Boards can be Shapers of Innovation

Is your corporate board agile to deal with rapid innovation in your industry? Industry innovation and disruption require a new strategic approach to manage digital transformation. Boards can influence disruption by shaping strategies that need massive capital investment to drive innovation. A versatile board works the business plan by incorporating innovation to shape the strategy of an organization. Top management requires board support to execute a successful shaping strategy.

Let us look at a classic corporate example when Google announced entering the telecommunications space, leaders of the industry like AT&T, Sprint, Verizon, T-Mobile, and others were caught off-guard. Google announced its planned launch of Google-Fi mobile device service. It brought a radical paradigm shift to the incumbent telcos who were not ready for such a sudden move. The economies of scale for google are derived from not owning an expensive infrastructure; instead, Google would resell access to telcos. Google-Fi will preselect the best available signal for your phone anywhere and anytime. What a fantastic benefit for the user experience! Were the boards of telcos shapers to predict what was coming?

According to Hagel III, Brown, et al. (2008), a shaping strategy is determined by an organization's strategic choices. There are three strategic choices the board can choose to shape corporate direction. The first is whether the board wants to assume an influencer's role in strategy shaping to increase asset efficiency, build capabilities, and gain market share? The risk of this strategy is limited in influencing thought leadership in the industry. Second is whether the board wants to become a disciple in shaping strategy to provide focus and clear strategic direction to avoid investing in competing and complex systems? This strategy risk is balanced to ensure that an alternative plan could be invoked if the other one fails. The third is whether the board wants to adopt a hedger’s strategy where the hedger’s eggs are spread across multiple competing platforms. The risk of this strategy could increase costs because of the spread of risk to numerous platforms. Today’s boards are encouraged to become shapers and collaborate with executives. Industry innovation is ubiquitous and happening at a rapid pace. Our consulting practice has found that many boards are learning to embrace change to avoid having outdated innovation and risk tolerance agendas. Boards with a futurist mindset are already at the forefront of shaping their strategies. The answer to the topic above is a resounding, yes they can!

Reference

(Hagel,J.,Brown,J.,Davidson,L.) Harvard Business Review. Oct 2008, Vol. 86, Issue 10, p80-89. Harvard Publishing, Boston MA (USA)