Studying the impact of innovation on business and society

The Role Boards of Directors and Shareholders Should Play in Guiding Business Innovation and Digital Transformation

Photo by Benjamin Child on Unsplash

My friend Raj Singh is the Chair of the Institute of Directors (IoD) in the UK. IoD has over 30,000 directors as members serving as board members for listed and unlisted companies. For one of its quarterly breakfast club meetings, I was asked to share my views on the role boards of directors need to play in guiding digital transformation and business innovation. Raj also asked for me to discuss the role of customer experience as a catalyst for change.

I wanted to share it with you here…(see below)

Do you remember the exact day that Uber disrupted the entire taxi industry?

While we’re at it, do you remember the moment when Amazon disrupted traditional retail?

It’s impossible to pinpoint because disruption wasn’t a specific event or moment in time. Instead, it was a gradual decay by a thousand digital cuts over several years.

Disruption was the outcome of 1) innovative services that changed behaviors over time, becoming the new standard and 2) how incumbents reacted and also didn’t respond to innovation over time. This is a textbook pattern that continues to repeat itself. An overconfident leadership team, a track record of success, quarter-to-quarter profits still on the horizon, all add up to give the false appearance of invincibility. In these cases, success is a poor teacher for seeing and productively responding to disruption.  Yet, disruption is a reality for everyone, even the disruptors.

If you stop and think about it, Uber launched in 2010. Amazon launched in 1994. Here we are still trying to figure out how to compete either against them or what we can learn from them to innovate forward. Imagine if we had these conversations earlier. Imagine if we had the foresight to see disruption on the horizon to more effectively compete in the moment. Imagine if we were the disruptors!

Too many organizations and business leaders are mired operational models that have them making investments and decisions on a quarter-to-quarter basis. Their view and vision can never extend beyond what’s directly ahead. This is short-termism and it hinders foresight, real-time periphery views and significant advancement. Short-termism also prevents market changing risk taking. It positions innovation as a cost center. It prioritizes immediate shareholder and stakeholder return over greater future returns. It protects the status quo and promotes conventional thinking and complacency.

This is not a time for short-termism however. Disruption is an everyday threat.

This is a call for every executive, every board member, every consultant, and all change agents, to prioritize the full understanding of market evolution and evolving  customer and employee behaviors and contrast and compare it to current digital transformation and innovation roadmaps.

I can assure you, there are gaps. And those gaps, signify real-time exposure to disruption. The bigger the gap, the bigger the threat. Someone has to build the bridges between them.

Leadership, especially boards of directors and shareholders, must now foster support and investment in immediate and longer-term transformation and innovation strategies, encourage more agile and dynamic leadership and organizational models and design empowering, safe and collaborative cultures. Even though these investments impact short-term results, it is the only way to future proof the organization while positioning it for greater yields over time.

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