Home > Board Performance, Technology in the Board, Trends in Corporate Governance > Deloitte on the ingredients boards need for success (in 2016)

Deloitte on the ingredients boards need for success (in 2016)

In a recently published report, Deloitte highlights some concerns boards should have in order to maximize their performance, given the economic and investment environment, and also the current trends relevant shareholders are focusing on these days.

 You can download the report here, (1), but I will in this post refer to one of the topics they deal with, “Innovation”.

 Marc Van Caeneghem and Takeshi Fujii refer to changes in the environment coming from the technological side, (not always but eventually in the shape of disruptive new business models), and from the new relationship among employees and between them and the firm.

 They state that boards need to prepare their organizations to identify and seize opportunities to increase their market share and brand power. And there are two ways boards need to tackle the challenge: (i) they need to assure the firm is aware of how technology helps them do more, (new markets, or more share), and (ii) they should also consider the risk of the no-innovation option.

 In order to do this, Van Caeneghem and Fujii list a number of tasks:

  1.  Companies need to be externally oriented, to identify change.
  2. A focus on customer needs also is helpful, so the firm finds better and new ways to satisfy them.
  3. A long-term perspective of the industry helps take correct decisions in the short-term also.

Beyond that, they argue innovation should not be the focus of an independent R&D department, but something embedded in the organizational culture. It is something connected with how the firm organizes itself and innovates, not just with having certain sources of ideas.

 Consequently, boards need to set the tone at the top, and nurture the firm`s innovation system. Here is how:

  •  Innovative firms are aware of the forces that could eventually dusrupt their business models.
  • They also need to be agile reacting when disruption appears or the opportunity to be disruptive is at the door.
  • Fostering the internal use of new technologies so as to develop the firm`s capacities and increase the competitive advantages will increase the firm`s resilience to change.

What should directors press for? Van Caeneghem and Fujii explain thar directors themselves need to understand the forces driving change and disruption, that they need to meet the relevant people inside and outside the firm to gain perspective; they finally need to set up a map of expectations they have from the management teams and a KPI map so that the firm remains on track.

Surely, other points in the report are interesting and trendy nowadays, but innovation seems the king for me!


(1) http://www2.deloitte.com/us/en/pages/risk/articles/directors-alert-2016.html

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