging diversity of thought through different perspectives and voices is integral to the successful implementation of innovative practices at board level.
“To be successful, companies must be led by leaders – the CEO, top executives and board of directors – who are deeply and irrevocably committed to innovation as their path to success. Just making innovation one of many priorities or passive support for innovation are the best ways to ensure that their company will never become a great innovator.”
Bill George, Harvard Business School professor and former Medtronic CEO
How to Drive Innovation from Above
When innovation is driven from above, the impact is felt organisasion-wide. But to move it forward, there are three steps which must be taken:
Step One: Get Innovation on the Agenda
It can be understandably easy for boards to get lost in the mire of governance and regulatory issues, financial performance and risk management – particularly during a crisis. As such, an approach to innovation should be formalised and time given to its discussion. Doing so will open up new approaches to old problems and offer solutions that may not have been visible before.
“Successful innovation requires a human dynamic to drive ideation.”
ICGN – ‘Innovation: The Role of the Board and Investors’
Step Two: Monitor Your Progress
Not every innovative strategy will stick. Some might not be the right option for your organisation. Some might need tweaking. But above all, a board must make sure that those innovations are responding to the organisation’s needs and are fit for purpose.
Boards should identify innovation projects and seek out regular updates, establish regular reviews against measurable targets, and compare projects against previously set milestones and KPIs.
Step Three: Communicate and Learn
The board should not limit its role to simply incorporating and establishing innovation within its own firm. Discussions should be held more broadly about sector-wide innovation projects. Successes should be celebrated and failures should be learned from.
Fostering a culture of engagement around innovation is key to establishing its long-term survival – if all decision-makers feel as though they have a stake in the process, the whole organisation will have more investment in its success.
Innovation in Governance
As digital advances continue to push forward and evolve the boardroom, the board also needs to look inward and better understand how technology can provide innovative solutions to existing practices. Paper board books are a thing of the past. Publicly available communication channels should become redundant when board matters are under discussion. An innovative approach to technology in the boardroom can improve substantially on processes already in place – from communication to collaboration to security. The physical concept of a boardroom seems more antiquated than ever.
We find ourselves in an age where the traditional image of governance – with its stacks of paper, reams of hand-written minutes and lackadaisical approach to cybersecurity – seems not only quaint but irrelevant. By embedding innovation in their own processes, boards can lead the way in encouraging their organisations to follow suit.
There is little doubt that innovation plays a huge role in creating long-term value, and company leaders need to make sure they are modelling desired behaviour and cultivating an embrace of its possibilities from the very top. A board stuck in the past will likely lead to a company unable to prosper in the future.
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