As evidenced by headlines like “Innovate or Die,” innovation has become an imperative for today’s corporations. Yet companies are often challenged to instill a culture that both drives progress and gives employees the freedom to take risks. How can boards support management in the difficult task of fostering innovation, supporting collaboration, and shaping culture?

In this episode, broadcast from the Diligent Director’s Experience event in Napa Valley, host TK Kerstetter sits down with Claudia Fan Munce, a director for CoreLogic and Best Buy. With a background in venture capital, Munce provides an interesting perspective on innovation; she explains what today’s board members can do to remain growth-minded at scale.

Evaluating and Engaging “Bleeding-Edge Disruptors”

During Munce’s 30-year tenure at IBM, she served as managing director of IBM Venture Capital Group, helping to foster innovation across 173 countries and 17 industries.

“I had the role of hunting and gathering venture-backed startups that have the bleeding-edge technologies that help us serve our customers,” she said.

To be able to respond to changing consumer social paradigms in today’s digital world, she explained, a company needs to proactively look for the bleeding-edge disruptors that can help it achieve its innovation agenda—a task where the board can play a pivotal role.

“My role as a board member is to challenge and ask questions about the disruptions that are taking place in the venture community,” she said. “A lot of times we’re in a strategy discussion and I’m the one to say, ‘Hey, have you seen the XYZ startup and they’re doing XYZ things?’”

At the very least, she said, corporations and boards need to be aware of the innovation landscape. That awareness could lead to partnerships and acquisitions that accelerate a corporation’s growth strategy.

The best outcome, according to Munce, is a win-win in which the large corporation leverages the disruptors to deliver an innovative solution, and the startup leverages the corporation’s vast customer base and marketing channels.

Munce said that skill—finding the opportunity for large corporations and the small venture-backed companies to align—is one of the most valuable perspectives she brings to corporate boards.

Encouraging a Culture that Takes on Risk

The failure to innovate, by and large, is not because we don’t have the talent or the skill base. It’s the culture of being afraid to fail that prevents companies to really leap from where they are to where they need to be.

— Claudia Fan Munce, Board Member, CoreLogic and Best Buy

Another way a board member can add innovation value is by supporting a company in taking on risk: for collaboration, international expansion, pilot projects, new ventures, acquisitions, and beyond.

According to Munce, a culture that enables innovation is a culture that has an acceptance level for potential failure—and the board is in a position to encourage management and ask the questions that allow them to take more risk and leverage more collaborative ways to innovate.

“I think the board has a unique role in allowing that level of risk-taking attitude,” she said. This could involve encouraging more risk when a corporation is thinking about its growth strategy, about “gaps and white spaces,” and about working with, investing in, or acquiring venture-backed startups.

“Everything is innovating so fast,” she said. “If you literally sit there and try to define that strategy on paper without doing something to really gather the information from the market and from the customer—to iterate to get to that right product market fit—chances are you’ll be unable to get there.”

The board has the responsibility to help the company and the management team feel that they are being supported to take more risks. Without the acceptance of initial failure, you just cannot innovate.

— Claudia Fan Munce, Board Member, CoreLogic and Best Buy