Data has consistently shown that innovation leads to long-term business growth, quicker penetration of new markets and that all-important edge to compete in a digital economy. However, a recent study has revealed that board members globally do not rank innovation as a priority in their strategic challenges.
The HBR report found that, despite a general awareness of the need to innovate to stay ahead, there is a widespread lack of board-level engagement in innovation processes. Just 30% of directors see innovation as one of the top three challenges their businesses face in achieving their strategic goals.
While attracting and retaining top talent was considered the top priority for respondents (41%), innovation ranked 5th in the list. Interestingly, the report concluded that boards with strong innovation processes tended to be those with better overall performance, and should therefore be addressed to improve business performance on all fronts.
3 steps to boosting innovation
To be able to lay the foundation for innovation and reap its benefits, there needs to be a forward-thinking mindset throughout the firm and the board, according to the report. As well as reassessing their priorities, boards should also consider these 3 steps to fostering innovation:
- Recruit directors with technological expertise (as opposed to the more common industry, strategy and financials expertise), so that boards can boost their innovative capabilities.
- Reallocate time in meetings for discussions around innovation, rather than always focusing operational strategy.
- Get the right CEO in charge, who focuses on long-term results and makes the right decisions and investments to promote vital innovation within the company.
The consensus is that companies must prioritise innovation initiatives, digital or otherwise, to effectively compete in a digital economy. In order to increase major innovations and retain entrepreneurial talent, it is crucial to have a solid innovation framework within an organisation.