A guest post from Claudia Fan Munce, an independent board member, digital innovation and entrepreneurship expert, and venture capital advisor. She recently joined us as a guest on The Corporate Director Podcast to discuss the idea of “disruptive innovation” in the boardroom.
How Boards Approach Innovation
Recently with the news of the passing of Clayton Christensen, a legendary HBS scholar on the topic of innovation, I was reminded of how much his strategic frameworks, like Disruptive Innovation, Jobs to be done, Future Back frameworks from Innosight, have affected my perspectives throughout my career as a corporate strategy executive. Today as an independent director on the board of several companies, they remain just as relevant.
Innovation has become an important topic in the boardroom as companies are all embracing it as enabling their strategy for growth. As companies seek to leverage the extensive experience in the boardroom to develop a foresight to address these new challenges, it creates a new mandate for diversity in thought, background, and expertise, to bring in new perspectives that were not as important for the traditional oversight function of the boards, but that is critical in providing a foresight to drive a company’s strategy.
Cultivate “Cognitive Diversity” in the Boardroom
As a corporate director with my gender, ethnic, and cultural diversity, being a Chinese women who grew up in Brazil, I am very encouraged by the momentum in the past couple of years in board refreshment with more diversity, and I do believe that diversity drives higher engagements level in forward-looking strategy discussion in the boardrooms. However, it is not enough to lean on board refreshments to fulfill this new mandate. Each board member, regardless of his or her tenure or profile, needs to be an active participant to foster and support the innovation discussion in the boardroom with their cognitive diversity and to be open to seek and digest new perspectives and bring them into the boardroom. Indeed, in my experience, as the engagement level of the board in forward-thinking strategy discussions increases, tenured directors that many would’ve assumed to be myopic, have led the way in broadening their perspectives in new areas such as cybersecurity, IT, and new business models. The board may be a source of great insights to help the management define an innovation strategy, but to truly help them achieve innovation, as Clayton Christensen has taught us, the board needs to encourage the management to take on the risk in defining a prototype, a pilot project, something that can be tested in the market place fast and be iterated upon rapidly, in order to learn insights that we don’t know.
Want to Innovate? Think Like an Entrepreneur
As directors, we all hope to ask the right questions to help our company get to the right answer, but understanding what questions to ask really takes work. It requires all of us to invest time outside of what management is presenting to us in the board material to develop unique insights based on the breadth and depth of our diverse perspectives. For example, my experience as a strategy executive that works with startups as a corporate venture leader is still very unique on my boards. My unique perspective helps me understand the investment thesis behind startups that are innovating in the relevant marketplaces we play. That understanding has proven to be valued by management teams and my fellow board members. The companies recognize that in seeking to innovate for growth, they need to monitor a spectrum of innovation activities, from academic research, customers, competitors, partners, suppliers, and ventured-funded startups. It is important for companies to be gathering information from all sources to understand their position in the marketplace and its competitiveness. It is necessary to continuously refine your strategy and to be prepared to defend against threats and to quickly respond to opportunities. Any signals of change that may be relevant to the company’s business can provide early insights to guide the company to recognize threats or opportunities. When a board is open in discussing external sources of innovation that may not have an immediate impact in the company’s business and attempts to synthesize that insight as part of the strategy discussion, it encourages management to pursue potentially riskier innovation initiatives that will have better long term results.
So get out there, meet with a few startup CEOs that are strategically aligned with the growth areas of the company you serve, have a chat over a fun meal, be open to understand their view of the world and the markets they serve and it will make your head spin, it will open you up to new perspectives, to elevate your board engagement level, and help you cultivate innovation.